Paid Parental Leave scheme questions and answers for employers

The Paid Parental Leave scheme

What is the Paid Parental Leave scheme?

The Paid Parental Leave scheme is a new entitlement for working parents of children born or adopted from 1 January 2011.

Eligible working parents can get 18 weeks of government funded Parental Leave Pay at the rate of the National Minimum Wage (currently $589.40 a week before tax).

Who funds Parental Leave Pay?

Parental Leave Pay is funded by the Australian Government.

Why are employers involved in providing Parental Leave Pay to their employees under the Paid Parental Leave scheme?

The Paid Parental Leave scheme is designed to:

• provide financial support during the time parents take off work, in the vital early months, to care for their newborn or recently adopted child
• enhance child and maternal health and development
• encourage womens workforce participation, and
• promote gender equity and work/family balance.

The Paid Parental Leave scheme will help employers:

• retain valuable and skilled staff by encouraging them to stay connected with the workforce when they become parents
• enhance existing family friendly workplace conditions without having to fund Parental Leave Pay themselves, and
• in the long-term through the increased workforce participation of parents.

Who is entitled to Parental Leave Pay?

Full-time, part-time, casual, seasonal, contract and self-employed workers may be eligible.

How much Parental Leave Pay does my employee receive?

Eligible working parents can get 18 weeks of government funded Parental Leave Pay at the rate of the National Minimum Wage (currently $589.40 a week before tax).

What if I have an employee who is eligible for Parental Leave Pay?

You will be contacted if you are required to provide Parental Leave Pay to an eligible employee. You will be asked to provide your:

• business name
• Australian Business Number
• contact details
• business bank account details, and
• employee’s pay cycle details.

The easiest way to provide this information is online. You can register at any time for the Paid Parental Leave scheme through Centrelink Business Online Services.

What is my responsibility in the case of a stillbirth or infant death?

In cases of stillbirth or infant death, the Paid Parental Leave scheme will allow eligible employees to continue to receive their Parental Leave Pay.

Your employee may ask the Family Assistance Office to provide their Parental Leave Pay directly. If this occurs, Centrelink will advise you of the change in arrangements. If an employee chooses to return to work before the end of their Paid Parental Leave period, they will not lose their entitlement to Parental Leave Pay.

Will my employee accrue additional leave entitlements for Parental Leave Pay?

Your employee will not accrue additional leave entitlements for Parental Leave Pay.  If an employee is on a type of paid leave that does attract the accrual of additional leave entitlements (such as annual or long service leave) at the same time as they receive Parental Leave Pay, Parental Leave Pay will not affect the usual leave accrual rules that apply to the paid leave. For example, if Parental Leave Pay is received while the employee is on long service or annual leave, accrual rules relating to long service and annual leave will apply.

When can my employee take Parental Leave Pay?

Your employee can choose when their Parental Leave Pay starts. It can start any time from the birth or adoption of their child, and they must receive all of their pay within 52 weeks of the birth or adoption.

Your employee can take their Parental Leave Pay before, after or at the same time as any paid or unpaid maternity or parental leave or other employer provided leave entitlements (such as annual leave or long service leave). Parental Leave Pay must be taken in one continuous block of up to 18 weeks.

Your employee may discuss their leave intentions with you before they commence leave. They may also discuss with you when they wish to receive their Parental Leave Pay.

Does my employee need to receive their Parental Leave Pay within a certain time?

Your employee must receive all of their Parental Leave Pay within 52 weeks of the date of the birth or adoption.

Will the Paid Parental Leave scheme affect existing employer provided parental leave entitlements?

The Paid Parental Leave scheme provides Parental Leave Pay but does not provide a new entitlement to leave. The scheme does not change any of your employee’s existing leave entitlements.

The existing minimum entitlement to 12 months unpaid parental leave for long-term employees, in the National Employment Standards under the Fair Work Act 2009, is unchanged. Your long-term employees can also request an additional 12 months unpaid leave on top of this. A long-term employee is someone who has worked for your business for 12 months or more.

