Paid parental leave information for employers

From 1 January 2011 the Government's Paid Parental Leave Scheme (GPPL) will come into effect and will have implications for many business owners.

Following our previous article in June 2010, we've had many questions regarding the employer's responsibilities with payments to employees.

The following are some Q&As we prepared to help employers to take on this process.

When will employers have to begin administering the payment of Parental Leave to employees?

Between the periods from 1 January 2011 – 30 June 2011, Centrelink will directly provide eligible employees with their Parental Leave Pay. From 1 July 2011 employers will be required to administer the payments to their eligible long term employees.

How will Paid Parental Leave payments be provided to employers for them to pass on to employees?

The Family Assistant Office (FAO) will electronically transfer payments to the employer’s nominated bank account. There will be no obligation for an employer to provide parental leave pay until the fund is received from the FAO.

How should employers treat the Paid Parental Leave funds?

The obligations of an employer will relate directly to providing Parental Leave Pay to their employees. The employer is not required to have a separate bank account and the employer can earn interest on the funds.

What process is involved in relation to payroll?

• The employee applies to the FAO for paid parental leave
• The FAO contacts the employer to confirm they have the required details to make the payments (e.g. bank account)
• The FAO pays the employer in advance for each payment
• The employer makes payment to the employee in the regular pay cycle and withholds tax.  The maximum GPPL payment is $569.90 a week
• No superannuation or WorkCover is payable
• No leave accrues
• No Payroll tax applies.

What records does the employer need to keep?

Financial records of the receipts of Paid Parental Leave payments need to be kept for a period of seven years.

For More information please visit:

http://www.familyassist.gov.au/publications/paid-parental-leave---information-for-parents/

This article is intended to provide general information only, and is not to be regarded as legal or financial advice. The content is based on current facts, circumstances, and assumptions, and its accuracy may be affected by changes in laws, regulations, or market conditions.  Accordingly, neither Azure Group Pty Ltd nor any member or employee of Azure Group or associated entities, undertakes responsibility arising in any way whatsoever to any persons in respect of this alert or any error or omissions herein, arising through negligence or otherwise howsoever caused. Readers are advised to consult with qualified professionals for advice specific to their situation before taking any action.