Paid Parental Leave Scheme

Guide to the Paid Parental Leave Scheme

Contents

• What is the paid parent leave scheme?
  • How much is the parental leave pay?
  • Is my type of work covered under the scheme?
  • What if I go back to work before the 18 weeks of leave are up?
  • Who pays the paid parental leave payments?
  • Does the baby bonus still exist and can I claim that too?
  • When can I lodge my application for the paid parental leave scheme?
• How do I check my eligibility for the paid parental leave scheme?
  • Am I eligible as the primary carer?
  • What is the paid parental leave work test?
  • Am I eligible if I keep working?
  • Am I eligible if I’m self employed and have to keep working?
  • Am I still eligible for leave entitlements from my employer?
• How do I claim parental leave payments and how are they paid?
  • When can parental leave pay be claimed?
  • How do I complete a claim for paid parental leave?
  • When are the payments made?
  • How are the payments made?
• How can the paid parental leave scheme help in my situation?
  • What if I want to stay at home longer than 18 weeks?
  • Can the primary carer change?
  • Can I claim as a stay at home mum?
• How are other entitlements affected?
  • How are employer parental leave entitlements affected?
  • How is the Baby Bonus affected with the introduction of the Paid Parental Leave Scheme?

There is no doubt that becoming a parent can be a trying, and tiring time, but it is also one of the most rewarding things you will ever do – if only you are given the chance to enjoy it. With Australia’s first national, government funded paid parental leave scheme coming into affect for babies born or adopted on or after 1 January 2011, Australian mothers and fathers are being given the freedom to enjoy their bundles of joy, without worrying about being without an income.

Whether you have been planning a family for some time or have been blessed with a surprise, your savings will only get you so far. There are significan’t initial costs to bringing home a new baby, as well as a myriad of ongoing expenses from diapers to doctors and maintaining an income to preserve as much of your savings as possible will be a welcome assistance. Therefore, whether you are planning a family or awaiting a due date, use the Savings Account Finder™ comprehensive guide to the paid parental leave scheme, to answer all of your questions, and make sure you don’t miss any precious moments or entitled payments.

What is the paid parent leave scheme?

It is important that you know about the details and eligibility requirements of the paid parental leave scheme if you are planning or already expecting a child, because the decisions you make about your job and other leave or entitlements can affect your entitlements under the scheme. The scheme is designed to help Australian parents manage their responsibilities to their career and their family, and was passed by Parliament to come into effect from 1 January 2011.

How much is the parental leave pay?

If you are an eligible working parent, you will receive taxable parental leave pay at the national minimum wage, which is currently $570 per week. You can receive the payments for up to 18 weeks.

Who is eligible to apply for paid parental leave?

To find out whether this scheme relates to you, consider whether you fit into the following eligibility criteria:

• You are the mother or initial primary carer of a newborn or recently adopted child.
• You have met the criteria of the paid parental leave work test before the birth or adoption of your child.
• You have an individual annual income of up to $150,000 in the financial year prior to the birth or adoption of your child.
• You are an Australian resident.

Is my type of work covered under the scheme?

With many work entitlements such as holidays, sick leave or long service leave you are often required to have put in a number of hours and a number of years for your current employer to be eligible. However, the paid parental scheme is run by the Australian Government, and as such is open to full time workers and:

• Seasonal workers.
• Casual workers.
• Contract workers.
• The self-employed.
• Part time workers.
• Workers who have had multiple employers.
• Workers in family businesses.
• Workers on farms which are not yet generating income.

While your employer may not consider you entitled to a paid maternity leave scheme in your workplace, you can still be eligible for the government funded scheme.

What if I go back to work before the 18 weeks of leave are up?

The paid parental leave scheme is not authorising your employer to give you leave from your job, but is instead providing an income for the time you are away from work. To receive the payments, you must be on leave, or not working, from the birth or adoption of your child, until the end of the 18 weeks. If you decide to return to work before the end of the 18 week period, you cannot go on receiving the payments, and the paid parental leave must be transferred to another eligible primary caregiver.

