FAIRER PAID PARENTAL LEAVE BILL 2015 Explanatory Memorandum
FAIRER PAID PARENTAL LEAVE BILL 2015
2013-2014-2015
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF REPRESENTATIVES
FAIRER PAID PARENTAL LEAVE BILL 2015
EXPLANATORY MEMORANDUM
(Circulated by the authority of the
Minister for Social Services, the Hon Scott Morrison MP)
FAIRER PAID PARENTAL LEAVE BILL 2015
OUTLINE
This Bill introduces the 2015 Budget measure that will provide a fairer Paid Parental
Leave scheme, and reintroduces a measure currently before the Senate in a
2014 Bill.
Fairer Paid Parental Leave
From 1 July 2016, this measure will ensure Government-funded payments under the
Paid Parental Leave scheme are more fairly targeted to parents who do not also
have sufficient access to employer-provided parental leave or similar payments.
Parents will no longer be able to receive employer-provided primary carer leave
payments (or other like payments) as well as the full amount of parental leave pay
under the Paid Parental Leave scheme.
Parents who are entitled to receive employer-provided payments in excess of the
total amount of parental leave pay under the Paid Parental Leave scheme will not
receive any parental leave pay under the Paid Parental Leave scheme.
Parents who are entitled to receive employer-provided payments of less than the
total amount of parental leave pay under the Paid Parental Leave scheme will
receive a top-up to ensure they can access the maximum rate.
Minor amendments to the Paid Parental Leave scheme are made, including
providing more generous backdating provisions so parents have more time to lodge
a claim in certain circumstances.
Removal of employer paymaster role in administering the Paid Parental Leave
scheme
The Bill also reintroduces the measure provided by the Paid Parental Leave
Amendment Bill 2014, which is currently before the Senate. To ease administrative
burdens on business, the measure removes the requirement for employers to
provide Government-funded parental leave pay to their eligible long-term employees.
Employees will be paid directly by the Department of Human Services, unless an
employer opts in to provide parental leave pay to its employees and an employee
agrees to their employer paying them. The measure will now be implemented from
1 April 2016.
Financial impact statement
The financial impact over the forward estimates of the measure for a fairer Paid
Parental Leave scheme is a saving of $967.7 million.
The measure removing the employer paymaster role has a financial impact of
$7.0 million over five years.
1
REGULATION IMPACT STATEMENT
The regulation impact statement for the removal of the employer paymaster role
appears at the end of this explanatory memorandum.
STATEMENTS OF COMPATIBILITY WITH HUMAN RIGHTS
The statements of compatibility with human rights appear at the end of this
explanatory memorandum, after the regulation impact statement.
2
FAIRER PAID PARENTAL LEAVE BILL 2015
NOTES ON CLAUSES
Abbreviations used in this explanatory memorandum
Paid Parental Leave Act means the Paid Parental Leave Act 2010
PPL scheme means the Paid Parental Leave scheme
Clause 1 sets out how the new Act is to be cited - that is, as the Fairer Paid
Parental Leave Act 2015.
Clause 2 provides a table setting out the commencement dates of the various
sections in, and Schedules to, the new Act.
Clause 3 provides that each Act that is specified in a Schedule is amended or
repealed as set out in that Schedule.
1
Schedule 1 - Adjustment for primary carer pay, etc.
Summary
This Schedule ensures that, from 1 July 2016, Government-provided parental leave
pay is more fairly targeted to ensure eligible working mothers have access to a base
level of financial support on the birth or adoption of their child. Parents will no longer
receive both employer-provided primary carer leave payments (such as maternity
leave pay) and the full amount of parental leave pay under the Government-provided
PPL scheme.
Parents who are entitled to receive employer-provided primary carer leave payments
of greater value than the total amount of parental leave pay will not receive any
parental leave pay under the PPL scheme.
Parents who are entitled to receive employer-provided primary carer leave payments
valued at less than the total amount of parental leave pay will have their total
parental leave pay under the PPL scheme reduced by the amount of employer-
provided primary carer leave payments they receive.
Background
Currently under the Paid Parental Leave Act, the PPL scheme provides working
mothers and the initial primary carers of children, with access to up to 18 weeks'
parental leave pay at the national minimum wage, while they stay home to look after
their baby or adopted child.
Payments under the current PPL scheme are made irrespective of whether an
individual receives employer-provided primary carer leave payments and regardless
of the amount of such payments.
Parental leave pay, under the PPL scheme, is paid over an 18-week period at the
national minimum wage.
Parents who lodge a claim before the birth of a child, or the child entering their care,
currently receive an initial eligibility determination stating whether they will be eligible
for parental leave pay.
Under the measure for a fairer Paid Parental Leave scheme, a person must inform
the Secretary (as represented by the Department of Human Services) of any primary
carer pay they are entitled to from their employer. The PPL period of a person is
then proportionately reduced by the amount of primary carer pay they are entitled to
from their employer. If a person receives primary carer pay from their employer that
is valued at equal to or more than the national minimum wage for the person's
unadjusted PPL period, the person will not be entitled to receive parental leave pay
from the Government.
The purpose of these changes is to provide fairer parental leave pay by creating a
base level of paid parental leave entitlement for all eligible working mums.
2
Schedule 1 - Adjustment for primary carer pay, etc.
Provision is made for a primary claimant to nominate a start day 28 days before the
day they make their claim for parental leave pay or verify their child's birth, to provide
greater flexibility for parents to make their claim after the birth of their child but
without delaying their receipt of parental leave pay.
Explanation of the changes
Part 1 - Amendments
Amendments to the Paid Parental Leave Act
Item 1 amends section 4, which sets out the Guide to the Act, to state that a
person's PPL period may be less than 18 weeks where they are entitled to primary
carer pay in respect of the child.
Item 2 amends section 6 by inserting a signpost to the definition of adjustment for
primary carer pay at section 11D, inserted by item 11 below.
Item 3 amends section 6 by repealing the definition of initial eligibility
determination and replacing it with a signpost to the definition of initial eligibility
determination at section 115BL, which relates to dad and partner pay.
Item 4 amends section 6 to amend the definition of maximum PPL period end day.
This is a technical amendment to signpost the definition of maximum PPL period end
day at section 11B, inserted by item 11 below.
Item 5 amends section 6 to amend the definition of maximum PPL period start
day. This is a technical amendment to signpost the definition of maximum PPL
period start day at section 11A inserted by item 11 below.
Item 6 amends section 6 to include a signpost to the definitions of primary carer
leave and primary carer pay at section 11F, inserted by item 11 below,
and provisional entitlement determination at section 26 and unadjusted
maximum PPL period end day at subsection 11B(3), inserted by item 11 below.
Item 7 amends section 7, which sets out the Guide to Part 2-1, to state that a
person's PPL period may be less than 18 weeks where they are entitled to primary
carer pay in respect of the child.
Items 8 and 9 are minor amendments to subsections 11(1) and (3) respectively to
include the respective headings PPL period and Maximum PPL period.
Item 10 repeals subsections 11(4) and 11(5) because new sections 11A and 11B,
inserted by item 11 below, will give the meanings of maximum PPL period start day
and maximum PPL period end day.
Item 11 inserts new sections 11A, 11B, 11C, 11D, 11E and 11F.
3
Schedule 1 - Adjustment for primary carer pay, etc.
New section 11A - Meaning of maximum PPL period start day
New section 11A defines the maximum PPL period start day. Subsection 11A(1)
provides that the maximum PPL start day for a child is the latest of: the day the child
was born; the nominated start date; 28 days before the primary claimant made an
effective claim for parental leave pay for the child; or 28 days before the day on
which the primary claimant verified the child's birth. This new definition has the
effect of allowing a claimant to backdate their PPL period start day by 28 days from
the date of an effective claim or verification of the child's birth.
The more generous backdating provisions will provide more parents with the
flexibility to backdate their claim to a date before they lodged their claim. Currently,
a person can only backdate a claim if they fulfil all claim requirements within 28 days
of birth. If a person lodged a claim after this time, they cannot backdate their claim,
and, if the person has already returned to work, they will be ineligible for parental
leave pay, despite potentially having had a period off work after the birth. The new
provision addresses this issue.
