Parental Leave Programs

How aiming for best practice will pay off

Parental leave enables employees to take time off work for the birth or adoption of a child and may include a range of different entitlements including employer funded leave, government funded Parental Leave Pay, unpaid parental leave, adoption leave, foster parent leave and the right to return to work.

The parental leave policies in workplaces vary and may include some or all of the entitlements described above, however, there are certain minimum entitlements which all employers are required to provide.

The benefits of a best practice parental leave policy and family-friendly, flexible working arrangements can be enjoyed at all workplaces. Businesses with flexible working arrangements, including good parental leave policies, can benefit from:

  • lower staff turnover, resulting in lower recruitment and training costs
  • recognition as an employer of choice
  • improved employee satisfaction and commitment
  • greater ability to attract new employees
  • smoother transitions for employees between work and parental leave.

The Diversity Council of Australia (DCA) has just conducted a survey of member organisations which shows that there are clear benefits to offering a paid parental leave scheme and that progressive employers are benefiting from these benefits.

DCA CEO Nareen Young says that forward thinking parental leave and flexible work options help attract and retain the most talented employees especially women and deliver a return on investment for companies which spend a lot of money training and developing employees.

“Some employers are quite innovative in their approaches such as continuing to pay superannuation while their employees are on unpaid parental leave, or making sure they remain eligible for salary reviews whilst on leave. These measures are especially important in addressing the gender pay gap for women with time spent out of the workforce having children a major contributor,” she said.

Paid parental leave

Paid parental leave can include both employer-funded and government-funded parental leave schemes.

Employer-funded paid parental leave

Many employers currently provide paid parental leave to their employees. This may be through a contract of employment, enterprise agreement or a workplace policy. Employees with access to employer funded paid parental leave schemes may also be eligible for the Government’s Paid Parental Leave scheme. It is important to remember that employers which provide paid parental leave through an existing industrial agreement cannot withdraw the entitlement for the term of the agreement.

Australian Government Paid Parental Leave scheme

The Federal Government’s Paid Parental Leave scheme came into effect on 1 January 2011 and provides Government funded Parental Leave Pay at the minimum wage level for a maximum of 18 weeks. Parental Leave Pay may start from the date of birth or adoption of a child or at a later date, it must be taken in one continuous period and must all be used in the first 12 months after the birth or adoption of a child. Government funded parental leave pay maybe taken before, after or at the same time as existing employer funded entitlements.

Employees must supply government funded parental leave pay to any employee who:

  • has a child born or adopted from 1 July 2011
  • will have been an employee for 12 months or more prior to the expected date of birth or adoption
  • will be an employee for the period of their Parental Leave Pay
  • is an Australian-based employee
  • is expected to receive eight weeks or more of Parental Leave Pay.

Employers not required to provide government funded parental leave pay can still choose to provide it to an employee if both the employee and employer agree for this to happen.

Unpaid parental leave

Under the National Employment Standards (NES), employees (including long term casuals) with 12 months or more of continuous service are entitled to take up to 12 months unpaid parental leave, with the right to request an additional 12 months of unpaid leave, subject to some requirements under the Fair Work Act 2009.

The NES provides employees with a return-to-work guarantee, enabling them to return to the same job they had before they went on parental leave. If that job no longer exists an employee is able to be transferred to a job which is nearest in status and pay to their pre-parental leave role and for which they are qualified and experienced.

Best practice parental leave schemes

The benefits of extended leave schemes for staff retention and morale have long been recognised and flexible work policies are becoming increasingly popular in forward looking workplaces. The best policies should be able to be tailored to the specific needs of individual employees and employers and options available to employers who wish to introduce a best practice scheme include:

  • extended periods of employer-funded paid leave
  • ‘topping up’ an employee’s pay during the period of Government-funded Parental Leave Pay to their full rate of pay
  • continuing to pay an employee’s superannuation contributions while on
    unpaid leave
  • a return-to-work bonus, payable after an employee has returned to work following parental leave
  • the option of taking paid leave at half pay
  • non primary carer (usually paternity) leave provisions to be taken at the time of birth or placement of a child
  • allowing the non primary carer to access existing leave entitlements, including personal leave, for extended periods around the birth of a child
  • allowing employees to purchase and repay longer periods of paid leave.

In consultation with their employer, employees can choose to organise their paid parental leave in a way which best meets their financial and caring needs. Subject to the terms of employer-funded paid parental leave policies, employees can elect to receive paid parental leave from both government-funded and employer-funded schemes consecutively or concurrently.

Staying in touch with employees on leave

An important aspect of best practice parental leave policies is details about maintaining contact with employees while they are away from the workplace. A proactive communications strategy will ensure your employees continue to feel connected to their workplace and colleagues and will ease the transition back to work.

Some strategies which may help to keep the lines of communication open include:

  • Conducting a formal handover of work, clients, milestones and key dates with employees before they go on leave.
  • Sending out regular communication update newsletter such as offered by the Care Corporate’s Stay in Touch program and ensuring the employee is kept up-to-date on key changes within the company.
  • Inviting employees on leave to attend training days, social events and team building days.
  • Organising a meeting prior to the employee returning to work to discuss dates, expectations and flexible work options.

Remember employees can choose whether or not they want to attend any work related event while they are on leave and if they do attend they should be paid accordingly. Any employee receiving government funded paid parental leave may take up to 10 days to stay in touch with their workplace before they lose their entitlement.

Flexible work

Best practice parental leave policies should always include flexible work options which enable parents to better manage their work and family commitments before, during and after a period of parental leave.

Flexible work options worth considering include enabling employees to:

  • Take single annual leave days or part days to meet family commitments
  • Take time off in lieu of overtime pay
  • Work additional hours to make up for time off
  • Access RDOs in part days
  • Enabling children to come to work or provide a carer’s room, child care facilities and/or information and resources on child care services
  • Work part time or job share
  • Work from home

How to implement best practice

According to the Fair Work Ombudsman employers who wish to implement a new parental leave policy should consider the following steps:

  • consulting with employees and their representatives to get a sense of their needs and ideas
  • seeking advice from an employer association or business advisor
  • developing draft policies and consulting with employees and their representatives on their content
  • considering an enterprise agreement to formalise the arrangements
  • publicising the new policy, with a view to attracting a wider pool of potential new staff.

Care Corporate offers employers a full range of products and services designed to make it easier to communicate with employees on parental leave. For more information contact us today!


Fair Work Ombudsman Best Practice Guide: Parental Leave

1. Diversity Council Australia survey of 152 member organisations, (74 of which responded) on paid parental leave.

This Better Workplace Bulletin was First Published in July 2012