By: Sian Gilbert, Grace Gunn, Dexter Cabal and Ellie Jongma
At a glance
- Employees entitled to parental leave under the Fair Work Act 2009 (Cth) (FW Act) may take up to 110 days of their 12-month unpaid leave entitlement in a flexible manner in the 24 months following the birth (or adoption) of their child (previously only 30 days).
- The Paid Parental Leave Act (Cth) (PPL Act) has been amended to align with the FW Act to allow flexibility and provide new parents (as a family) with a total of 110 days (or 22 weeks) of minimum wage payments, noting that at least 10 of these days are reserved for partners.
- Both parents may take 12 months of unpaid leave at the same time following the birth or adoption of their child (previously 8 weeks).
Whether you are an employee, or running a business, it is important to understand parental leave entitlements and obligations.
Unpaid parental leave is an entitlement under the FW Act when an employee, or their partner, gives birth or adopts a child. In July 2023, the legislation surrounding parental leave was amended to allow greater flexibility for new parents.
The most notable changes included the provision of up to 100 days (now 110 days as of 1 July 2024) of flexible unpaid leave out of their 12-month entitlement, as well as removing the limits on parents taking concurrent leave. These amendments are aimed at providing a balanced approach to parental leave and to align with the amendments to the Government’s Paid Parental Leave scheme (PPL scheme).
FW Act changes
Entitlement to unpaid parental leave
If an employee is expecting a child, including an adoption placement, and that employee has completed 12 months of continuous service on the date of the expected birth or placement, they are entitled to 12 months of unpaid parental leave.
This leave is also available to casual employees who have been regular and systematic for 12 months prior to taking the leave.1 The leave period may be extended to 24 months if the employer and employee agree. The employee must have, or will have, responsibility for the care of the child to be entitled to unpaid leave.
The period of leave and how it works
Prior to the changes in July 2023, the 12 months of unpaid parental leave was required to be taken in a single continuous period with only 30 flexible days in that period. While the new approach is similar, it is subject to some exceptions, in particular the amendments to the FW Act provide that 110 business days (or 22 weeks) of the 12-month unpaid leave entitlement may be taken flexibly in the 24 months following the birth (or adoption) of their child,2 with periods of unpaid leave as short as one day.3 The flexible days are part of the 12-month entitlement to unpaid leave – they are not additional days. These changes will continue to increase by 2 weeks each year until 1 July 2026, when flexible parental leave will total up to 130 days. This is aligned with the changes to the government’s PPL scheme outlined below.
If the employee is pregnant, they may commence their unpaid parental leave up to 6 weeks before the expected birth date.4 In certain circumstances, such as when the employee is not fit for work due to a pregnancy-related illness, they will be entitled to a period of unpaid special parental leave at an earlier date. If the employee continues working within 6 weeks of their due date, they may need to supply a medical certificate to their employer (if requested).5 The employee who isn’t pregnant can take parental leave at any time within 24 months after the birth or placement of the child, but the leave must end within 24 months of the birth or placement of the child.6
The amendments also allow parents to take their entitlement of 12 months of unpaid leave at the same time, which is a significant change from the previous allowance of 8 weeks of concurrent leave. Parents may also request to extend their unpaid leave up to a further 12 month period with agreement from their employer.7 However, if an employee performs a ‘keeping in touch day’, this does not extend the unpaid leave entitlement, and the period of parental leave must conclude within 24 months of commencement.
The FW Act also allows employees on parental leave to use their paid entitlements, such as annual leave, at the same time as their unpaid parental leave.
PPL scheme
The Government PPL scheme was expanded on 1 July 2023 to support a more balanced approach to parental leave. The PPL Act amendments came into effect on 1 July 2023. One of the key changes was combining partner and parental leave pay into single payment.
The amount of paid leave also increased to 100 business days, or 20 weeks (for the family). This will progressively increase until July 2026 where the payment will be for 130 business days, or 26 weeks (for the family) paid at minimum wage.
Entitlement to the PPL scheme
Prior to the amendments, employees were required to pass certain criteria in order to qualify for the scheme. The criteria has been expanded and employees must pass certain tests to qualify for the payments. Subject to meeting the income, work and residency test requirements, there are a number of people who may claim paid parental leave, including those who, together with their partners, are the birth mother and father, adoptive parents, gaining parents in a surrogacy arrangement and a person caring for a child under exceptional circumstances.
Superannuation
The government funded PPL scheme does not currently involve any superannuation contributions. However, for those that qualify for the scheme and have children born after 1 July next year (2025), superannuation will be payable as part of this scheme and workers will be paid contributions on top of the minimum wage payments at the superannuation guarantee rate of 12%.
Considerations for insureds and insurers
The changes to the FW Act and PPL Act represent more flexible developments in minimum standards for Australian workplaces. Businesses, employees and workers should be aware of the entitlements and obligations available to ‘new’ parents.
Insureds need to be mindful of their obligations under the FW Act in relation to parental leave (and when employees are returning from parental leave) to avoid disputes arising from alleged discrimination on the basis of sex, pregnancy, and family and carer’s responsibilities, as well as to avoid taking adverse action in contravention of the general protections provisions of the FW Act, and to avoid allegations of unlawful termination. When such disputes arise, a potential consequence is the triggering of insurance policies for insureds to defend such allegations.
Our experienced Workplace + Safety Team can provide assistance on parental leave entitlements and obligations. Please get in touch with our authors to discuss how we can support you.
[1] Whether casuals are “regular and systematic” is determined on a case-by-case basis.
[2] Fair Work Act 2009 (Cth), s.72A(1)
[3] Ibid. s.72A(3)(b)
[4] Ibid. s.72A(2A)
[5] Ibid. s.73(1)(a)
[6] Ibid. s.71(4)
[7] Ibid. s.76(1)