Subsections 11A(2) and (3) provide that the Secretary can make a determination in
exceptional circumstances, specifying an earlier start day, but not a day before the
child's date of birth.
New section 11B - Meaning of maximum PPL period end day
New section 11B gives the meaning of maximum PPL period end day.
Subsection 11B(1) defines the maximum PPL period end day as the earlier of the
day that is 125 days after the maximum PPL period start day (which is 18 weeks
from and including that start day), or the day before the child's first birthday.
Subsection 11B(2) provides that, where there is an adjustment for primary carer pay,
the maximum PPL period end day is the earlier day resulting from the adjustment for
primary carer pay worked out in accordance with section 11D. This provision has
the effect of substituting an earlier maximum PPL period end day, calculated with
reference to an amount proportional to the amount of primary carer pay the person is
entitled to.
Example
Jo is entitled to eight weeks of primary carer pay at $1,000 per week,
totalling $8,000.
Jo's maximum PPL period start day is her nominated start date of
14 July 2016. Jo's maximum PPL period end day is the 126th calendar
day of the PPL period, reduced by 59 week days (determined in
accordance with section 11D), which is the 31st week day in the PPL
period.
As Jo's nominated start date is 14 July 2016, her maximum PPL period
end day is 25 August 2016.
4
Schedule 1 - Adjustment for primary carer pay, etc.
Subsection 11B(3) defines the unadjusted maximum PPL period end day as the
period worked out in accordance with subsection 11B(1). This is the earlier of
125 days after the PPL period start date (which is 18 weeks from and including that
start day), or the day before the child's first birthday. This provides for the end day
from which any adjustment for primary carer pay is calculated to be the day before
the child's first birthday where this would be earlier than the end of the full 18-week
period.
New section 11C - No PPL period etc. where maximum adjustment for primary carer
pay
New section 11C provides that, where the adjustment for primary carer pay
(calculated in accordance with section 11D) is equal to or exceeds the number of
week days in the maximum PPL period, there is no PPL period. Where a person's
unadjusted maximum PPL period end day is 125 days after their nominated start
date, this would only occur where the amount of primary carer pay a person receives
from their employer totals more than the minimum wage for 18 weeks.
Where there is a secondary claimant, the maximum PPL period is first adjusted by
the primary claimant's adjustment for primary carer pay and then further adjusted for
the secondary claimant's adjustment for primary carer pay. A secondary claimant's
primary carer pay could result in the secondary claimant not having a PPL period.
New section 11D - Meaning of adjustment for primary carer pay
Primary claimant
Where a person receives primary carer pay from their employer, their maximum PPL
period end day is an earlier day to reflect the amount of primary carer pay received.
The purpose of new section 11D is to provide a calculation for this adjustment. As a
person's parental leave pay is based on the daily rate (taking into account only week
days) of the national minimum wage, the calculation takes into account potentially
differing rates of national minimum wage where the period includes 1 July.
To calculate the adjustment for primary carer pay:
a) firstly, determine the number of week days in the person's maximum PPL
period that ended before the first 1 July after the start of that period;
b) then multiply the daily national minimum wage for the day before that 1 July
by the number of days worked out at (a);
c) then subtract from 90 the number of days at (a) (this will give the number of
days in the person's maximum PPL period after the first 1 July after the start
of that period);
d) then multiply the result at (c) by the daily national minimum wage for that
1 July;
e) add the results at (b) and (d) (which reflects the national minimum wage for
18 weeks with a five-day working week);
5
Schedule 1 - Adjustment for primary carer pay, etc.
f) divide the result at (e) by 90, representing the number of working days in the
maximum PPL period (this will reflect the average daily national minimum
wage for the person's PPL period);
g) divide the amount of primary carer pay received by the person by the result
at (f).
If the result at (g), which is the number of week days by which a person's maximum
PPL period end day is brought forward, is not a whole number, that number is
rounded down in accordance with subsection 11D(4).
Example
Jo is entitled to eight weeks of primary carer pay at $1,000 per week,
totalling $8,000.
Jo's maximum PPL period start day is her nominated start date of
14 July 2016.
As Jo is entitled to primary carer pay, her maximum PPL period end
day is adjusted under subsection 11B(2).
The number of week days in Jo's unadjusted PPL period (125 calendar
days from her nominated start date) that ended before the first 1 July
after the start of that period is 90.
The national minimum wage amount for that day is $134. Ninety
multiplied by $134 is $12,060.
Ninety subtracted from 90 is 0.
The national minimum wage effective 1 July 2017 is $137.
$137 multiplied by 0 is $0.
$12,060 added to $0 is $12,060.
$12,060 divided by 90 is $134.
The total value of Jo's primary carer pay of $8,000 is divided by $134,
equalling 59.7015.
The adjustment for primary carer pay is rounded down to 59 (with
0.7015 being the rounding reduction to apply to new
subsection 65(1A), inserted by item 23 below).
Note the national minimum wage used in this scenario is for the purpose of
the example only and is not reflective of what the national minimum wage
may be at that date.
6
Schedule 1 - Adjustment for primary carer pay, etc.
Secondary claimant
If there is a secondary claim, the secondary claimant's maximum PPL period end
day is reduced to reflect the amount of primary carer pay received by both the
primary and secondary claimants. The adjustment calculated in accordance with
subsection 11D(1) is increased by the adjustment for the secondary claimant.
The adjustment for the secondary claimant is calculated by dividing the amount of
primary carer pay to which the secondary claimant is entitled for the child by the
result of paragraph 11D(1)(f). If this calculation, which is the number of week days
by which a person's maximum PPL period end day is brought forward, is not a whole
number, that number is rounded down in accordance with subsection 11D(4).
Subsection 11D(3) provides that, if the Secretary is satisfied that a secondary claim
is made in exceptional circumstances, the maximum PPL period end date will not be
reduced to reflect any primary carer pay of the secondary claimant.
Example
Background
Jo is entitled to eight weeks of primary carer pay at $1,000 per week,
totalling $8,000.
Jo's maximum PPL period start day is her nominated start date of
14 July 2016. Jo's maximum PPL period end day is the 126th calendar
day of the PPL period, reduced by 59 week days (determined in
accordance with section 11D), which is the 31st week day in the PPL
period.
As Jo's nominated start date is 14 July 2016, her maximum PPL period
end day is 25 August 2016.
Operation of section 11D
John is Jo's partner and claims PPL as a secondary claimant. John is
entitled to four weeks of primary carer pay at $600 per week, totalling
$2,400.
As John is also entitled to primary carer pay, his maximum PPL period
end day will be adjusted for primary carer pay.
The adjustment worked out under subsection 11D(1) for Jo is
increased by the result of dividing the amount of John's primary carer
pay by the result of paragraph 11D(1)(f).
That is, $2,400 divided by $134 is 17.9104, added to 59.7015 is
77.6119.
Under subsection 11D(4), the adjustment for primary carer pay is
rounded down to 77 (with 0.6119 being the rounding reduction to apply
to new subsection 65(1A), inserted by item 23 below).
Subsection 11B(2) provides that John's maximum PPL period end day
is the 126th calendar day of the PPL period, reduced by 77 week days
(determined in accordance with section 11D), which is the 13th week
day in the PPL period.
7
Schedule 1 - Adjustment for primary carer pay, etc.
As Jo's nominated start date is 14 July 2016, John's maximum PPL
period end day is 1 August 2016.
Note the national minimum wage used in this scenario is for the
purpose of the example only and is not reflective of what the national
minimum wage may be at that date.
New section 11E - Adjustment for primary carer pay - PPL period ended by child's
first birthday
Section 11E applies where the claimant receives primary carer pay and the
unadjusted maximum PPL period is ended by the child's first birthday. It provides
that the reference to the number 90 (being the number of week days in an 18-week
period) is replaced by the number of week days in the claimant's PPL period for the
child.
