Paid Parental Leave Limit To Increase To 20 Weeks

16 March 2023

The Paid Parental Leave Amendment (Improvements for Families and Gender Equality) Bill (the Bill) was passed on 6 March 2023 and it introduces the following changes to how paid parental leave will apply.

  • From 1 July 2023 the maximum amount of paid parental leave (PPL) a couple can claim will be increased from 18 weeks to 20 weeks under a new ‘use it or lose it’ provision.
  • This amendment applies to National System Employers.
  • Claims for PPL will no longer require the primary claimant to be the birth parent, allowing parents to decide who will take their leave first.
  • Paid parental leave will now only consist of flexible PPL days which allow claimants to decide when they will use their leave within two years of the birth or adoption of a child.
  • The requirement that a parent continuously remains off work has also been removed from the paid parental leave scheme, meaning that claimants will be able to return to work for short periods of time before resuming PPL.
  • The changes emphasise the need for equality between parents and promotes secondary caregivers also being able to take time off work to be able to bond with and care for their child.

Use it or lose it provision

The existing ‘Dad and Partner Pay’ scheme will be abolished and replaced by a more gender-neutral approach. This new approach to paid parental leave will allow both parents to find a balance between their employment and family obligations. Replacing the ‘Dad and Partner Pay’ scheme is a ‘use it or lose it’ system where parents can claim an additional 2 weeks of PPL per application, which increases the couple’s maximum from 18 weeks to 20.

A paid parental leave claim can be made by the following people:

  • The child’s birth parent;
  • An adoptive parent of the child;
  • A person who is a parent of the child but is not the birth parent;
  • The partner of the child’s birth parent;
  • The partner of an adoptive parent of the child;
  • The partner of a person who is a parent of the child but is not the birth parent; or
  • A person who makes a PPL claim in exceptional circumstances

The maximum amount of PPL that a couple can receive per child is 20 weeks, with each parent having a maximum allocation of 18 weeks to use out of the 20. Partnered parents will be able to receive a maximum of 18 weeks PPL with an additional two weeks that can be divided between the parents for example, one taking 18 weeks, one taking 2 weeks. Additionally, single parents and parents in exceptional circumstances will be entitled to the full 20 weeks of PPL.

The notion of primary, secondary and tertiary claimants for paid parental leave will be removed to allow families greater flexibility in deciding who will take PPL first and how they will share the entitlement.

If an individual parent does not meet the individual income test to receive PPL the new family income limit of $350,000 per annum (indexed from 2024) can be used in order to assess the family in the alternative, which may enable more families to access the PPL benefits than before. Additionally, the eligibility of non-birthing partners to be able to receive PPL will disregard whether the birth parent meets the income test.

What does this mean for employers?

Once the amended legislation comes into effect in July 2023 there will be a change in how parents are dividing their paid parental leave since both parents will be able to equally share their entitlement to take time off, whether to recover after birth, spend time with their child and establish parental bonds. Employers need to anticipate that parental leave will be taken flexibly and now spread out over the two years following the child’s birth.

Workplace policies that define an employee’s entitlement to take paid parental leave will need updating and need to be applied to reflect the changes in legislation. Should you require assistance with this, please contact one of our solicitors.

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