It is up to you how you combine your paid parental leave with the entitlements from your employer as your current work contract may entitle you to unpaid parental leave. Or you may choose to use your company’s paid maternity leave, your annual leave or your long service leave in conjunction with the government’s paid parental leave, without affecting your payments.

Who pays the paid parental leave payments?

If you are a long term employee, your parental leave payments may be made by your employer. Alternatively the payments may be made by the Family Assistance Office.

Does the baby bonus still exist and can I claim that too?

Yes, the baby bonus is still in place in addition to the paid parental leave scheme but you will only be able to receive one or the other. For example, if you are not eligible for paid parental leave, you may still be eligible for the baby bonus, and other family assistance payments. With different eligibility requirements and different payment methods, the government will provide online calculators from October 2010 to help you decide which option is best for you. The online estimator will ask you questions about your work and financial circumstances to help you compare which is the most viable option. For now, read more about the baby bonus and the paid parental leave scheme below.

When can I lodge my application for the paid parental leave scheme?

You can lodge your claim up to three months before your due date or the expected date of your adoption, and the first claims can be lodged from 1 October 2010, for children born or adopted on or after 1 January 2011.

How do I check my eligibility for the paid parental leave scheme?

The paid parental leave scheme is just one family assistance benefit available to Australians expecting or adopting children so to make sure you are eligible, and the payments of the scheme are right for you, you need to find out more about the eligibility criteria:

• You must be an Australian resident.
• You must be the mother of the child or the initial primary carer of an adopted child.
• You must have met the criteria of the paid parental leave work test.
• You must have received an individual taxable income of $150,000 or less in the financial year prior to the birth or adoption.

Am I eligible as the primary carer?

If you are adopting a child, the birth mother or the initial primary carer must usually apply for the parental leave payments. You can also transfer all or part of your payments to another primary carer such as the father. Only one carer can receive parental leave payments at one time, for the same child. At the same time, if you are the birth mother, you can receive parental leave payments for up to 18 weeks, while the adoptive primary carer can also receive payments, for the same child. This may also apply to surrogacy arrangements.

• The birth mother.
• The adoptive parent.
• The partner of the birth mother or adoptive parent.
• The child’s other legal parent, or their partner.

What is the paid parental leave work test?

To be eligible for the paid parental leave scheme, you need to pass the work test, to show that you have been, and would continue to be, receiving an income, but you are taking time off to have and look after your child.

• You must have been in continuous paid work for at least 10 of the 13 months prior to the birth or adoption of your child.
• You must have worked at least 330 hours in the 10 month period, which equates to just over one day per week.
• You must not have had more than an eight week gap between two consecutive working days.
• You must have worked for at least one hour a day for the employment to be classified as a working day.

This allows you to qualify for the scheme even if you are a seasonal, part time or contract worker, are self employed or have recently changed jobs. Plus, you can include all the hours you have worked for a family business, including a farm, even if the business has not generated an income.

Am I eligible if I keep working?

If you return to work within the 18 week paid parental leave term, your payments will cease, unless you are eligible to transfer them to another eligible primary carer, as they can then use your remaining paid parental leave.

You are also to use up to 10 days of your leave for the purposes of keeping in touch with your workplace, without losing your parental leave payments. For example, you can attend a training course organised by your employer, but attendance must be voluntary as your employer cannot make it compulsory to attend a workplace even during your leave.

You do not have to use your 10 days to participate in your workplace all at once, and when you do return to work, your employer must pay you your usual wages or salary for the time spent at work, which will be in addition to your parental leave payments.

Am I eligible if I’m self employed and have to keep working?

Being self employed is like no other career in the world because as you’ll already know, there is no ‘off’ button. Even on the weekends or on your holidays there are emails to be sent, phone calls to take, disasters to be resolved. Luckily if you are self employed you are still able to keep an eye on your business without jeopardising your paid parental leave. You can check on the operations of your business and complete occasional administrative tasks, without being classed as having returned to work.