Example
Ruth is entitled to eight weeks of primary carer pay at $500 per week,
totalling $4,000.
Ruth's maximum PPL period start day is her nominated start date of
3 July 2017.
As Ruth is entitled to primary carer pay, she has an adjustment for
primary carer pay.
However, as Ruth's child was born on 30 September 2016, Ruth's
unadjusted maximum PPL period end day under subsection 11B(3)
is the day before the child's first birthday under paragraph 11B(1)(a),
being 29 September 2017.
The number of week days in Ruth's PPL period (89 calendar days from
her nominated start date of 3 July 2017 to 29 September 2017) that
ended before the first 1 July after the start of that period is 65.
65 multiplied by the daily national minimum wage amount for that day,
which is $137, is $8,905.
65 subtracted from 65 is 0.
$140 multiplied by 0 is $0.
$8,905 added to $0 is $8,905.
$8,905 divided by 65 is $137.00.
The total value of Ruth's primary carer pay of $4,000, divided by
$137.00, is 29.1971.
The adjustment for primary carer pay is rounded down to 29 (with
0.1971 being the rounding reduction).
Jo's maximum PPL period end day is the 89th calendar day of the PPL
period, reduced by 29 week days (determined in accordance with
section 11D), which is the 36th week day in the PPL period.
8
Schedule 1 - Adjustment for primary carer pay, etc.
As Jo's nominated start date is 3 July 2017, her maximum PPL period
end day is 21 August 2017.
Note the national minimum wage used in this scenario is for the
purpose of the example only and is not reflective of what the national
minimum wage may be at that date.
New section 11F - Meaning of primary carer pay and primary carer leave
Subsection 11F(1) defines primary carer pay as an amount an employer is obliged
to pay an employee under the terms of their employment because the employee is
on primary carer leave (such as maternity leave). Subsection 11F(2) provides that
the PPL rules may prescribe classes of payment provided by an employer that are or
are not taken to be primary carer pay.
Subsection 11F(3) defines primary carer leave as leave an employee is entitled to
take: because the employee is expecting to give birth to a child; or to allow the
employee to be the primary carer for a child who has not turned one; or to allow the
employee to be the primary carer for a child who has been entrusted to the care of
the employee within the last 12 months as part of a process for the adoption of the
child; or to allow the employee to care for an adopted child; or where the employee
would have been entitled to such leave but the child is stillborn or died.
Primary carer leave does not include personal or carer's leave, annual leave, long
service leave or bereavement leave. It also does not include leave where the main
purpose is to support the primary carer of the child and not to support the child itself;
or develop initial bonds with a child, such as a newborn or newly-adopted child (such
as some forms of paternity leave).
To avoid doubt, subsection 11F(5) makes it clear that paragraph 11F(4)(b) does not
apply to leave the main purpose of which is to allow an employee to be the primary
carer for a child.
Item 12 amends section 12 which sets out a Guide to Part 2-2 by repealing the
paragraph relating to Division 5, and substitutes a new paragraph relating to
provisional entitlement determinations, which can be made by the Secretary before a
payability determination if the person satisfies or will satisfy certain requirements for
a payability determination.
Item 13 repeals and substitutes subsection 13(2), regarding determinations on a
claim made by a primary claimant for parental leave pay. Subsection 13(2) provides
that the Secretary must determine that parental leave pay is payable where the
primary claimant has a PPL period and the primary claimant meets the eligibility
criteria from the day the child is born until the last day of their PPL period.
9
Schedule 1 - Adjustment for primary carer pay, etc.
Item 14 repeals and substitutes subsection 14(2), regarding determinations on
claims made at the same time by the primary and secondary claimants, where both
claimants are sharing parental leave pay. Subsection 14(2) deals with when
parental leave pay is payable to the primary claimant. It provides that the Secretary
must determine that parental leave pay is payable to the primary claimant for the
child where the primary claimant has a PPL period and the primary claimant meets
the eligibility criteria from the day the child is born until the last day of their PPL
period.
Item 15 amends subsection 14(5), regarding determinations on claims made at the
same time by the primary and secondary claimants, where both claimants are
sharing parental leave pay. New paragraph 14(5)(aa) provides that, for parental
leave pay to be payable, the Secretary must be satisfied that the secondary claimant
has a PPL period.
Item 16 amends subsection 15(3), regarding determinations on claims made at the
same time by the primary and secondary claimants, where the secondary claimant is
to receive all the parental leave pay. New paragraph 15(3)(aa) provides that,
for parental leave pay to be payable, the Secretary must be satisfied that the
secondary claimant has a PPL period.
Item 17 amends subsection 16(3), regarding determinations on a secondary claim
made after the primary claim. New paragraph 16(3)(aa) provides that, for parental
leave pay to be payable, the Secretary must be satisfied that the secondary claimant
has a PPL period.
Item 18 repeals paragraph 24(b) and substitutes new paragraphs 24(b), (ba)
and (bb). New paragraph 24(b) provides that notice of a payability determination
must state the claimant's PPL period and the amount of parental leave pay that will
be paid. Paragraph 24(ba) provides that, where there is an adjustment for primary
carer pay and the claimant is the primary claimant, the notice of determination must
include the amount of primary carer pay the primary claimant is entitled to.
Paragraph 24(bb) provides that, where there is an adjustment for primary carer pay
and the claimant is not the primary claimant, the notice of determination must state
the amount of primary carer pay the primary and secondary claimants are entitled to.
This means that a notice to a secondary claimant will include the amount of primary
carer pay both the primary and secondary claimants are entitled to. If a tertiary
claimant ultimately claims and is eligible for the balance of a secondary claimant's
parental leave pay, the notice of their payability determination must also state the
amount of primary carer pay the primary and secondary claimants are entitled to.
A tertiary claimant may only claim because they have care of the child in exceptional
circumstances prescribed by the PPL rules (see existing subsection 54(3)), such as
both the primary claimant and secondary claimant being incapable of caring for the
child on an ongoing basis.
10
Schedule 1 - Adjustment for primary carer pay, etc.
Item 19 inserts new section 24A, which allows the Secretary to vary a payability
determination. It will be necessary to vary a claimant's payability determination due
to a change in circumstance, such as a change to the amount of primary carer pay a
claimant is entitled to. Subsection 24A(1) states that a payability determination may
be varied on the initiative of the Secretary, or at the request of a claimant made
within one year of the PPL period ending. A variation comes into force on the day it
is made, in accordance with subsection 24A(2).
Subsection 24A(3) provides that, when making a variation to a payability
determination, the Secretary must be satisfied that the requirements specified in
Division 2 of Part 2-1 are met.
Subsection 24A(4) provides that anything that is required to be specified in a
payability determination must also be specified in a variation to that determination.
Subsection 24A(5) provides that the notice of variation must comply with section 24.
Therefore, it must state: whether parental leave pay is payable; if it is payable,
the person's PPL period; the amount of parental leave pay that will be paid; and,
if applicable, the amount of primary carer pay the person receives.
Where a payability determination has been varied, section 272 of the Paid Parental
Leave Act will apply in relation to the Secretary determining events to have
happened, or not to have happened.
A note alerts the reader to the fact that the Secretary may have to give notice of the
variation to the person's employer under section 114.
Item 20 repeals Division 5 of Part 2-2, which provides for initial eligibility
determinations about parental leave pay, and substitutes a new Division 5 -
Provisional entitlement determinations about parental leave pay.
This amendment means parents, who lodge a claim before the birth of a child or the
child entering their care, will receive a provisional entitlement determination instead
of an initial eligibility determination. This change is to reflect the fact that the notice
will include a person's PPL period and the amount of parental leave pay they will
receive, which is information not linked to a person's eligibility. The change in the
Division's name better reflects the information the notice contains.
New subsection 26(1) provides that the Secretary may make a provisional
entitlement determination for a primary claimant if the Secretary is satisfied the
person meets the work test, income test, Australian residency test, requirements in
Division 2 of Part 2-1, including having a PPL period, and provisions in Part 2-2
relating to making a payability determination.