If you currently provide paid maternity or parental leave through an industrial agreement, you cannot withdraw that entitlement for the life of that agreement.
Parental Leave Pay will not result in the accrual of any additional leave entitlements for your employee.

For more information about employment entitlements, workplace obligations or the Fair Work Act 2009, visit www.fairwork.gov.au or call 13 1394.

If my employee has not worked with me for 12 months, can they still receive the government's Paid Parental Leave scheme?

Yes, as long as the employee meets the eligibility requirements for the scheme.

What do I need to discuss with my employee?

Your employee may discuss their leave intentions with you before they lodge their claim. This conversation may include:

• what leave is available and how your employee may take it in conjunction with Parental Leave Pay
• when your employee would like to start their leave and when they expect to return to work
• how to manage their return to work, and
• what their post-leave role might involve.

You should encourage your employee to claim before their child arrives to help prevent any delay in providing Parental Leave Pay.

Are there any times when my employee cannot receive Parental Leave Pay?

To be eligible for Parental Leave Pay, your employee must be on leave from the time they become their child’s primary carer, until the end of their Paid Parental Leave period.

If your employee returns to work before the end of their Paid Parental Leave period, you need to tell us, because their Parental Leave Pay will stop.

Are there provisions which allow my employee to Keep in Touch with the workplace?

The purpose of the Keeping in Touch provision is to allow your employee to remain connected with the workplace without losing their entitlement to Parental Leave Pay.

The Paid Parental Leave scheme supports your employee to take time away from work to care for their newborn or recently adopted child. It also includes Keeping in Touch provision to assist your employee in returning to the workforce following their paid and/or unpaid parental leave.

The provision simply ensures that your employee does not lose their entitlement to Parental Leave Pay if they participate in paid work for the purpose of Keeping in Touch. Your employee can access up to 10 Keeping in Touch days from the time they become their child’s primary carer until the end of their Paid Parental Leave period.

You and your employee must both agree that they can take part in a Keeping in Touch activity and the arrangements for the activity.  Either party can decide they do not wish the Keeping in Touch activity to take place.

If your employee returns to work, or participates in paid work before the end of their Paid Parental Leave period for any purpose other than Keeping in Touch, their Parental Leave Pay will stop.

My role as an employer in the Paid Parental Leave scheme

What is my role as an employer?

You must provide Parental Leave Pay to an eligible employee who:

• has a child born or adopted from 1 July 2011
• has worked in your business for at least 12 months prior to the expected date of birth or adoption
• will be your employee for their Paid Parental Leave period
• is an Australian-based employee, and
• is expected to receive at least eight weeks of Parental Leave Pay.

If your employee does not meet the above criteria you are not required to provide Parental Leave Pay. However, if you and your employee both agree, you can still choose to provide it to an employee. You need to register for Centrelink Business Online Services and then opt-in to provide Parental Leave Pay before your employee lodges their claim for the scheme.

Your business must have an Australian Business Number to participate in the scheme.

Centrelink will contact you if you are required to provide Parental Leave Pay to an eligible employee.

The Family Assistance Office will provide Parental Leave Pay to an eligible parent who does not receive it from their employer.

How will I know if my employee is claiming Parental Leave Pay?

The Family Assistance Office will assess whether your employee is eligible for Parental Leave Pay.

Centrelink will contact you either online or by mail to advise you of the decision if you are to provide Parental Leave Pay to your employee,

If you are required to provide Parental Leave Pay to your employee, you need to do one of the following within 14 days of the date of notice advising you of Centrelink’s decision:

• accept the decision that you are to provide Parental Leave Pay, or
• seek a review if you do not accept the decision. 

What if I do not accept the decision that I am to provide Parental Leave Pay to an employee?

You may seek a review within 14 days of a decision that you are required to provide Parental Leave Pay, on the basis that your employee:

• has not been employed by you for 12 months or more immediately prior to their expected date of birth or adoption
• will not be employed by you while they receive Parental Leave Pay
• is likely to receive less than eight weeks of Parental Leave Pay, and/or
• is not an Australian-based employee.

