Is it time to revisit your paid parental leave scheme?

Employers may need to get creative with parental leave policies if new legislation comes into place.

Proposed changes to the Federal Government’s Paid Parental Leave (PPL) scheme could leave employers solely responsible for paying their worker’s maternity leave if the government cracks down on “double-dipping”.
Workers whose employers pay equal or more than the government-provided PPL entitlement may not receive any government assistance under the proposed changes.
The existing scheme provides new parents with 18 weeks government pay at the national minimum wage of $657 per week. The scheme was designed to top-up employer parental leave and allow women to take 26 weeks or more in leave with their infants.
The former Abbott government vowed to change the scheme and prevent new parents “double-dipping” by claiming leave from both their employer and the government.
If the proposed changes go through in their current form, employers would be solely responsible for paying employee parental leave entitlements as their employees would no longer be eligible for the 18 weeks of assistance from the government scheme.
However, the Turnbull government has downplayed these changes, and Social Services Minister Christian Porter told Fairfax Media the government is now considering a compromise that would allow all new mothers to receive 18 weeks of paid parental leave.
While some employers may seek to withdraw their maternity leave schemes, or restructure employee remuneration packages, Patricia Ryan, Principal of The Workplace Lawyers, says some employers will not be able to withdraw their current schemes.
“Besides legal implications, withdrawing schemes is not a good HR strategy unless it is replaced by a rejigged scheme,” Ryan told HC Online.
“It may also result in women returning to work earlier than they would like, causing anxiety to employees, which could affect productivity and engagement,” she says.
Ryan says employers need to balance the economic reality of paid parental leave entitlements with maintaining employee satisfaction.
“We believe some employers will not be able to withdraw from paid mat leave, at least for current employees who may have a contractual right or will choose not to do so even if able to, because of effect on employee satisfaction,” Ryan says.

If paid parental leave is covered in company policy and not in an individual’s enterprise agreement, then legally there is scope for these leave arrangements to be altered or removed, Ryan says.

“Often, company policies are discretionary and are not included in contracts,” she says.

“Therefore they possibly could be changed (subject to legal advice on their terms and applicability); however this could lead to low morale amongst employees and a loss of a great retention and attraction strategy.”

If the staff enterprise agreement provides for paid maternity leave, the employer can wait until the EA expires and then seek to make a new one that excludes paid maternity leave or replaces it with another strategy.

“However employees may choose not to vote for this and the existing EA would continue to operate,” Ryan says.

“Alternatively if the EA is current (not yet reached the expiry date) , the employer could ask the employees to vote on a variation – this is very unlikely to occur and the vote is unlikely to support the change,” she says.

Ryan says many employers may look at options to maximize benefits to their employees if reducing the number of weeks of paid maternity leave.

HR departments could consider implementing other options such as return-to-work bonuses for mothers returning from maternity leave, or subsidizing child care costs for their employees, she says.

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