New subsection 26(2) provides that the Secretary may make a provisional
entitlement determination for a secondary claimant if the Secretary is satisfied the
person meets (or will meet) the work test, income test, Australian residency test,
requirements in Division 2 of Part 2-1, including having a PPL period, and provisions
in Part 2-2 relating to making a payability determination.
11
Schedule 1 - Adjustment for primary carer pay, etc.
New section 26A provides that, where the Secretary has made a provisional
entitlement determination that a person is provisionally entitled to parental leave pay,
the Secretary is not prevented from later making a different payability determination,
including that parental leave pay is not payable.
New section 27 provides that, when the Secretary makes a provisional entitlement
determination, the Secretary may act on the assumption that the information
provided by the person will remain unchanged and the national minimum wage will
remain unchanged.
New section 28 provides that a provisional entitlement determination comes into
force the day it is made.
New section 29 sets out the matters to be specified in a notice of provisional
entitlement determination. The notice must state the person's PPL period,
the amount of parental leave pay they will receive, and the amount of primary carer
pay that they notified the Secretary they are entitled to. In the case of a secondary
claimant, it would also include the amounts of primary carer pay the primary and
secondary claimants are entitled to.
Item 21 is a technical amendment to subsection 33(2), which omits the reference to
'an initial eligibility determination' and substituting it with 'a provisional entitlement
determination'. This reflects the changes made by item 20.
Item 22 is a technical amendment to note 2 to subsection 57(1), omitting the
reference to subsection 14(4) and substituting a reference to subsection 11A(1).
This reflects the changes made by items 10 and 11.
Item 23 amends section 65 by inserting new subsection (1A). This subsection
reduces the final instalment of parental leave pay where there has been an
adjustment for primary carer pay and the amount of the adjustment was rounded
down under subsection 11D(4) (see item 11).
The amount of the final instalment of parental leave pay to the person is reduced by
the dollar equivalent of the daily national minimum wage on the last week day of the
PPL period, multiplied by the rounding reduction.
Example
Hanna gives birth to Joanna on 1 July 2017, and that day is the start of her
PPL period for Joanna. The daily national minimum wage amount for every
day in her PPL period is $134.
Hanna is entitled to $8,000 of primary carer pay for Joanna. This means that
her adjustment for primary carer pay is 59.70149 (before rounding down
under subsection 11A(4)). After rounding down under that subsection,
the adjustment for primary carer pay is reduced by 0.70149 to 59. This
means Hanna's PPL period is 31 days.
12
Schedule 1 - Adjustment for primary carer pay, etc.
Hanna's last instalment for parental leave pay will be reduced to account for
the rounding reduction. To reflect the rounding reduction, this subsection
reduces the amount of her final instalment by the daily dollar equivalent of
0.70149 (that is, the daily national minimum wage for that day, estimated to be
$134, multiplied by 0.70149, resulting in $94.00). Hanna's final instalment is
$40.
Note the national minimum wage used in this scenario is for the purpose of
the example only and is not reflective of what the national minimum wage may
be at that date.
Items 24 and 25 amend section 87, regarding the payment of arrears. Item 24
repeals the heading and substitutes a new heading, 'Payment of arrears - extending
PPL period after review or variation'. Item 25 omits the words 'after review',
and substitutes 'after review or variation'. The amendments mean that, where a
determination has been varied in accordance with section 24A, any instalments
relating to arrears must be paid as soon as practicable.
Items 26 and 27 amend section 92, regarding the effect of extending the PPL period
after review. Item 26 repeals the heading and substitutes a new heading, 'Effect of
extending PPL period after review or variation'. Item 27 amends paragraph 92(b)
so it applies where a determination is reviewed or varied. The amendments mean
that, where a determination has been varied in accordance with section 24A to
extend the PPL period, the Secretary is required to pay the instalments.
Items 28 and 29 are technical amendments to paragraphs 101(1)(a) and 117(1)(a)
to reflect the amendments to Division 5 of Part 2-2 (see Item 20). The reference to
'an initial eligibility determination' is substituted with 'a provisional entitlement
determination', and the reference to 'initially eligible for' is substituted with
'provisionally entitled to'.
Item 30 inserts new paragraph 117(1)(ba) to allow the Secretary to require a person
to give information, or produce a document, that is relevant to determining whether a
person is entitled to an amount of primary carer pay.
Item 31 inserts new subsection 124(2)(ba) to allow the Secretary to use a person's
tax file number to verify the amount of primary carer pay a person is or was entitled
to for the child.
Item 32 inserts new paragraphs 125(1)(c) and (d) to impose an obligation on a
person who has made an effective claim for parental leave pay to notify the
Secretary of a change in the amount of primary carer pay they are entitled to for the
child, or if they become entitled to primary carer pay.
Item 33 amends subsection 272(1) so the provision applies where a payability
determination is varied. This means, in circumstances where a payability
determination is varied as a result of new information, the Secretary can determine
that an event did not happen that would have happened if the original determination
had been different, or that an event did happen that would not have happened if the
original determination had been different.
13
Schedule 1 - Adjustment for primary carer pay, etc.
Example
Mary has a PPL period of 25 June 2017 to 25 July 2017. Due to an increase
in the national minimum wage her payability determination is varied. As a
result of the variation, her PPL period is extended by one day to 26 July 2017,
and she is entitled to receive parental leave pay for that day. Mary is notified
of the variation on 28 July. However, she returned to work on 26 July 2017 on
the basis of the information she was given in the original payability
determination. The Secretary has the discretion to determine that the Paid
Parental Leave Act is to apply as if Mary did not return to work on
26 July 2017 for the purpose of being eligible to receive the top-up payment.
Part 2 - Application
Item 34 provides that the amendments made apply to a claim for parental leave pay
where the child is born, or becomes entrusted to the care of a person
(see section 275 of the Paid Parental Leave Act) on or after 1 July 2016.
14
Schedule 2 - Employer opt-in
Summary
To ease administrative burdens on business, the Paid Parental Leave Act will be
amended to remove the requirement for employers to provide Government-funded
parental leave pay to their eligible long-term employees.
From 1 April 2016, employees will be paid directly by the Department of Human
Services, unless an employer opts in to provide parental leave pay to its employees
and an employee agrees to their employer paying them.
Background
Currently under the Paid Parental Leave Act, in the majority of cases, employers are
required to provide parental leave pay to their eligible long-term employees.
The Secretary of the Department of Human Services (as a delegate of the Secretary
of Social Services) must make an employer determination that a person's employer
is to pay the person's instalments of parental leave pay, if the Secretary is satisfied
that certain conditions are met.
However, an employer determination can be made, despite not all of the conditions
being satisfied, if an employer has made an election to 'opt-in' to pay instalments of
parental leave pay to the employee and the employee consents to the employer
paying the instalments. If an employer determination is in force for an employer and
their employee, the employer must pay instalments of parental leave pay to their
employee.
In their feedback to the Paid Parental Leave review, employer and industry groups
generally did not support the employer role, particularly in relation to small business.
These stakeholders considered the employer role places an unnecessary
administrative burden on business, and any benefits to employers in terms of
employee retention were outweighed by the administrative burden imposed.
From 1 April 2016, payments of parental leave pay will be made by the Department
of Human Services, unless an employer opts in to manage the payment of parental
leave pay to their employees, and their employee agrees to the employer paying
them. This will go some way towards easing the administrative burden on business.
The amendments will only require an employer to provide instalments of parental
leave pay to a person if an employer determination is in force for the employer and
the employee. An employer determination can only be made if the employer has
made an election to pay instalments, that election applies to the parental leave pay
claimant, and certain other conditions are met, including that the employee agrees to
their employer paying them. Parental leave pay funding amounts will then be
transferred to the employer from the Department of Human Services for payment to
the employee, consistent with current arrangements.
15
Schedule 2 - Employer opt-in
If an employer determination is made for a particular employer and employee,
but the employer no longer wishes to pay parental leave pay for that particular
employee, the employer can decline the paymaster role. If this happens,
the Department of Human Services will pay the employee.
