Critical updates to Parental Leave and Policy Compliance

Starting 1 July 2025, Australia’s parental leave and superannuation laws have been updated. These changes affect how employers manage leave entitlements, payroll, and employee support. The updates aim to enhance flexibility and financial security for working families. 

If your policies haven’t been revised yet, prompt action is crucial. Employers who fail to update their policies and practices risk disputes with Fair Work, reputational damage, and difficulty in retaining staff. Conversely, organisations that act now to align with the new standards show leadership, responsibility, and a genuine commitment to employee wellbeing. 

This article highlights the key legislative changes and provides practical tools, templates, and steps to help you meet your obligations with confidence and effectiveness. 

Changes to the Australian Government Paid Parental Leave Scheme 

Effective from 1 July 2025, the Australian Government will increase the Paid Parental Leave (PPL) entitlement to 120 days (24 weeks) for families with children born or adopted on or after this date. This payment will be aligned with the National Minimum Wage. 

For children born or adopted between 1 July 2024 and 30 June 2025, families can access up to 22 weeks of shared parental leave, with a maximum of 105 days available to one parent. Importantly, a 12% superannuation contribution will be paid on top of the Parental Leave Pay. 

Superannuation Contributions on Government-Funded Parental Leave Pay 

From 1 July 2025, the government will begin paying superannuation contributions on PPL, managed by the Australian Taxation Office (ATO). 

Eligible parents will receive a 12% contribution, based on the Superannuation Guarantee, paid into their nominated super fund. These contributions, including any applicable interest, will be paid as a lump sum at the end of each financial year in which the PPL was received.  

The ATO will commence payments from July 2026. 

Note: Parents must apply for Government Parental Leave Pay through Services Australia, which will assess eligibility for both the payment and the superannuation contribution. 

Unpaid Parental Leave under the Fair Work Act 

Under the Fair Work Act, employees who have worked with their employer for at least 12 months are entitled to unpaid parental leave when they or their partner gives birth or adopts a child. This applies to both full-time and casual employees who have been employed on a regular and ongoing basis. 

Key provisions include:

• Duration: Up to 12 months, with the option to request an extension for an additional 12 months (total of 24 months), subject to employer agreement. 

• Flexibility: Leave can be taken as a single continuous period, flexibly, or a combination of both. 

• Notice Requirements: Employees must provide at least 4 weeks’ written notice to extend their leave. 

• Return-to-Work Guarantee: Employees are entitled to return to their pre-leave position or an equivalent role if the original position no longer exists. 

Compliance Actions for Employers

• Employers must adhere to specific rules regarding notice, start dates, evidence requirements, and responses to requests for extensions. 

• Audit employment contracts and leave policies for alignment. 

• Implement a leave calendar to manage flexible leave requests. 

• Create return-to-work plans to support reintegration. 

Developing a Parental Leave Policy 

Creating a parental leave policy demonstrates your organisation’s commitment to supporting employees and can enhance your ability to attract and retain talent. 

What Your Policy Must Include 

• Entitlements: Unpaid leave, government-funded PPL, and employer-funded benefits 

• Notice & Evidence: Clear expectations for documentation and timelines 

• Transition Support: Plans for leaving and returning to work 

• Keeping in Touch: Communication during leave 

• Flexibility: Options for part-time or phased return 

A well-crafted policy should 

• Acknowledge the importance of parental and family responsibilities. 

• Align with other workplace policies.

• Promote fairness and consistency. 

Summary of Key Changes 

• Extended Paid Leave: Increased to 120 days (24 weeks) 

• Shared Leave: Designed to be shared between parents, with reserved portions. 

• Superannuation: 12% contribution paid to super funds, starting July 2026 

• Flexible Use: Leave can be taken in blocks, single days, or a combination. 

• Usage Period: Leave must be used within two years of birth or adoption. 

• Eligibility: Subject to individual and family income tests 

• Application: Through Services Australia  

• Record Keeping: Employers must maintain standard payroll records, including pay slips for PPL.