Am I still eligible for leave entitlements from my employer?

If you are eligible for the paid parental leave scheme, you can access the government funded payments in addition to any paid or unpaid leave entitlements offered by your employer. You can use the paid parental leave scheme, before, after or at the same time as leave funded by your employer, whether it is annual leave or long service leave.

If your employer currently offers paid maternity leave or parental leave through an industrial agreement, they are required to continue offering the entitlement for the life of the agreement. Any employer funded entitlements or payments do not affect your paid parental leave eligibility.

How do I claim parental leave payments and how are they paid?

If you have decided to claim the government funded parental leave payments, the first thing you will need to do is make your employer aware of your decision. This is because while the paid parental scheme is paying you for being away from work, it does not entitle you to that leave time, that is still up to your employer.

• Unpaid maternity leave under the National Employment Standards. If you have been with your current employer for more than 12 months, you may be entitled to unpaid maternity leave as part of the Fair Work Act. This also entitles you to request an additional 12 months of unpaid leave on top of this. If you plan to take advantage of this unpaid leave, you should notify your employer at least 10 weeks before you intend to leave.
• Unpaid leave or independent parental leave schemes. Before the paid maternity leave scheme was introduced, many Australian employers were offering a range of paid and unpaid leave schemes, and continue to do so; for example 46% of Australian organisations offered a paid maternity leave scheme before any scheme was offered by government. Therefore, discuss with your employer any parental leave entitlements which may already be in place in your workplace.
• Decide how to combine your leave and entitlements. You can use your paid parental leave in addition to employer funded maternity leave schemes, or before or after your other entitlements.

When can parental leave pay be claimed?

Claims for paid parental leave can be submitted up to three months before your child’s due date, or date of adoption, with the first claims being received from 1 October 2010, for implementation of the scheme on 1 January 2011.

You can still submit a claim after the birth or adoption of your child, but to receive the full 18 weeks of parental leave payments, you must submit your claim before the end of 33 weeks after the birth or adoption of your child. This is because you can only receive parental leave pay within the first year after your child’s birth or adoption and if you wait more than 33 weeks to submit your claim, your payments will fall outside of the 52 week deadline.

If you claim your parental leave payments outside of the first 33 weeks, the amount of the payment you receive is reduced. For example, if you claim in the 34th weeks after the birth or adoption of your child, you will only receive 17 weeks of parental leave pay; if you claim in the 35th week you will only receive 16 weeks of payments and so on.

How do I complete a claim for paid parental leave?

You can enter your claim online by registering for online services through your local family assistance office. If you are already registered for other payments or entitlements you can complete an online claim by confirming your details and providing information about your claim.

If you are registering your details you can do so online, over the phone or in person at a Family Assistance Office in Medicare offices and Centrelink Customer Service Centres. You then simply answer questions about yourself and your claim, choose passwords and access questions in case you forget your password, and you will be issued with a customer number to complete your claim.

When are the payments made?

You can register to receive paid parental leave at any time from the day your child is born or adopted, up to 52 weeks after their birth, or the care begins. parental leave pay is paid:

• In a continuous 18 week block. You cannot start and stop your parental leave payments within your 52 week timeframe as payments are made continuously. Even if you transfer the payments to another primary caregiver, their payments commence directly after yours have stopped.
• After the birth or adoption of your child. Even if you lodge your claim within the three months before the birth or adoption, your payments do not begin until after the birth or adoption. At the hospital, or at the time of adoption, the date you start receiving the payments will be confirmed when you complete a ‘Newborn child claim form for family assistance’ and your Medicare forms.

How are the payments made?

The payments of your parental leave may be paid by your employer, or by the Family Assistance Office.