To reflect the non-mandatory nature of this role, employers who do not respond to a
notice of an employer determination will no longer be potentially subject to a
compliance notice. Review of an employer determination is no longer required
because the employer can simply decline the paymaster role.
The amendments made by this Schedule commence on 1 April 2016.
Explanation of the changes
Part 1 - Amendments
Amendments to the Paid Parental Leave Act
Employer election to pay parental leave pay
The main amendments to give employers the right to elect to pay parental leave pay
to their employees relate to removing the obligation on the Secretary to make an
employer determination if certain conditions are met. This obligation is in
section 101. Subsection 101(1) provides that the Secretary must make an employer
determination if various criteria are met. Instead, in place of an obligation to make a
determination if instalments are likely to be paid for at least 40 consecutive PPL days
and the employee has been with the employer for at least 12 months, item 17
substitutes new paragraphs 101(1)(b) and (c), requiring that the employer has made
an election under section 109 to pay instalments and that election applies to the
person (the PPL claimant), and that the person has consented in their claim to their
employer paying instalments to the person.
As a consequence of removing reference to the length of time for which a person
has been with an employer from section 101, subsection 278(2), which guides
assessing the duration of employment, is repealed by item 52. Item 51 adjusts the
structure of section 278 as a consequence of this repeal.
If more than one employer of the person has made an election to pay parental leave
pay, the claimant may nominate the employer who would pay instalments to the
person. Item 19 amends paragraph 101(1)(f) to substitute reference to amended
paragraphs (b) to (d), which will now contain the criteria for making the
determination.
Item 20 repeals subsection 101(2), which becomes redundant as the result of
introducing into subsection 101(1) an employer election as a criterion for making an
employer determination.
16
Schedule 2 - Employer opt-in
Provision is already made for an employer to elect to pay parental leave pay to their
employee in section 109. To reflect the fact this will now be the only means of an
employer becoming obliged to pay parental leave pay to their employee, various
criteria currently guiding whether a compulsory employer determination can be made
are inserted into section 109. Item 31 inserts into subsection 109(1) the requirement
that the employer have an ABN before being able to elect to pay. Item 18 removes
this requirement from section 101 by repealing paragraph 101(1)(e).
Item 32 expands paragraph 109(2)(b) by requiring an employer's bank account
information to be provided in the election notice given by the employer, including
account number, BSB, account name and the name of the financial institution. This
information was previously required to be provided in the employer's compulsory
acceptance notice under section 104 in response to notice of the making of the
employer determination. Item 22 repeals subsection 104(2) to remove this aspect of
an acceptance notice, and repeals subsection 104(5), which becomes redundant as
a result of the expanded election notice. Item 5 makes a consequential amendment
to the definition of bank account information in section 6, to refer to
paragraph 109(2)(b).
Section 299 extends the Act to persons who are in a relationship that is similar to
that of employer and employee. Subsection 299(1) currently gives the Secretary
capacity to make employer determinations in circumstances provided by the PPL
rules. Item 53 amends this to substitute provision for a person to make an election
under section 109 to pay instalments to another person if both persons are in a
relationship that is similar to the relationship between an employer and an employee.
Items 1 to 3 consequentially amend section 4, which sets out a Guide to the Act,
to reflect the changed role of employers. Item 16 consequentially amends
section 100, which sets out a Guide to Part 3-5 - Employer determinations, to reflect
the voluntary nature of the role.
Accepting the employer paymaster role
If an employer determination is made, the employer will retain the right to accept or
refuse the obligation to pay instalments to the person. Item 21 repeals and
substitutes section 103, replacing the former obligation on an employer to accept the
obligation or seek review. New section 103 will allow an employer a period of
14 days (or such longer period allowed by the Secretary) after receiving notice under
section 102 of the making of an employer determination, to accept or not accept the
obligation. The employer may either give the Secretary an acceptance notice
complying with existing section 104, or give a non-acceptance notice, either orally or
in writing, declaring that the employer does not accept the employer's obligation to
pay instalments to the person. A definition of non-acceptance notice is inserted
into section 6 by item 7, referring to new paragraph 103(1)(b). A consequential
amendment is made to the definition of acceptance notice by item 4 to refer to new
paragraph 103(1)(a).
17
Schedule 2 - Employer opt-in
If the employer does not accept the obligation, the Secretary must revoke the
employer determination. Section 108 stipulates when the Secretary is required to
revoke the employer determination, by setting out matters of which the Secretary
must be satisfied. Item 28 inserts new item 1A into the table following
subsection 108(1), providing that, if the Secretary is satisfied that the employer has
given a non-acceptance notice for the person under paragraph 103(1)(b),
the employer determination is revoked with effect on the day of the revocation.
Item 29 amends table item 2 of section 108 to provide for revocation of the employer
determination if an employer does not respond to notice of the determination within
the period for response.
An employer's failure to accept an employer paymaster role under existing
section 103 could result in compliance activity by the Secretary. This will not result
from new section 103 as substituted by item 21. As a consequence, table items in
section 146 defining civil penalty provisions referring to section 103 are no longer
correct. Item 33 consequentially repeals table item 10 referring to section 103.
As a further consequence, a compliance notice will not be given in reliance upon
new section 103. Section 157, which deals with giving a compliance notice,
is amended by item 34 to omit reference to section 103. Similarly, section 159 deals
with giving infringement notices. An infringement notice will not be given in reliance
upon new section 103. Subsection 159 is consequentially amended by items 35
and 36 to omit reference to section 103.
Review of employer determinations
Because acceptance of this role is now voluntary, there is no need for the capacity to
seek review of a decision to make an employer determination. Section 207, which
gives the right to internal review of such decision, is repealed by item 41. Similarly,
section 223 sets out decisions which may be reviewed, currently by the SSAT, but by
the AAT after 1 July 2015 as a result of the Tribunals Amalgamation Act 2015.
Item 47 removes reference to an employer determination decision from section 223.
Item 6 repeals the definition of employer determination decision from section 6.
Section 93 provides for the effect of an employer determination coming into force
after review, which becomes redundant as a result of the repeal by item 41. Item 15
repeals section 93. Consequentially, item 9 removes redundant references to
section 93 from a note to subsection 64(1). Item 11 repeals subsection 84(3),
dealing with the payment of an instalment following review of the employer
determination. A consequential amendment is made by item 8 to the definition of
transfer day in section 6, omitting reference to subsection 84(3). Items 12 and 13
omit reference to review of an employer determination from the heading to
section 85 and paragraph 85(1)(a), dealing with payment of arrears following review.
Item 14 makes a consequential amendment to subsection 85(3) to reflect the
changed structure of section 85. Item 10 makes a consequential amendment to
section 83, to omit reference to the Secretary paying instalments because an
employer determination is being reviewed.
18
Schedule 2 - Employer opt-in
Similarly, section 105 relates to giving bank account and other information after
review. Item 23 repeals section 105. Item 27 consequentially amends section 107,
relating to when an employer determination comes into force, to repeal
subsection 107(3), relating to an employer determination which has been reviewed.
Items 24 to 26 make consequential amendments to the structure of section 107 to
reflect the effect of item 27.
Item 30 deals with giving notice of the revocation of an employer determination to
the SSAT under subsection 108(6) when an application has been made for review of
the determination, by repealing subsection 108(6).
An employer's failure to provide bank details following review could result in
compliance activity by the Secretary. This will not result from section 105 as a result
of its repeal by item 23. As a consequence, table items in section 146 defining civil
penalty provisions referring to section 105 are no longer correct. Item 33
consequentially repeals table item 11, which refers to section 105.
As a further consequence, a compliance notice will not be given in reliance upon
section 105. Section 157, which deals with giving a compliance notice, is amended
by item 34 to omit reference to section 105. Similarly, section 159 deals with giving
infringement notices. An infringement notice will no longer be given in reliance upon
section 105. Subsection 159(1) is consequentially amended and
paragraphs 159(10(b) and (c) repealed by items 35 and 36 to omit reference to
section 105.