When will my employee’s Paid Parental Leave period start

When an employee lodges their claim, they will nominate the start date of their Parental Leave Pay. As Parental Leave Pay must be paid in one single continuous 18 week (or less) period, the employee will nominate the date they want their Paid Parental Leave period to commence.  Their Paid Parental Leave period can start anytime from the date of birth or adoption, and must all be used within 52 weeks of the birth or adoption. To receive the full 18 weeks of Parental Leave Pay, the employee’s nominated start date needs to be within 34 weeks of the date of birth or adoption of their child.

The start date is the first day the employee will be entitled to receive Parental Leave Pay. As with wages, the employee may not receive their Parental Leave Pay on that day. It will be paid in the same way as they would receive wages for that day, for example fortnightly in arrears.

How do I provide Parental Leave Pay to my employee?

Parental Leave Pay should be paid to your employee in the same way you provide salary or wages in accordance with the employee’s normal pay cycle. Paid Parental Leave funds will be provided to you before you are required to provide Parental Leave Pay to an employee. There is no obligation to provide Parental Leave Pay to an employee until you have received the required funds from Centrelink.

Paid Parental Leave funds will be electronically transferred to your nominated bank account by Centrelink, before your employee's usual pay cycle cut-off.

As funds may not be provided to you until after your employee’s nominated start date, the first payment may contain an amount of arrears that is an amount to be paid to the employee for a previous pay period.

If an employee resigns or is terminated from their employment, who is responsible for advising Centrelink and how is this done?

You and your employee are both required to advise of a change in circumstances, including the termination of an employee.  Notification must be provided in writing.  Employers can do this online using Centrelink Business Online Services.  Employees will need to call the Family Assistance Office on 13 6150.

If a fixed term employee's contract will expire during their Paid Parental Leave period and we won't be renewing their contract, how will they receive their Parental Leave Pay?

The Family Assistance Office will provide ParentalLeave Pay to the employee if they are not expected to remain your employee for the duration of their Paid Parental Leave period.

Who will pay my employee’s Parental Leave Pay if I am not required to pay them?

The Family Assistance Office will pay your employees directly if you are not required to do so.

What records do I need to keep?

You need to keep records of the funds received from Centrelink and Parental Leave Pay provided to your employee.

You may keep copies of the Centrelink Payment Advice for each funding amount paid to you and payment advice provided by you to your employee on pay slips or separate notices.

What do I do with unused Paid Parental Leave funds?

You must ensure that any unpaid Paid Parental Leave funds are returned to Centrelink, either if you become aware you have an amount that cannot be paid, or if Centrelink advises that you must return funds.

You should call the Centrelink Business Hotline on 13 1158 if you become aware of such a situation.

What happens if I sell my business while providing Parental Leave Pay to an employee?

You should notify Centrelink, in advance if possible, if you have ceased, or intend to cease a business. Alternative arrangements will be made to provide any remaining Parental Leave Pay to your employee.

Providing Parental Leave Pay to my employees

What information does my employee need to provide when they make a claim?

Your employee will be asked a number of questions about their employment and their employer. Questions they will be asked include:

• if they are currently employed
• what their working arrangements are, for example are they employed on a full-time, part-time, casual or contract basis
• the date they commenced employment with you
• if they will still be employed with you while receiving Parental Leave Pay
• if they have more than one employer
• your contact details, including:
• business/trading name
• Australian Business Number
• contact name
• contact phone number
• postal address
• their employee identification number (if applicable), and
• if they give you permission to provide their Parental Leave Pay (in case you are not required to provide pay but you have opted in to do so).

What do I need to do to prepare for providing Parental Leave Pay?

To provide Parental Leave Pay to any eligible employees, you are required to register for the Paid Parental Leave scheme.  You can do this through Centrelink Business Online Services.

You can register for the scheme at any time, or you can register when Centrelink contacts you.

What information do I need to provide to Centrelink?

You will be contacted if you are required to provide Parental Leave Pay to an employee. You will be asked to provide Centrelink with information such as your:

• business name
• Australian Business Number
• contact details
• business bank account details, and
• employee’s pay cycle details.

