What every business ought to know about paid parental leave

Do you know what to do if an employee claims Paid Parental Leave? Mick Cosgrove has advice about your obligations, plus five tips that explain everything you need when a staff member goes on parental leave.

Paid Parental Leave is an idea that a good proportion of the Australian public has been waiting to have implemented for quite some time.

On January 1st 2011 the dream became a reality. However, businesses, and indeed employees, need to know some key facts about this scheme. It’s not as simple as some might think.

First off the incorrect use of the word “leave” has left some employees wondering if it’s worth it, and left employers wondering what just happened. The Paid Parental Leave scheme is purely a payment. Nothing more.

The process of accessing the scheme is fairly easy. The employee makes a phone call, answers some fairly straight forward questions, and then gets a simple “yes” or “no” answer. If the answer is no then the employer can rest easy, for now.

However if the answer is yes, then be prepared for what could turn out to be a very difficult situation to manage. The Government subsidized payment allows the primary care giver to be with the newborn, or newly adopted child, for a period of 18 weeks, paid at the current minimum wage.

In order to receive the payment the caregiver must be on some form of leave.

Therefore the employee must of course have sufficient leave available. This is where Australian employers are being dealt yet another blow.

Here is a scenario for you. You have an employee who started working for you yesterday. She has previously worked as a part-time office manager for six different local firms, but you have hired her because your business is growing. She performed well at the interview. She is immersed in the positive culture in the workplace, and made friends quickly.

She comes to you the next day and tells you that she is pregnant, or has decided to adopt a child, and wishes to go on Paid Parental Leave.

Is she eligible for Paid Parental Leave?

The answer is yes. Confused yet? The employee is eligible if they meet the Paid Parental Leave work test taking into account all recent employers. Once they have passed this test the debacle is handed over to the employer to manage. So now you potentially have any unhappy employee to manage, with the likelihood then of having to backfill a key position in your business, and face the potential of destroying the positive workplace culture you have spent years building.

So how can you ensure that this doesn’t happen to your business? Ensure you have a robust Parental Leave Policy. It is only through a strong workplace policy, and consistent application of it, that any business will be able to effectively manage the likely conflicts that will occur when you tell your employees, yes they might be eligible for the payments from the Government, but they have no accrued leave they can use.

The inconsistencies were brought to the attention of the Federal Government in 2010, but at that time the Minister’s response was “employers should deal with employees on a case-by-case basis”. Therefore it is absolutely essential that you have a policy in place as a matter of priority.

In saying this however, some employers may wish to manage the situation in order to maintain the positive workplace culture. If this is the case then I highly recommend the following.

  1. Do a comprehensive assessment of the employee’s day to day tasks and accountabilities. This assessment will give the basis by which you can work on a strategy to address the need for continued productivity, whilst managing and maintaining a positive workplace culture.

  2. Seek written agreement with the employee for the period of leave to be taken.
    Remembering that if the employee intends to also access Unpaid Parental leave, they must have a minimum of 12mths service with you, provide 10 weeks notice indicating likely start and end dates, and these must be confirmed 4 weeks prior to the commencement of the unpaid leave.
    Note: The employee can apply for a further 12months extension of the unpaid leave but it must be in writing 4 weeks before the first 12mth period ends, the employer must respond in writing, but can refuse the extension on “reasonable business grounds”.

  3. Explore fixed term labour hire options. It may be a viable option if the period of leave is to be for 3mths or longer.

  4. If labour hire is not an option, you will need to assess the viability of spreading the tasks across your current staff. This can be tricky, and in some instances, conflict can arise so be mindful.

  5. Ensure you are aware of the return to work requirements following Parental Leave. Fair Work Australia will not look favorably on an employer who terminates staff during this time because it just “got too hard” to manage without them.

Employers must remember to approach this issue with caution. The prospect of becoming a parent can be a very emotional and overwhelming time. The employee will need understanding and compassion. However, as an employer you have a business to run, and must do so with minimal disruption to the productivity and culture within the business.

How’s your walk on the tightrope going? Always seek professional Human Resources and Industrial Relations advice and support, before you over balance.

Michael Cosgrove is the Director of Rivercity Consulting a company that provides Human Resources and Industrial Relations services.

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