References to internal review of a decision to make an employer determination are
removed from notes to section 203 by items 38 and 39. Items 40, 42, 43 and 44
remove reference to an application for review under section 207 of an employer
determination decision from sections 205, 209, 210, and 212 as a consequence of
item 41. Item 45 is a consequential amendment to the structure of section 212.
Similarly, references of the right to SSAT review of a decision to make an employer
determination are removed by items 47, 48 and 49 from section 224 relating to
applications for review, and by item 50 from section 225, relating to review of
employer decisions.
Item 37 amends section 202, which sets out a Guide to Part 5-1 - Internal review of
decisions, to reflect the fact that the only remaining employer review decision is an
employer funding amount decision. Similarly, item 46 amends section 213, which
sets out a Guide to Part 5-2 - Review by the Social Security Appeals Tribunal
(which, from 1 July 2015, becomes the Administrative Appeals Tribunal as a result of
the Tribunals Amalgamation Act 2015) to remove reference to employer
determination decisions.
Part 2 - Application and transitional provisions
Item 54 provides that the amendments made by Part 1 of this Schedule apply in
relation to an employer determination that is made on or after the commencement of
this Schedule in relation to a claim for parental leave pay that is made before, on or
after that commencement.
19
Schedule 2 - Employer opt-in
Item 55 is a transitional provision relating to elections made before commencement.
This item provides that an election under section 109 of the Paid Parental Leave Act
that is in force immediately before the commencement of this Schedule ceases to be
in force at that commencement.
Item 56 is a transitional provision relating to revoking employer determinations made
before commencement.
Subitem 56(1) provides that this item applies if:
an employer determination was made before the commencement of this
Schedule for a person and the person's employer;
the determination had not been revoked before that commencement; and
the person's PPL period had not started before that commencement.
Subitem 56(2) provides that the Secretary must revoke any determination captured
under subitem 56(1).
Subitem 56(3) provides that the Paid Parental Leave Act applies as if a revocation
under subitem 56(2) were made under subsection 108(1) of that Act.
20
REGULATION IMPACT STATEMENT
FAIRER PAID PARENTAL LEAVE BILL 2015
Policy objective
Removal of the mandatory employer role under the Paid Parental Leave (PPL)
scheme for Parental Leave Pay (PLP) could assist in meeting the following
objectives:
helping to reduce administrative and compliance costs on employers
particularly those who feel the role is not beneficial for their organisation; and
continuing to provide an option for employers to take on this role voluntarily
where the employer has administrative capacity and has found the role to be
beneficial for their organisation.
Implementation options
Two options have been considered:
Implementing the measure to remove the mandatory employer role from
1 April 2016 in the lead-up to other changes to the PPL scheme to be
introduced by this Bill, with an opt in option for employers who want to
continue to be a PPL paymaster.
Implementing the measure to remove the mandatory employer role from
1 April 2016 in the lead-up to other changes to the PPL scheme to be
introduced by this Bill, without an opt in option for employers.
Assessment of impacts
Implementing the measure from 1 April 2016 in the lead-up to other changes to
the PPL scheme to be introduced by this Bill, with an opt in option
This measure would be implemented from 1 April 2016, in advance of the other
changes made by this Bill.
Implementation of the measure from 1 April 2016 would allow the changed PPL
paymaster arrangements to be bedded down prior to the commencement of the
fairer Paid Parental Leave provisions on 1 July 2016. This would ensure a smooth
administrative transition to the fairer Paid Parental Leave provisions, which will
involve different employer interactions and transition to the 'opt-in' model.
Allowing the option for an employer to opt in to be the PPL paymaster is the
preferred approach given that some employers have indicated there are benefits for
them in undertaking the paymaster role. The option for employers to opt in to
provide PLP payments to their employees also provides choice for employers who
wish to continue with the PPL paymaster role.
1
Regulation impact statement
Implementing the measure from 1 April 2016 in the lead-up to other changes to
the PPL scheme to be introduced by this Bill, without an opt in option
This measure would be implemented from 1 April 2016, in advance of the other
changes made by this Bill.
Implementation of the measure from 1 April 2016 would allow the changed PPL
paymaster arrangements to be bedded down before the commencement of the fairer
Paid Parental Leave provisions on 1 July 2016. This would ensure a smooth
administrative transition to completely remove PPL employer paymaster
arrangements.
Under this option, employers would no longer be able to make any PLP payments to
employees, with all PLP payments to be made by the Department of Human
Services (DHS). The choice for employers to opt in to provide PLP payments to their
employees would not be available.
Impact group identification
Impact on employers
Both options would result in a shift of administration costs from the employer to the
Government.
Findings from Phase 3 of the PPL evaluation indicate that the majority of employers
found their role in the PPL scheme to be relatively easy and inexpensive. The
majority of employers (81 per cent) agreed or strongly agreed that the registration
process and the organisation of PLP payments for the PPL scheme were easy.
Similarly, most employers felt that there were minimal costs to their organisation in
implementing the PPL scheme. It should be noted that a significant minority (37 per
cent) agreed 'that organising payments for PPL has been time consuming'.
Phase 2 of the PPL evaluation investigated in detail employer views on administering
the PPL scheme to their employees, including perceived costs. Phase 2 found that
the additional costs for employers were mainly due to the extra workload rather than
purchasing a new payroll system or hiring additional staff to administer the PPL
scheme.
Among the 29 per cent of employers who felt additional costs were involved, almost
all (94 per cent) said these costs involved taking on extra workload themselves,
while half (51 per cent) said the workload of current staff had been increased to
implement the PPL scheme.
In terms of staff hours needed to implement the PPL scheme, the Phase 2 PPL
evaluation found that the median hours varied from 4 hours for medium size
business, to 5 hours for small business and 7 hours for large business:
4 per cent of organisations reported that no hours were needed
25 per cent of organisations reported 1-2 hours were needed
24 per cent of organisations reported 3-5 hours were needed
2
Regulation impact statement
14 per cent of organisations reported between 6-15 staff hours were needed
22 per cent of organisations reported more than 15 hours were needed
10 per cent of organisations reported that they did not know how long the
implementation of the PPL scheme took.
The median cost identified by all organisations to implement the PPL scheme was
$350:
nearly half (45 per cent) of employers estimated the cost to be less than $250
21 per cent of employers estimated the cost to be between $250-$1,000
20 per cent of employers estimated the cost to exceed $1,000
14 per cent of employers did not know the level of costs involved.
It is possible that smaller business would have a larger proportional impact for
administering the PPL scheme, as they do not have the same economies of scale
when applying the process for a single employee. For around 91 per cent of small
businesses who provided PLP payments to an employee in the last year, this
employee was the only PLP recipient in that business in that year. Therefore, it is
likely that for many small businesses, costs incurred to administer PLP payments are
mostly one-off costs.
The PPL evaluation also found that 41 per cent of employers felt organising PLP
payments was time consuming. Submissions to the PPL Review indicated that, even
though the costs may not have been significant, the process of administering PLP
payments was viewed by some employers as time-consuming.
The PPL evaluation also showed that some employers found the administration of
PLP payments to be problematic. The evaluation interviews found that some
employers experienced problems, especially small, private organisations. A very
small number of employers also reported high monetary costs involved in
administering PLP payments.
While there are likely to be benefits to employers for administering PLP payments,
including increased workforce attachment and overall participation, these are difficult
to quantify. Many employers are of the view that costs to administer the PPL
scheme outweigh any benefits that a mandatory employer paymaster role may
deliver. The PPL evaluation results showed that most employers felt it was too soon
to tell if there would be gains for administering the PPL scheme, but most agreed
that women on parental leave had shown good workplace attachment.
Impact on employees
The measure will have no impact on the regulatory or compliance costs for
employees, as they would still be required to undertake the same claim process as
under current arrangements.