The easiest way to provide this information is online through Centrelink Business Online Services at www.centrelink.gov.au

How and when will my business receive Paid Parental Leave funds?

Paid Parental Leave funds will be provided to you before you are required to provide Parental Leave Pay to an employee. You will not have to provide Parental Leave Pay to an employee until you have received the required funds from Centrelink.

Paid Parental Leave funds will be electronically transferred to your nominated bank account by Centrelink, before your employee’s usual pay cycle cut-off. 

A notification about the funding amount (either electronic or in another written form) will be provided each time an amount is deposited into your account. If you have multiple employees receiving Parental Leave Pay, the advice will provide details for each employee.

You can receive Paid Parental Leave funds fortnightly throughout the Paid Parental Leave period or you can choose to receive the funds in three six-weekly instalments.

Will my employee receive Parental Leave Pay if my organisation already has a paid parental leave scheme in place?

The Paid Parental Leave scheme is designed to complement existing workplace entitlements. The Paid Parental Leave scheme provides up to 18 weeks of government funded Parental Leave Pay but does not provide a new entitlement to leave. The scheme does not change your employee’s existing leave entitlements. Your employee’s Parental Leave Pay is in addition to leave entitlements you provide.

If you currently provide paid maternity or parental leave through an industrial instrument or agreement, your business cannot withdraw that entitlement for the life of that agreement.

Do I need to withhold tax from the Parental Leave Pay?

You must withhold tax from your employee’s Parental Leave Pay under the usual PAYG withholding arrangements and include Parental Leave Pay in the total amounts on the employee's annual or part-year payment summary.

What is the proportion of tax deducted from Parental Leave Pay?

The proportion of tax deducted from Parental Leave Pay should be as per normal PAYG provisions. If you require more information, contact the Australian Taxation Office.

If an employee has received an overpayment of Parental Leave Pay and Centrelink recovers the money, how is the employee’s PAYG withholdings repaid?

In some circumstances, if Centrelink recovers the overpaid Parental Leave Pay from an employee, the employer may need to refund their employee the PAYG withholding amount for the overpaid Parental Leave Pay. For more information, refer to Overpayment and Refunding PAYG Withholding Payments in the Employer Toolkit.

Do I have to make superannuation contributions for Parental Leave Pay?

You are not required to make superannuation contributions in respect of Parental Leave Pay, although the Paid Parental Leave scheme does not prevent you from doing so if you wish. If you do not want to make superannuation contributions in respect of Parental Leave Pay, it will need to be identified separately from other amounts that attract a superannuation guarantee liability.

Will Parental Leave Pay be subject to payroll tax liability or workers compensation premium liabilities?

Parental Leave Pay is not subject to payroll tax liabilities or workers compensation premium liabilities. Parental Leave Pay will need to be identified separately from other amounts that attract payroll tax and workers compensation premium liabilities.

Providing written notification to my employees

What payment notification do I need to provide my employees?

You must provide your employees with written notification of their Parental Leave Pay within one working day of the payment being made. This can be on their usual pay slip or in a separate notice such as a letter or email. The written notification must include:

• your business or trading name
• the Australian Business Number
• the employee’s name
• the period to which the Parental Leave Pay relates
• the date on which the Parental Leave Pay was or will be paid
• the gross amount of the Parental Leave Pay
• the total PAYG amount deducted in respect of all taxable entitlements paid in the pay period
• the total net amount of Parental Leave Pay, and
• if an amount is deducted from the gross amount, for example, for salary sacrifice or child support the record must also include the name and/or number of the fund or account into which the deduction was paid.

My business’ payroll software can't separate Parental Leave Pay from other payments. What do I do in this case?

Parental Leave Pay must be shown as a separate gross item on an employee's payslip. If you are having difficulties, contact your payroll software provider.

Do I need to provide payment notification to Centrelink?

You do not need to notify Centrelink when you have provided Parental Leave Pay to your employee, but you must keep written financial records of the Paid Parental Leave funds you receive from Centrelink and of the Parental Leave Pay you provide to your employee.

Employees returning to work

What if my employee decides to return to work before their Parental Leave Pay is due to finish?