Your employer may make the payments if:

• From 1 July 2011 you have been working for your employer for more than 12 months and will be receiving more than eight weeks of parental leave pay. You will receive the government-funded parental leave payments in the same way you receive your normal payments from your employer.
• If your child is born or adopted between 1 January 2011 and 30 June 2011 it is not compulsory for your employer to provide the parental leave payments. If your employer does choose to provide the payments, you must also agree.

Your employer will provide you written notification of each payment, within one working day of the payment being made. They will use your usual payslip method to notify you of the payment.

• Between 1 January 2011 and 30 June 2011 your employer chooses not to provide parental leave payments.
• You have been with your employer less than 12 months.
• You will be receiving less than eight weeks of parental leave pay.
• Your employer ceases to trade, sells the business, declares bankruptcy, transfers ownership or merges with another business, they will notify the Family Assistance Office and the Family Assistance Office will take over the payments if other arrangements are not made.

Even if you are eligible to receive payments from the Family Assistance Office, your employer may agree to make the payments.

How can the paid parental leave scheme help in my situation?

If you’re wondering how you would benefit from the paid parental scheme in your situation, consider some of the following examples, and whether they relate to you and your family, or family-to-be.

What if I want to stay at home longer than 18 weeks?

Mum and Dad are expecting their first child on 5 August, 2011. Both Mum and Dad have been working for several years, earning $52,000 each in the year before the birth of Baby.

However, Mum is not entitled to any paid maternity leave from her current employer. She is eligible for parental leave pay of $570 per week, for 18 weeks. This comes to a total of $10,260 before tax. parental leave payments begin from Mum’s first full pay period after Baby’s birth.

Mum remains at home caring full time for Baby until after 30 June 2012 and so in the financial year in which Baby was born, Mum and Dad are $2,062 better off from net family assistance and parental leave pay, than if they had not received government funded parental leave payments.

Can the primary carer change?

Mum has been working as an accountant for seven years, earning around $60,000 a year. Dad has been a labourer for nine years, earning around $30,000 a year. Mum and Dad have their first child on 1 August 2012.

Mum takes four weeks of recreation leave before the birth of Baby. She is also entitled to six weeks paid maternity leave from her employer which she takes after the birth. Mum is also eligible for paid parental leave and starts her parental leave pay after her paid maternity leave, so her parental leave payments start six weeks after the birth of Baby.

After 15 weeks, Mum has the opportunity to accept a promotion to a position with an annual salary of $70,000 so Mum and Dad decide that Dad should take unpaid leave, so Mum can return to full time work. Mum has received nine weeks of parental leave pay at this point.

Dad is eligible for parental leave pay too, and Mum transfers her unused payments to him so Dad uses the remaining nine weeks of paid parental leave, plus unpaid leave from work, to look after Baby until he is a year old.

In the financial year that Baby is born, Mum and Dad receive around $1,629 more in net family assistance and parental leave payments than they would without the paid parental leave scheme.

Can I claim as a stay at home mum?

Mum and Dad have a two year old Son, and Mum did not return to work after the birth of their Son. Dad has an annual salary of around $60,000 but when Mum and Dad have a Daughter, Mum is not eligible for the paid parental leave scheme.

However, the family is eligible for the Baby Bonus and other family assistance, receiving around $13,226 in family assistance in the financial year their Daughter is born.

How are other entitlements affected?

Government funded parental leave can be a huge help to your family when you want or need time off from work to care for a new baby, and don’t want to be worrying about the bills. However, you don’t want to claim the new paid parental leave if it affects your other entitlements do you?

You don’t have to worry about the government funded parental leave affecting any entitlements you are already offered by your employer because employer schemes can be used at the same time to supplement the government scheme, or be used to extend your leave and entitlements past the 18 weeks allocated by the government scheme.

However, the baby bonus can be affected by your claim of the paid parental scheme, so read on to find out how to choose the best entitlements for your situation, and how to use the government funded scheme in conjunction with your existing benefits.

