On 1 January 2011 Australia will get its first ever national government-funded Paid Parental Leave scheme. This is a historic reform which will benefit not just mums, dads and babies, but also businesses.

In designing our Paid Parental Leave scheme, the Australian Government engaged business as part of the process. We wanted to ensure the scheme is not only fair to business, but helps employers retain valuable and skilled staff.
Having a baby is for many people part of balancing everyday work and family life. That’s why the Government had designed our Paid Parental Leave scheme to be delivered as a workplace entitlement, just like annual leave or sick leave.
This means that employers have a role in providing the Government-funded paid parental leave to their long-term employees. This is based on the expert recommendations of the Productivity Commission, which suggested this model because it will help employers retain skilled staff, as well as boost workforce participation.
It is important for women to remain connected to their workplace when they take time off to have a baby. Australian women have lower labour force participation during child bearing years than women in other countries. Almost one fifth of mothers in paid work resign instead of taking leave around childbirth.
This has consequences for both mothers taking leave, and for Australian businesses in retaining skilled staff.
To make sure the scheme was fair on business, we decided it would be funded by the Government, rather than requiring employers to pay or imposing a tax burden on business.
We have also taken a number of steps to make employers’ role in the scheme easy. Employers will receive funds from the Government before they are required to pass them onto their employees, and will make payments in line with the employee’s usual pay cycle.
Employers will also provide the payments on a ‘business as usual’ basis – meaning no special rules or special bank accounts are required. We’ve also made sure that employers aren’t required to pay superannuation or workers compensation premiums on parental leave pay.
The payment arrangements will be phased in over six months, to give employers time to prepare for their introduction from 1 July 2011. Employers are only required to make payments to employees who will be returning to work with them, and who have worked with them for at least 12 months.
Other eligible parents will be paid by the Government. This is because we recognise it is not in business’ interest to have employees artificially stay with their employer for a period of Paid Parental Leave in order to receive payments, when they intend to resign.
We estimate that around nine per cent of all businesses and three per cent of small businesses will make payments under the scheme in any given year.
The Government has established an implementation group to help ensure a smooth roll-out of the scheme to working parents and in particular, employers who will provide the Government-funded parental leave pay to their employees.
We will continue to work closely with employers to ensure that this historic reform benefits families and businesses across Australia.
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