You will need to notify Centrelink if your employee decides to return to work before their Parental Leave Pay finishes. Your employee will also need to notify us. They may be able to transfer any unused portion of their Parental Leave Pay to another eligible primary carer.

If my employee decides to return to work before the end of their Paid Parental Leave period, are they still entitled to receive Parental Leave Pay if there is no other primary carer?

No. Once an employee has returned to work, they are generally no longer eligible for Parental Leave Pay.

Where can I go for more information about my employee's workplace entitlements?

For more information about workplace entitlements and obligations visit the Fair Work Ombudsman website.

Self-employed parents

What happens if I am self-employed and receiving Parental Leave Pay?

To receive Parental Leave Pay, you must be on leave or not working from the time you become your child’s primary carer, until the end of your Paid Parental Leave period. If you return to work before that time your Parental Leave Pay will stop from that date.

If you are self-employed, you will be able to keep an eye on your business without being regarded as having returned to work. You will be able to oversee the business’ operations and perform the occasional administrative task. Types of activities that may be considered as overseeing your business or performing an occasional administrative task may include:

• paying an account
• checking on the delivery of an order
• approving the business accounts
• dealing with ad hoc disputes
• organising a repair, or
• organising replacement staff to manage your absence from work.

You will be regarded as having returned to work if you perform your usual pre-birth or pre-adoption duties at any time from the time you become your child’s primary carer until the end of your Paid Parental Leave period, even at reduced hours or a reduced level. 

If you are self-employed, your Parental Leave Pay will be provided by the Family Assistance Office in fortnightly instalments.

Overpayments

What is an overpayment of Paid Parental Leave funds?

This is an amount of Paid Parental Leave funds that you have received from Centrelink and not yet provided to your employee, and that Centrelink has advised you must repay.

What is an overpayment of Parental Leave Pay?

This is an amount of Parental Leave Pay you have paid to your employee that they are not entitled to receive.

How can an overpayment occur?

An overpayment can occur if you have received Paid Parental Leave funds from Centrelink and either:

• your employee is no longer entitled to receive Parental Leave Pay
• you are unable to provide your employee with Parental Leave Pay, or
• you have not provided and do not intend to provide Parental Leave Pay owed to your employee.

Example 1: Your employee may no longer be entitled to receive Parental Leave Pay because they have returned to work and Centrelink was not notified in time to stop sending you Paid Parental Leave funds.

Example 2: You may be unable to provide Parental Leave Pay to your employee because their bank account is closed and you are unable to contact them to get an alternative account.

How will I know if an overpayment has occurred?

When Centrelink becomes aware of an overpayment, they will contact you. You will be asked not to provide further payments of Parental Leave Pay to your employee. If you become aware that an overpayment has occurred, you should advise Centrelink immediately.

What will happen if an overpayment occurs?

When Centrelink becomes aware that an overpayment has occurred, they will work out who is liable to repay any overpaid amount. Centrelink will then contact you to confirm the amount of:

• Paid Parental Leave funds you hold, and
• Parental Leave Pay you have provided to your employee, and
• Pay As You Go (PAYG) withheld for the Parental Leave Pay you have provided to your employee.

If you are holding overpaid Paid Parental Leave funds you will be asked to repay the funds to Centrelink within 28 days of receiving a notice.

If your employee has received an overpayment of Parental Leave Pay, Centrelink will recover the gross amount of the overpayment from the employee.

Do I need to refund PAYG withholding amounts to an employee who has received an overpayment of Parental Leave Pay?

As Centrelink will recover the gross amount of an overpayment of Parental Leave Pay from your employee, you may need to refund the employee’s PAYG withholding amount for the overpayment.

The arrangements to refund PAYG withholding amounts are similar to those that apply to overpaid salary and wages.
Under taxation law your employee has the right to recover the amount of PAYG withholdings from you or from the Australian Tax Office (ATO).

When do I need to refund PAYG?

If the overpayment occurred in the same financial year in which it was discovered, Centrelink will recover the gross amount of the overpayment from your employee and advise your employee to request a refund of the PAYG withholding amount from you or from the ATO.