How are employer parental leave entitlements affected?

Paid an unpaid maternity leave can depend on your employer, the contract you signed and how long you have been working for the company. However, there are some standard entitlements you may be covered by after 1 January 2010:

• The National Employment Standards cover certain minimum conditions for all workers. The National Employment Standards were updated from 1 January 2010 and cover award rates and the rights and conditions of workers, to ensure you are not disadvantaged.
• Request for flexible hours. If you are a parent or carer of a child under school age you can request a change in your working conditions to allow you to assist with their care.
• parental leave. Up to 12 month unpaid leave for every employee, plus the right to request an additional 12 months unpaid leave, and other forms of maternity, paternity and adoption leave.
• Annual leave. Four weeks of paid leave per year.
• Compassionate leave. Also known as personal days you may be entitled to 10 days paid personal or carer’s leave, two days of unpaid carer’s leave and two days of compassionate leave.
• Long service leave. Pending the development of a national long service leave standard, you may be entitled to paid leave for extended time with an employer.

You are able to use a combination of your choice of annual leave, long service leave and maternity leave, in conjunction with the government funded paid parental leave scheme. The above conditions apply to employees:

• In a constitutional corporation.
• In Victoria, the Northern Territory and the ACT.
• Working for the Commonwealth or a Commonwealth Authority.
• Waterside employees, maritime employees or flight crews employed in conjunction with interstate or overseas trade or commerce.
• From 1 January 2010, sole traders, partnerships, unincorporated entities and non-trading corporations in New South Wales, Queensland, South Australia and Tasmania are eligible.

Even if you do not fit into the above categories, and your employer is not part of the national workplace system, there are still two entitlements which apply to full time and part time employees:

• parental leave entitlements. Full time and part time employees, and casual employees who have been employed for at least 12 months on a regular basis, are entitled to parental leave and the related entitlements.
• A notice of termination. Full time and part time employees must be notified if their employer plans to cease their employment, and the period of notice is dependent on how long they have been working for the company.

How is the Baby Bonus affected with the introduction of the Paid parental Leave Scheme?

Before you claim for the paid parental leave scheme, you will need to make a decision between the parental leave pay and the baby bonus as you cannot claim both. It is important to note that you may not be eligible for both either, so you need to know the details of both payments before deciding.

• Paid to families following birth or adoption. The baby bonus is paid to cover the additional costs at the time of the birth or adoption of a new child and is paid to families following the birth or adoption, and is also paid in the case of stillbirths. The baby bonus replaces the Maternity Allowance from 1 July 2004.
• The baby bonus is paid in 13 instalments to the total of $5,294. The bonus is paid in equal fortnightly instalments, and is paid for each child in the case of a multiple birth.
• The family income limit is $75,000. If your household income in the six month period following your child’s birth or adoption is less than $75,000 you may be eligible for the baby bonus.
• The baby bonus is not taxable income. Where the parental leave pay is taxed after it is received, the baby bonus is not taxable income and is not taken into account when considering other social security or family assistance payments.
• The claim must be lodged within 52 weeks of the birth or adoption of the child. You can register the claim online or by completing a claim form which is issued at birth.

• You are the parent of the dependent child.
• You are a carer other than the parent of a new born child, within 26 weeks of the child’s birth. You are also likely to continue to care for no less than 26 weeks.
• If you adopt the child, they must come into your care before they are 16 years old.

You must also have an adjusted taxable income of $75,000 or less in the six months from the date of the child’s birth, or the date the child entered your care. You must also meet Australian residency requirements.

The baby bonus and the paid parental leave scheme can help your savings stretch that all important extra distance when your family begins to grow. Knowing what you are entitled to and how the paid parental leave scheme can work for you and your situation can help you plan your financial decisions for the future more easily, and give you more time to concentrate on the more important things. If you have a question about family savings or the paid parental leave scheme which hasn’t been answered here, contact Savings Account Finder™ now.