The small business specialists
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Australia's first national Paid Parental Leave scheme provides 18 weeks' pay at the National minimum wage for eligible, long-term employees who are the primary carer of a newly born or adopted child.
The scheme may help you retain valuable and skilled staff by encouraging them to stay connected to your business when they become parents. Receiving the Federal Government payments through your business will help to do this. Employers will also benefit in the long-term through the increased workforce participation of parents.
Parental leave payments won’t cost your business anything – they are paid from the Federal Government direct to your business and then you pay your employee. As an employer you will be responsible for administering Paid Parental Leave for your eligible employees.
You will not need to make superannuation contributions on Parental Leave pay. It will not increase your payroll tax liability or workers compensation premiums.
From 1 July 2011 you must provide Parental Leave pay for eligible employees who have been with you for 12 months or more prior to the expected date of the birth or adoption
For these long-term employees, the Family Assistance Office will advance funds direct to your business. You can receive these funds in three instalments or fortnightly over the 18 weeks.
For employees who have been with you less than 12 months, the Family Assistance Office will make the payments directly to them, unless you choose to do so.
You don’t have to change your employee’s usual pay cycle, set up any special bank accounts or report back to the Family Assistance Office. You just have to pay the Parental Leave pay to your employee. You will also need to withhold the usual Pay As You Go (PAYG) tax.
If you are self-employed or work for a family business you may be eligible for the Paid Parental Leave scheme providing you meet the eligibility requirements, including the Paid Parental Leave work test.
You will be able to keep an eye on your business without being regarded as having returned to work. You will be able to oversee the business’ operations, perform the occasional administrative task and recruit replacement staff to manage your absence from work.
Discuss parental leave plans with your employee before they make an application for Paid Parental Leave. Encourage your employee to lodge their claim before their child arrives, so that payment arrangements can be made, payments are not delayed and you have an opportunity to consider any changes that need to be made in your business.
Employees can apply to the Family Assistance Office up to three months before the expected birth or adoption. If approved, the Family Assistance Office will let you know that you will be required to provide Parental Leave Pay to your employee.
For more information about the Paid Parental Leave scheme and your role as an employer: