The Paid Parental Leave (PPL) Scheme is an Australian Government funded scheme that commenced 1 January 2011, that provides up to 18 weeks paid leave to new parents who are the primary carers of a child born or adopted on or after 1 January 2011.

Employees eligible for the payment can receive up to 18 weeks leave, paid at the National Minimum Wage. Parental Leave Pay is available in additional to existing employer-provided paid or unpaid leave, and can be taken in conjunction with, or in addition to, employer-provided paid leave.

Between 1 January and 30 June 2011, eligible Employees will receive PPL payments directly from the Family Assistance Office, however from 1 July 2011 employers will be required to administer PPL payments to eligible Employees within their business.

The PPL scheme starts on 1 January 2011, for the first 6 months of the scheme, Employers may voluntarily choose to provide Parental Leave Pay to eligible long-term employees.

From 1 July 2011, it will be mandatory for businesses to provide Parental Leave Pay to eligible employees who have worked in the business for 12 months or more, and who will receive 8 weeks or more of Parental Leave Pay.

At any time during the scheme, an Employer will only need to pay Paid Parental Leave to employees who have completed 12 months or more continuous service immediately prior to the expected date of birth or adoption of the child.

If an Employee has worked in the business for less than 12 months, or are accessing less than 8 weeks Parental Leave Pay, an Employer is not obligated to pay PPL to the Employee, however it may choose to do so.

Eligibility for PPL payments will be determined by The Family Assistance Office after the birth mother or the initial primary carer of an adopted child makes the claim for Parental Leave Pay. There is a two stage determination process:

1. An initial eligibility determinationA payability determination after the birth has been verified.
2. The scheme covers full-time employees, casual employees, part-time, seasonal workers, the self-employed, family businesses and contractors. Employees that have multiple employers and those that have recently changed jobs may also be eligible.

A claimant may be eligible for parental leave pay in respect of a child born or adopted on or after 1 January 2011 if:

• she is the birth mother in cases of birth or stillbirth, or
• an adoptive parent who will be the initial primary carer for an adopted child, or
• the partner of the primary carer birth mother or of the initial primary carer for an adopted child, or
• the legal parent of the child other than as above, or
• the partner of that other legal parent, or
• in exceptional circumstances, intended to be prescribed by the PPL rules, any other person.

To be eligible for parental leave pay the person must be the child's Primary Carer and must meet the other eligibility requirements including:

• the work test (see Appendix A)
• the income test, (have an adjusted taxable income of $150,000 or less in the previous financial year) and
• the Australian residency test (see Appendix A)

Employers will largely be responsible for delivering the payments but they will receive the required funds from the Family Assistance Office (FAO) in advance of making a payment to the Payee.

The process is as follows (a flowchart diagram can also be found in Appendix B):

1. The Employee notifies and agrees on leave arrangements with their Employer before commencing leave prior to the birth or adoption. At this time, they will notify their employer when they wish to receive PPL payments.
2. The Employee applies to the Family Assistance Office (FAO) for PPL.
3. Where an Employee has submitted a claim for Parental Leave Pay, and is eligible, the FAO will make an employer determination (the FAO will determine if the person's Employer is required to pay instalments).
4. Where the Employer will make the payments, the Employer will be contacted and asked to provide details:
   
   a) Australian Business Number (ABN)
   b) business name
   c) payroll cut off details
   d) pay cycle details (applicable to the employee)
   e) contact name and contact number, and
   f) bank account details.
   
   ere an Employer Determination is made the Employer can appeal against the determination if they do not consider the person to be their Employee. The Employer will need to provide evidence to the FAO demonstrating why the person is not their Employee. If the FAO is satisfied that the person is not an employee of the Employer, the Employer Determination will be revoked and the FAO will provide Parental Leave Pay to the person.
   
   A business can register for the Paid Parental Leave scheme through Centrelink Business Online Services. This will enable the business to provide details online.
   
   
5. The Family Assistance Office will make PPL payments to the employer. Paid Parental Leave funds are provided to businesses before the Employee's usual pay cycle. The funds will be received fortnightly from Centrelink throughout the 18 weeks or a business may choose to receive them in 3 six-weekly installments.
6. The employer will make payments to the employee minus PAYG tax.

What if my Employee has been working for another Employer in the last 12 months? Who makes the PPL payments?

Where an Employee has worked for two Employers within the last 12 months, the following rules will apply;

1. If the claimant has worked for two or more employers in the previous 12 months, but was an employee of only one employer immediately prior to the child's birth, that employer will provide the pay.
2. If the claimant has worked for two or more employers in the previous 12 months, and was employed by more than one employer immediately prior to the child's DOB, the claimant will nominate which employer will provide the pay.

Tax should be withheld from Parental Leave Pay by the Employer under usual PAYG withholding arrangements, however, Parental Leave Pay is not subject to payroll tax, workers compensation premium liabilities and Employers do not need to make superannuation payments for PPL.

Additionally, Employees will not accrue leave entitlements during a period of government PPL.

Businesses do not need to notify Centrelink when PPL has been paid, however, businesses must keep written financial records of the Paid Parental Leave funds received and the Parental Leave Pay paid to the Employee.

The only deductions that can be made from an Employee’s Parental Leave Pay are:

• PAYG withholdings at the appropriate rate for that Employee
• deductions that the Employee has authorised and that are principally for the Employee's benefit, and
• child support, if the Employee has a child support liability.

An Employee must be provided with notification of their Parental Leave Pay within 1 working day of the payment being made. Notification of payment can be provided either on a payslip or on a separate record.

Parental Leave Pay amounts must be identified separately from other amounts that attract superannuation and/or payroll tax and/or workers compensation premium liabilities.

The additional details that must be included on the payslip are:

• the date the payment (to which the notice relates) was or will be paid
• the gross amount of the payment
• the total net amount of payment
• the total PAYG deducted (the PAYG withheld or the net amount that relates to Parental Leave Pay does not have to be separately identified.)
• the amount deducted from the gross amount of the payment (for example, salary sacrifice) and the name and/or number of the fund or account into which the deduction was paid.

Where an Employee receives Parental Leave Pay as well as other paid entitlements such as annual leave or paid maternity leave, the gross amount of Parental Leave Pay will need to be shown.

PPL Payments amounts must be included in the total amounts on the Employee's annual and part-year payment summary, however PPL Payments do not need to be separately identified on payment summaries.

• An Employee can 'keep in touch' with their workplace, participating in activities at the workplace for up to 10 days from the birth or adoption until the end of the PPL period without losing the entitlement. “Keep in touch” days cannot occur within the first two weeks after the birth. The Employee will be paid their usual wages or salary in addition to the Parental Leave Pay for the time they attend work. This is a voluntary agreement between the Employee and the Employer. An Employer cannot make this a compulsory requirement for the Employee.
• An Employee will not be paid PPL payments for any period after returning to work. An Employee can be "keeping in touch" with their workplace, however, if an Employee returns to work, PPL will stop. If an Employee decides to return to work before the end of the 18 week Paid Parental Leave period he/she will need to notify the Family Assistance Office. Remaining PPL entitlements may be transferrable to another eligible Primary Carer.
• A business will not have to provide Parental Leave Pay to a person who ceases to be employed by the business, for example, where the Employee resigns before the period of their Parental Leave Pay finishes.