3
Regulation impact statement
However, there may be an impact on the after tax-income of employees with salary
sacrifice arrangements in place. Where their employer is administering PLP
payments, salary sacrificing arrangements are able to continue and so the
employee's tax liability would continue to be calculated on a lower salary. However,
as DHS does not offer salary sacrifice deduction functionality, an employee's tax
liability could increase if the mandatory employer role is removed and their employer
does not opt back in to be the PPL paymaster. This may be a particular issue for
employees in the not-for-profit sector who are more likely to have salary-sacrificing
arrangements in place. While this impact is not a compliance cost, it may have an
impact on the after-tax income a person may receive, dependent on an employee's
income and the level of salary sacrificed under the arrangement.
Impact on Government
As noted above, the measure would result in a shift of administration costs from
employers to Government. Currently DHS administer payments for around 27 per
cent of employees (non-mandatory employees or recipients who do not have an
employer). However, under the measure, they would be responsible for making the
majority of payments to employees. The additional cost to Government to implement
the measure is $7 million over five years.
Analysis of costs/benefits
Average annual change in compliance costs (from BAU)
Sector/ Business Not-for-profit Individuals Total by cost category
Cost categories
Administrative costs $44 million $4 million $ $48 million (savings)
(savings) (savings)
Substantive $ $ $ $
compliance costs
Delay costs $ $ $ $
Total by sector $44 million $4 million $ $48 million (savings)
(savings) (savings)
Proposal is deregulatory Yes
Consultation
The overwhelming and sustained opposition from employer groups to the mandatory
employer role was first raised during the public consultations conducted prior the
implementation of the PPL scheme in 2009. After the PPL scheme had commenced,
the implementation working group, when specifically asked to comment on the
mandatory employer role, supported its removal.
A public consultation process was also undertaken as part of the PPL Review in
2013, including:
a public submission phase, including a general call for submissions and direct
emails to employee, employer and community peak bodies;
face-to-face consultation with key stakeholders; and
4
Regulation impact statement
the formation of a PPL Review Steering Committee made up of
representatives from employer, employee, women's and community groups.
In submissions to the PPL review, a number of employer groups, such as the
Australian Chamber of Commerce and Industry, called for the removal of the
employer role from the scheme.
Feedback on the employer role has also been received through direct contact made
by members of the public (for example, via ministerial correspondence), generally
small business employers who have been recently notified of their mandatory
obligations under the PPL scheme.
This measure directly responds to the feedback received by the Government over a
significant period of time through the PPL evaluation, PPL review, consultations and
direct public contact. As outlined earlier, employer groups have shown an
overwhelming and sustained opposition to the mandatory employer role, and have
put forward their own proposals to remove its mandatory nature. Employer groups
did not raise any opposition to a continuing role should an employer voluntarily
choose to do so.
In submissions to the PPL review, some representative bodies, such as the
Australian Council of Trade Unions, expressed support for the PPL paymaster role.
The view of these organisations is that having an employer administer PLP
payments reaffirms the nature of the payment as a workforce entitlement, rather than
a welfare entitlement.
Conclusion and recommended option
Given feedback from employers and the Government's commitment to move to an
'opt-in' role, the preferred option is to move to an opt-in employer paymaster role
under the PPL scheme from 1 April 2016.
Under the measure to remove the mandatory employer role from 1 April 2016,
all employers registered for the PPL scheme will be 'opted out' on that date and
payments of PLP will be made by DHS. However, if an employer chooses to 'opt in'
to provide PLP payments and the employee consents to being paid by their
employer, an employer determination will be made and payment could be provided
by the employer. Where an employer is already providing PLP to an employee on
1 April 2016, that arrangement would not be affected.
Ongoing, where an employee consents to being paid by their employer,
the employer will be sent a notice with the option to accept or decline an employer
determination. If the employer accepts the notice of the employer determination and
their obligations to pay instalments of PLP to the person, funds will be transferred to
the employer in line with current arrangements. If the employer declines or does not
respond to the notice, DHS will provide PLP directly to the recipient. To reflect the
non-mandatory nature of their role, employers will no longer be subject to a
compliance notice for not responding to a notice of an employer determination.
5
Regulation impact statement
The take up of the opt-in arrangement will be monitored as an indicator for the
effectiveness of these arrangements following its commencement. Key performance
indicators could include the number of:
employees who consent to their employer providing PLP;
employers who accept or decline the employer determination; and
employers who opt-in after 1 April 2016.
6
STATEMENTS OF COMPATIBILITY WITH HUMAN RIGHTS
Prepared in accordance with Part 3 of the
Human Rights (Parliamentary Scrutiny) Act 2011
FAIRER PAID PARENTAL LEAVE BILL 2015
Schedule 1 - Adjustment for primary carer pay, etc.
This Schedule is compatible with the human rights and freedoms recognised or
declared in the international instruments listed in section 3 of the
Human Rights (Parliamentary Scrutiny) Act 2011.
Overview of the Schedule
The Paid Parental Leave Act 2010 provides for the Paid Parental Leave scheme,
a Government-funded payment that complements the entitlement to unpaid leave
under the National Employment Standards in the Fair Work Act 2009. The Paid
Parental Leave scheme currently consists of Parental Leave Pay, an 18-week
payment at the rate of the national minimum wage for eligible primary carers (mostly
birth mothers) of newborn and recently adopted children, and Dad and Partner Pay,
a two-week payment at the rate of the national minimum wage for eligible dads or
partners caring for newborn or recently adopted children.
The Fairer Paid Parental Leave Bill 2015 amends the Paid Parental Leave Act 2010
to bring into effect the Budget measure for a fairer Paid Parental Leave scheme.
Currently, eligible primary carers can receive employer-provided paid maternity leave
and Government-funded Parental Leave Pay. Under the amendment to the Paid
Parental Leave scheme, primary carers will no longer receive both their
employer-provided paid maternity leave and the full 18 weeks of Government-funded
Parental Leave Pay.
Eligible mothers without access to employer-provided paid maternity leave will
continue to be eligible for the full 18 weeks of Parental Leave Pay at the rate of the
national minimum wage, and mothers who receive less than the total value of
Government-funded Parental Leave Pay from their employer will be entitled to the
residual amount from the Government.
This will ensure that the Paid Parental Leave scheme continues to support mothers
who would not otherwise have access to generous paid maternity leave provisions,
while enabling Government resources to be refocused on other complementary
measures to support working parents, including increased childcare support.
Eligible fathers and partners will continue to be eligible to receive two weeks of Dad
and Partner Pay and any employer-provided paid paternity leave.
1
Statements of compatibility with human rights
The Paid Parental Leave scheme was implemented with the objective of providing
financial support to primary carers (mainly birth mothers) of newborn and adopted
children, in order to:
allow those carers to take time off work to care for the child after the child's
birth or adoption, and
enhance the health and development of birth mothers and children,
encourage women to continue to participate in the workforce, and
promote equality between men and women, and the balance between work
and family life.
Human rights implications
The amendment to the Paid Parental Leave scheme is likely to engage the following
human rights:
The right to social security
Article 9 of the International Covenant on Economic, Social and Cultural Rights
(ICESCR) recognises 'the right of everyone to social security, including social
insurance'. That right requires a country to, within its maximum available resources,
provide a minimum essential level of benefits to all individuals and families that will
enable them to acquire at least essential health care, basic shelter and housing,
water and sanitation, foodstuffs, and the most basic forms of education. Article 26 of
the Convention on the Rights of the Child (CRC) ensures that right to 'every child'
and requires that the benefits should, where appropriate, be granted, taking into
account the resources and the circumstances of the child and persons having
responsibility for the maintenance of the child.
The amendment to the Paid Parental Leave scheme will continue to ensure that all
eligible working mothers receive appropriate financial assistance - at least 18 weeks
of payment at the rate of the national minimum wage from their employer,
the Government or a combination of both - to take time off work after the birth or
adoption of their child. Eligible mothers who do not have access to generous
employer-provided paid maternity leave provisions will continue to be financially
supported under the amendment to the Paid Parental Leave scheme, fulfilling
Australia's obligations to the right to social security.
The Paid Parental Leave scheme is just one of a significant package of financial
measures provided by the Australian Government to families, including low and
middle-income families, to assist with the costs of raising children. Other forms of
financial assistance available to eligible parents include Family Tax Benefit,
Parenting Payment, and childcare assistance.
