Significant changes to employment conditions have been made in recent months by the Respect at Work legislation and by expanded entitlements to family and domestic violence leave. Changes to the Paid Parental Leave Scheme have now been legislated and will take effect from 1 July 2023. There are also changes to the provisions for unpaid parental leave under the Fair Work Act.
These changes are likely to affect most employers (including aged care providers). Here’s what you need to know.
Currently, the Paid Parental Leave (PPL) Scheme provides the following benefits at the rate of the National Minimum Wage:
The Fair Work Act 2009 (Cth) (Fair Work Act) makes provision for unpaid parental leave for eligible employees.
Last year, the Government passed a law that makes changes to the PPL Scheme. That law was called the Paid Parental Leave Amendment (Improvements for Families and Gender Equality) Act 2022 (Cth) (Amending Act).
The changes mean that where a child is born or adopted on or after 1 July 2023:
The Government intends to progressively increase the PPL Scheme to 26 weeks of paid leave through a second tranche of changes to the PPL Scheme that will require separate legislation.
From 6 June 2023, new rules apply to employers who intend to reject an application from an employee to extend their unpaid parental leave beyond 12 months. Employees will also be able to appeal to the Fair Work Commission if they are unhappy with the outcome of their request.
While the amended PPL Scheme allows the leave to be taken flexibly, there is maximum period of flexible PPL days that can be taken for a claimant who is partnered at the time that they make their claim. A partnered claimant will not be eligible for PPL if the claim is for more than 90 flexible PPL days (roughly 12 weeks) for the child. This reserves 10 flexible PPL days (roughly two weeks) for another claimant, generally expected to be their partner.
As with the current dad and partner pay (DAPP) and current PPL arrangements, parents can only take two weeks of the new flexible PPL concurrently.
This change is quite complex and will require monitoring of the relevant government websites (for example, Services Australia) for more information about how this will work in practice and how to manage a claim for flexible PPL.
People who can currently make a PPL claim include the child’s birth mother, an adoptive parent, the partner of an adoptive parent, the birth mother’s partner, a parent who is not the birth mother, and the partner of a parent who is not the birth parent. The PPL Rules may also allow PPL claims by other individuals in exceptional circumstances.
The Amending Act makes changes to allow fathers or partners to claim a payment without the birth parent having to make a successful claim first. Fathers or partners will be able to make a claim for PPL in their own right (rather than as secondary claimants).
Being able to make a claim in their own right means that fathers and partners who meet the eligibility criteria will be able to claim PPL in cases where the birth mother is ineligible due to the income or residency tests. While able to claim PPL in their own right, fathers and partners will normally require the permission of the birth mother to make a claim (except in cases of adoption).
The changes introduce a $350,000 family income limit, under which families can be assessed if they do not meet the individual income test.
Under the current income test, an individual cannot receive PPL for the birth mother/primary carer or DAPP if their adjusted taxable income is over $156,647 in the 2021–22 financial year. The income test applies only to the individual’s own income. The current income test has been criticised as discriminatory because, where there are families on identical incomes, when a family includes a mother who earns a higher income than the current income test, they cannot claim PPL as the birth mother or primary carer, regardless of what their partner earns. This is compared to a family that includes a mother who earns below the income threshold and who can claim PPL, even if their partner is a high-income earner.
Using a family income test would exclude a mother who would otherwise be eligible but whose partner’s income puts them above the family threshold. The changes in the Amending Act avoid this problem by only applying the family income limit if the claimant fails the individual income test. One effect of the changes is that a single parent who fails the individual income test will be assessed against the new family income limit.
An employee taking 12 months unpaid parental leave has the right to request an extension for a further 12 months leave from their employer, unless their partner has already taken 12 months of leave.
Currently, the Fair Work Act requires an employer to respond to a request for an extension of unpaid parental leave by providing a written response within 21 days. If the employer is intending to refuse the request, they must provide an opportunity for the employee to discuss their request and then detail the reasons for the refusal in writing. The request can only be rejected on “reasonable business grounds”. However, there is no further guidance on what that means. Currently, if an employee’s request is rejected, there is little they can do about it.
The Government has passed a law to change this situation. The law is the Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022 (Cth), and it makes changes to the Fair Work Act.
The changes say that from 6 June 2023, an employer must consider and inform the employee in writing if there is any other period of extension to which they would be willing to agree.
The amendments also provide guidance on what constitutes “reasonable business grounds” for refusing a request by listing examples, such as that the extension would be too costly for the employer, or that it would be impractical to change the working arrangements of others to accommodate the employee’s request. The written reasons for refusing a request must include the particular business grounds that apply to the employee’s request.
The amendments also provide increased access to dispute resolution for employees through the Fair Work Commission if they cannot resolve their dispute about an extension of unpaid parental leave directly with their employer.
The Department of Parliamentary Services’ Bills Digest No. 55 2022-23 provides a more detailed overview of the purpose of the Amending Act and the key changes to the PPL Scheme, together with information from the Explanatory Memorandum.
For further information on leave extension requests see the Department of Employment and Workplace Relations fact sheet: Unpaid parental leave.
These changes are very complex and require further monitoring of the relevant government websites (for example, Services Australia) up to and beyond 1 July 2023 to further understand how the new PPL Scheme will operate in practice for employers and employees.