House of Representatives

Explanatory Memorandum

(Circulated by the authority of the Minister for Families and Social Services, Senator the Hon Anne Ruston)

Schedule 4 - Paid parental leave work test period

Summary

The amendments made by Schedule 4 introduce a revised Paid Parental Leave work test period for a limited time, to enable people to access parental leave pay and dad and partner pay who do not meet the current work test provisions because their employment has been interrupted by the COVID-19 pandemic. This would enable most individuals with a genuine work history pre-COVID-19 to qualify for payments under the Paid Parental Leave scheme.

The objectives of the Paid Parental Leave scheme are to signal that taking time out of the paid workforce to care for a child is part of the usual course of life and work for both parents, to promote equality between men and women and to help achieve balance between work and family life.

Amendments to the Paid Parental Leave Act, made by the Coronavirus Economic Response Package Omnibus (Measures No. 2) Act 2020, allow for time spent on the JobKeeper Payment to count towards the Paid Parental Leave work test. This is consistent with the objectives of the Paid Parental Leave scheme.

Beyond parents receiving JobKeeper Payment, some parents may have been on a pathway to maintaining a consistent work history that would have enabled them to be eligible for parental leave pay, but have not achieved a continuing work history due to the impacts of COVID-19. As a result, this cohort will have less income in the pre-birth period than originally planned, and may be relying on income support, such as the JobSeeker Payment.

In order to be eligible for payment, people claiming paid parental leave must meet the current work test requirements, in which individuals must have worked:

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at least 10 months in their work test period, and

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for at least 330 hours in that 10-month period (just over one day a week), with no more than a 12-week gap between any two consecutive working days.

Many parents who have lost employment and not met the Paid Parental Leave work test because of COVID-19 will likely still identify as working Australians, even though they may currently be unemployed.

Currently to meet the Paid Parental Leave work test, individuals must meet the work test requirements in the 13 months (392 days) prior to the birth or adoption of their child for parental leave pay, or prior to their period for dad and partner pay.

This measure will temporarily extend the Paid Parental Leave work test period from 13 months prior to the birth or adoption of a child, to 20 months (600 days) for parents who have had their employment impacted by COVID-19. This change will apply to births and adoptions that occur between 22 March 2020 and 31 March 2021.

Changes will allow people who meet the concessional work test to backdate the start date of their PPL period to the date of birth of their child. This backdating is currently not available to people who make their claim more than 28 days after the birth of their child.

The retrospective nature of the proposal may create overpayments where the individual or their partner have been receiving income support, Newborn Upfront Payment or Newborn Supplement for that child or FTB Part B for the backdated period. Existing arrangements for raising and recovery of any associated debts will continue to apply as normal.

Services Australia will work with families to ensure paid parental leave eligible parents receive their payments in a way that is least likely to affect previous period payments, and will inform parents of any future debts that may arise and how these debts can be repaid.

Schedule 4 commences the day after Royal Assent.

Explanation of the changes

Paid Parental Leave Act

Item 1 amends section 6 to insert a new definition of COVID-19 affected claimant . A COVID-19 affected claimant may be able to satisfy the work test applying the new temporary extended Paid Parental Leave work test period (see new sections 33A and 115CD, inserted by items 9 and 11 ) for parental leave pay or dad and partner pay, if they would not otherwise meet the work test.

A person is a COVID-19 affected claimant if:

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the relevant child was born, or was due to be born, between 22 March 2020 and 31 March 2021;

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the person must satisfy the work test to be eligible for parental leave pay or dad and partner pay;

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the person was affected by the adverse effects of COVID-19 in one of the following ways:

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they became unemployed;

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their working hours were reduced (including to zero); or

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their business for which they work was suspended or suffered reduced turnover; and

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as a result of those effects, the person would not satisfy the ordinary work test.

Item 2 amends the definition of work test period in section 6 as a consequence of the new temporary Paid Parental Leave work test period.

Items 3 and 4 amend section 11 as a consequence of the new temporary Paid Parental Leave work test period to allow primary claimants who meet the concessional work test to backdate the start date of their PPL period to the later of the date of birth of their child or their nominated start day.

Item 5 inserts new section 19B.

New section 19B - Parental leave pay not payable to COVID-19 affected claimant if child born after 31 March 2021

New section 19B provides that parental leave pay is not payable to a COVID-19 affected claimant in relation to a child if the child is born after 31 March 2021. The change to the work test period is only intended to be available for a temporary time.

Item 6 amends the method statement in section 32 (for working out whether a person satisfies the work test ) as a consequence of the new temporary Paid Parental Leave work test period.

Items 7 and 8 amend section 33 (relating to the work test period ) so that it only applies to claimants who are not COVID-19 affected claimants. A note directs the reader to new section 33A for COVID-19 affected claimants.

Item 9 inserts new section 33A.

New section 33A - The work test period - COVID-19 affected claimants

New section 33A introduces the temporary extended Paid Parental Leave work test period. For a COVID-19 affected claimant (see item 1 above), section 33A extends the work test period (for a primary or secondary parental leave pay claimant) from 392 days to 600 days.

Item 10 inserts new subsection 57A(2A) so that a COVID-19 affected claimant may claim flexible paid parental leave days that are more than 42 days before the date of claim, provided those flexible paid parental leave days are still within the flexible PPL period for the child (which ends only once the child turns 2 years old - see subsection 11D(2)).

Item 11 inserts new section 115BDA.

New section 115BDA - Dad and partner pay not payable to COVID-19 affected claimant if child born after 31 March 2021

New section 115BDA provides that dad and partner pay is not payable to a COVID-19 affected claimant in relation to a child if the child is born after 31 March 2021. The change to the work test period is only intended to be available for a temporary time.

Item 12 replaces section 115CD.

New section 115CD - The work test period

New section 115CD re-enacts the existing dad and partner pay ordinary work test period, and introduces the temporary extended dad and partner pay work test period. For a COVID-19 affected claimant (see item 1 above), new paragraph 115CD(a) extends the work test period from 392 days to 600 days.

Item 13 is an application provision. The new temporary extended work test period is available to parental leave pay or dad and partner pay claims that are either:

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made on or after commencement; or

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effective claims (see sections 55 and 115DE) that are outstanding at commencement.