Under the Taxation Administration Act 1953,you must refund the PAYG withholding amount attributable to the overpaid Parental Leave Pay if, before the end of the financial year in which the overpayment occurs:

• your employee requests a refund of the withholding amount, or
• you become aware that your employee received an overpayment of Parental Leave Pay.

You are required to refund the PAYG amount to the employee whether or not you have remitted the PAYG amount to the ATO.

If you have refunded a PAYG withholding amount to an employee, and it is for a withholding amount you have previously remitted to the ATO, you can:

• recover the refunded amount from the ATO as a debt, or
• offset or reduce another payment to the ATO by the refunded withholding amount.

When don’t I need to refund PAYG?

You do not need to refund the PAYG withholding amount if the overpayment occurred in the financial year prior to the year in which it was identified. Centrelink will recover the gross amount of the overpayment from your employee, and will advise your employee to recover the overpaid PAYG from the ATO.

What if the overpayment spans two financial years?

If the overpayment spans two financial years, the processes described above will apply to the portions of the debt that occurred in each financial year.

For more information about refunding PAYG withholding amounts, contact the ATO or visit www.ato.gov.au

Do I need to amend my employee’s payment summary?

If you have not issued your employee with a payment summary for the financial year in which the overpayment occurred, you must adjust the payroll record so that the overpaid amount is not reported as income on your employee's end-of-year or part-year payment summary.

If you have issued an employee with a payment summary for the financial year in which the overpayment occurred, you will have 28 days to:

• issue an amended payment summary to your employee, or
• give your employee a letter containing relevant information about the overpayment.

This letter should contain:

• sufficient information to identify the taxpayer for tax purposes, for example a Tax File Number
• the amount of Parental Leave Pay paid incorrectly
• the amount of PAYG withholding attributable to that amount, and
• the financial year(s) in which the incorrect payment was made.

If you are unable to give the employee an amended payment summary or the letter within 28 days of becoming aware of the overpayment, you must advise Centrelink.

For more information about amending payment summaries, visit the ATO website at www.ato.gov.au

What if I provide Parental Leave Pay to the wrong employee?

If you receive Paid Parental Leave funds from Centrelink for an employee and you provide Parental Leave Pay to the wrong employee, you must provide the correct amount of Parental Leave Pay owed to the right employee as soon as the mistake is identified.

You may recover the Parental Leave Pay from the employee who received it incorrectly and take PAYG, payroll record and payment summary actions in accordance with your usual arrangements relating to overpaid salary and wages.

What happens if I am self-employed and receiving Parental Leave Pay?

To receive Parental Leave Pay, you must be on leave or not working from the time you become your child’s primary carer, until the end of your Paid Parental Leave period. If you return to work before that time your Parental Leave Pay will stop from that date.

If you are self-employed, you will be able to keep an eye on your business without being regarded as having returned to work. You will be able to oversee the business’ operations and perform the occasional administrative task. Types of activities that may be considered as overseeing your business or performing an occasional administrative task may include:

• paying an account
• checking on the delivery of an order
• approving the business accounts
• dealing with ad hoc disputes
• organising a repair, or
• organising replacement staff to manage your absence from work.

You will be regarded as having returned to work if you perform your usual pre-birth or pre-adoption duties at any time from the time you become your child’s primary carer until the end of your Paid Parental Leave period, even at reduced hours or a reduced level. 

If you are self-employed, your Parental Leave Pay will be provided by the Family Assistance Office in fortnightly instalments.

What if my employee decides to return to work before their Parental Leave Pay is due to finish?

You will need to notify Centrelink if your employee decides to return to work before their Parental Leave Pay finishes. Your employee will also need to notify us. They may be able to transfer any unused portion of their Parental Leave Pay to another eligible primary carer.

If my employee decides to return to work before the end of their Paid Parental Leave period, are they still entitled to receive Parental Leave Pay if there is no other primary carer?

No. Once an employee has returned to work, they are generally no longer eligible for Parental Leave Pay.

Where can I go for more information about my employee's workplace entitlements?

For more information about workplace entitlements and obligations visit the Fair Work Ombudsman website.