Changes To Paid Parental Leave

In 2022, the Federal Government announced changes to the existing Paid Parental Leave Scheme. Under the current Scheme, parents are able to take time off work so they can care for their new child (whether through birth or adoption) and are paid at the rate of the national minimum wage. As it stands, there are two payment types under the Scheme; Parental Leave Pay and Dad and Partner Pay.

Historically, Parental Leave Pay has been taken by mothers and has been available to eligible working parents for up to 18 weeks of paid leave. The Dad and Partner Pay option has provided eligible working fathers or partners with up to two weeks of paid leave. Eligibility for both payment types is dependent on an income threshold capped at $151,350 for the individual taking leave.

What updates have been made to the national Paid Parental Leave Scheme?

From 1 July 2023, both the Parental Leave Pay and Dad and Partner Pay payment types will become single, 20-week payments meaning both parents are able to claim parental leave entitlements in equal amounts.

In practice, just one parent could take 20 weeks of parental leave, both parents could share the entitlement which would enable them to take paid parental leave at the same time or separately, or each could take some of the 20 weeks in unequal shares (with one taking 14 weeks and the other taking 6 weeks, for example).

From 1 July 2024, an additional two weeks of paid parental leave will be added until 1 July 2026 when the paid parental leave term becomes 26 weeks.

The Paid Parental Leave Scheme carries a household income threshold of $156,647 for each parent, a slight increase on the previous threshold. The family income limit will max out at $350,000.

Parental Leave Pay must be taken within two years of the date of birth or adoption, but it can be taken in blocks of as little as one day at a time. Parents are able to work in between the blocks of paid parental leave without this affecting their entitlement.

Parents who do not take part in the Scheme will not be able to access it at a later date. The Federal Government has put in place a ‘use it or lose it’ mechanism in order to incentivise both parents to take leave under the Scheme. This will remain in place until at least 2026 as the entitlement grows.

Why has the Paid Parental Leave Scheme been changed?

The overarching objective of the changes is to encourage both parents to take an active role in caring for their new child/ren in the formative years of their lives. The current Parental Leave Pay Scheme had received criticism for its outdated approach to gender roles and the perceived makeup of family units, and for reinforcing gender roles. It is hoped that the changes will bring Australia’s parental leave supports more in line with current society as well as providing both parents with the flexibility to care for their new child and return to work comfortably.

As it stands, the Scheme discriminates against heterosexual couples where the mother earns over the threshold and the father earns under, as the father would only be able to access two weeks of paid leave and the mother none. Under the updated Scheme, the father could access all twenty weeks of paid leave in the same financial circumstances.

Critics were also pushing for a combined twenty weeks per couple to empower them to decide how to fairly access parental leave benefits based on their dynamic.