2
Statements of compatibility with human rights
Rights of parents and children
Article 18 of the CRC states that 'States Parties shall use their best efforts to ensure
recognition of the principle that both parents have common responsibilities for the
upbringing and development of the child'. In guaranteeing and promoting those
rights, 'States Parties shall render appropriate assistance to the parents and legal
guardians in the performance of their child-rearing responsibilities'.
Under the amendment, eligible working dads and partners will continue to receive
both Government-funded Dad and Partner Pay as well as any employer-provided
paid paternity leave. The ability for fathers and partners to access Dad and Partner
Pay and employer-provided paid paternity leave is to encourage them to take
additional time off work to bond with their child. Dad and Partner Pay can only be
paid while on unpaid leave, which encourages dads and partners to extend their total
period of leave rather than simply supplementing their income during a period of paid
leave. Moreover, Parental Leave Pay will continue to be transferrable to a
secondary claimant (generally the primary claimant's partner) where that person
takes on primary care for the child. This promotes the understanding that both
parents have an important role to play in raising a child and supporting working
parents to fulfil those roles, in line with Australia's obligations under the CRC. It also
helps to promote cultural acceptance of those roles in the workplace.
Right to maternity leave
The right to maternity leave is contained within Article 11(2)(b) of the Convention on
the Elimination of All Forms of Discrimination Against Women (CEDAW) and
Article 10(2) of the ICESCR. Article 11(2)(b) of the CEDAW requires 'States Parties
to introduce maternity leave with pay or with comparable social benefits without loss
of former employment, seniority or social allowances'. Article 10(2) of the ICESCR
states 'special protection should be accorded to mothers during a reasonable period
before and after childbirth. During such a period working mothers should be
accorded paid leave or leave with adequate social security benefits'.
The amendment to the Paid Parental Leave scheme will maintain Australia's
commitment to Article 10 (2) of ICESCR and Article 11(2)(b) to CEDAW by
preserving a minimum safety net for all eligible working mothers of paid maternity
leave equivalent to 18 weeks of payment at the rate of the national minimum wage.
Eligible mothers may use their entitlements to other types of leave, such as annual
leave or long service leave, before, after or at the same time as Parental Leave Pay.
The Paid Parental Leave scheme will continue to complement the existing
entitlement to unpaid leave under the National Employment Standards as set out in
the Fair Work Act 2009. The Fair Work Act 2009 provides eligible long-term
employees, who have worked continuously for their employer for 12 months or more,
with an entitlement to at least 12 months of unpaid parental leave and the right to
request a further12 months from their employer.
3
Statements of compatibility with human rights
Right to work and rights at work
Article 7 of the ICESCR sets out the right to just and favourable conditions of work,
including:
remuneration that provides all workers, as a minimum, with fair wages and
equal remuneration for work of equal value without distinction of any kind;
safe and healthy working conditions;
equal opportunity to be promoted in employment to an appropriate higher
level, subject to no considerations other than those of seniority and
competence; and
rest, leisure and reasonable limitation of working hours and periodic holidays
with pay, as well as remuneration for public holidays.
The UN Committee on Economic, Social and Cultural Rights has commented that
Article 7 of the ICESCR requires States parties to take steps to 'reduce the
constraints faced by men and women in reconciling professional and family
responsibilities by promoting adequate policies for childcare and care of dependent
family members'.
The amendment to the Paid Parental Leave scheme is compatible with the right of
parents to take time away from the workplace following the birth or adoption of their
child. The amendment will guarantee eligible working mothers receive a minimum
entitlement to paid maternity leave, equivalent to 18 weeks of payment at the rate of
the national minimum wage, to support them to take time off work after the birth or
adoption of their child. Eligible fathers or partners will continue to be eligible to
receive two weeks of Dad and Partner Pay at the rate of the national minimum wage
in addition to any employer-provided paid paternity leave.
Importantly, the Paid Parental Leave scheme will continue to complement existing
entitlements to at least 12 months unpaid parental leave under the National
Employment Standards as set out in the Fair Work Act 2009. The Fair Work
Act 2009 protects employees from loss of seniority or employment during that
12 month period.
Right to health
Under Article 24(2)(d) of the CRC, there is a requirement that 'States Parties ensure
appropriate pre-natal and post-natal health care for mothers'. Article 10(2) of the
ICESCR states that 'working mothers should be accorded paid leave or leave with
adequate social security benefits for a reasonable period before and after childbirth'.
The amendment to the Paid Parental Leave scheme will continue to ensure that all
eligible working mothers receive appropriate financial assistance, equivalent to
18 weeks of payment at the rate of the national minimum wage, to take time off work
after the birth or adoption of their child for maternal recovery and to bond with their
child. Mothers may also be eligible for other Australia Government financial
assistance, including Family Tax Benefit, Parenting Payment, and childcare
assistance.
4
Statements of compatibility with human rights
Right to privacy and reputation
Article 17 of the ICCPR provides that 'no one shall be subjected to arbitrary or
unlawful interference with their privacy, family, home, or correspondence, nor to
unlawful attacks on his honour and reputation'. Schedule 1 to the Fairer Paid
Parental Leave Bill 2015 contains provisions requiring personal information, but only
such information as is necessary to determine the correct benefit to an individual and
to ensure the timely and accurate delivery of the payments.
Rights of equality and non-discrimination
Article 3 of the ICESCR seeks to ensure the right of both men and women to the
enjoyment of all economic, social, and cultural rights set forth within the convention.
The amendment to the Paid Parental Leave scheme will ensure all eligible
working mothers are afforded the same right to paid maternity leave equivalent to
at least 18 weeks of payment at the rate of the national minimum wage. Mothers
who have access to employer-provided paid maternity leave provisions more
generous than Government-funded Parental Leave Pay will not be eligible for the
Government-funded payment. On the other hand, eligible working mothers who
may not be in a strong position to bargain for access to paid maternity leave,
or who do not currently have a collective or individual agreement with their
employer to provide paid maternity leave, will continue to be able to receive the
full 18-week entitlement to Government-funded Parental Leave Pay. Eligible
working mothers whose employer-provided paid maternity leave is less than the
full 18 weeks of Government-funded Parental Leave Pay will receive the residual
amount in Government-funded Parental Leave Pay. The amendment particularly
promotes the right to equality for the last two groups of working parents.
Conclusion
This Schedule is compatible with human rights and, to the extent that it may limit
certain human rights, those limitations are reasonable, necessary and proportionate.
It does not disturb the existing safety net, focuses support on those working women
who need it most, while assisting the Government to increase investment from within
available resources in measures such as better childcare support to more effectively
advance the relevant rights.
5
Statements of compatibility with human rights
Schedule 2 - Employer opt-in
This Schedule is compatible with the human rights and freedoms recognised or
declared in the international instruments listed in section 3 of the
Human Rights (Parliamentary Scrutiny) Act 2011.
Overview of the Schedule
In addition to the measure for a fairer Paid Parental Leave scheme, this Bill makes
amendments to the employer role in the Paid Parental Leave Act 2010.
The amendments will remove the requirement for employers to provide
Government-funded parental leave pay to their eligible long-term employees. From
1 April 2016, employees will be paid directly by the Department of Human Services,
unless an employer opts in to provide parental leave pay to its employees and an
employee agrees for their employer to pay them.
Human rights implications
The Paid Parental Leave scheme engages the right to social security in Article 9 of
the International Covenant on Economic, Social and Cultural Rights, and the right to
work in Article 10(2) of the International Covenant on Civil and Political Rights.
However, the amendments in this Schedule are limited to changes to the
administrative arrangements for delivering parental leave pay to customers. They do
not affect a customer's eligibility to the payment, a customer's rate of pay, or a
customer's entitlement to paid or unpaid leave from employment before and after the
birth of a child. As such, the amendments do not engage any human rights.
Conclusion
This Schedule is compatible with human rights as it does not raise any human rights
issues.
[Circulated by the authority of the Minister for Social Services,
the Hon Scott Morrison MP]
6