Purpose of the bill
1.1
The Paid Parental Leave Amendment (Flexibility Measures) Bill 2020 (bill) introduces changes to the Paid Parental Leave (PPL) scheme that seek to better support working mothers and families and provide greater flexibility in accessing PPL.
1.2
The bill amends the Paid Parental Leave Act 2010 (Act) and makes consequential amendments to the A New Tax System (Family Assistance) Act 1999 and A New Tax System (Family Assistance) (Administration) Act 1999.
1.3
Under current arrangements, eligible working parents can access up to 18 weeks of parental leave pay (PLP) in a continuous period, at a rate based on the national minimum wage. The 18 weeks of leave must be used within the first 12 months after the birth or adoption of a child and before the parent has returned to work. While the current scheme allows the transfer of all or part of a primary carer's PPL to an eligible partner, this transferred leave must still be taken in a continuous period within the first 12 months after birth or adoption.
1.4
The changes proposed in the bill are intended to make the PPL scheme more flexible for eligible working parents by introducing:
an initial 12 week block of entitlement to be used within the first 12 months after the birth or adoption of a child (PPL period);
the ability to use up to six weeks (30 days) at any time within the first two years (Flexible PPL); and
the ability for claimants to make more than one transfer of PPL to an eligible partner (Enhanced Transfers).
1.5
The bill builds on amendments made to the Act by the Paid Parental Leave Amendment (Work Test) Act 2019 and introduces further key aspects of the 'Women's Economic Security Package' (WESP) measure announced in the 2018–19 Mid-Year Economic Fiscal Outlook.
The proposed amendments
1.6
The bill comprises two schedules: Schedule 1, which includes provisions to enable greater flexibility in accessing PPL, and Schedule 2 which includes transitional, application and saving provisions.
Overview of key changes
1.7
The following table summarises the key changes between the current PPL policy and the flexible PPL measures set out in the bill.
Table 1.1: Overview of key changes - Paid Parental Leave Amendment (Flexibility Measures) Bill 2020
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Payment period
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A PPL period of up to
18 weeks to be taken in a continuous period within 12 months of the birth or adoption.
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A PPL period of up to
12 weeks to be taken in a continuous period within 12 months of the birth or adoption; and
Six weeks (30 days) of Flexible PPL to be taken in blocks as small as one day within two years of the birth or adoption.
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Employer role
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Employers must provide PLP to eligible long-term employees for the
18-week PPL period.
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Employers must provide PLP to eligible long-term employees for the
12-week PPL period and any Flexible PPL days taken in a continuous period immediately following the PPL period within 12 months of the birth or adoption.
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Eligibility after return to work
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No eligibility for the
18-week period after returning to work.
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No eligibility for the
12-week PPL period after returning to work.
Eligibility for six weeks Flexible PPL retained after returning to work.
Can be eligible for Flexible PPL even if not eligible for initial 12 week period.
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Transfers
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Primary claimant can transfer all or part of the 18-week PPL period to a secondary claimant.
Once transferred, the primary claimant can no longer access PLP.
The 18 weeks must be taken in a continuous period within 12 months of the birth or adoption
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The current transfer rules apply to the 12-week PPL period.
The primary claimant can give permission for a secondary claimant to claim some or all of the Flexible PPL entitlement. The Secondary claimant can claim Flexible PPL in blocks as small as one day within two years from the birth or adoption.
Primary claimant can still access remaining Flexible PPL days.
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Flexible paid parental leave
1.8
As noted above, the changes set out in Schedule 1 will enable eligible claimants to claim two types of PPL: an initial 12 week PPL period and a flexible PPL period of six weeks.
1.9
The bill does not increase or decrease the PPL entitlement. The maximum duration of a person's PPL remains 18 weeks. However, the bill will enable people to elect to split their PPL and keep a flexible component of up to six weeks of their entitlement to be used within the first two years after the birth or adoption.
Impact on parents
1.10
Approximately 178 000 primary carers received PLP in the 2018–19 financial year. DSS submitted that around 4 000 parents can be expected to take their PLP flexibly each year. DSS states that this estimate is based on data collected by Services Australia in relation to the number of parents who currently:
return to work before they have received their full PLP entitlement;
return to work before claiming PLP; or
receive less than their full entitlement before their child turns one.
1.11
In particular, the changes are expected to better support self-employed women and small business owners who cannot afford to leave their businesses for 18 consecutive weeks.
Impact on employers
1.12
DSS explained that the flexible component of the scheme has been designed to minimise impacts on the role of employers. For example, where a claimant elects to claim 18 consecutive weeks of PPL, and the employer would pay for all of the person's PLP under the current scheme, the employer will continue to pay for all 18 continuous weeks.
1.13
Alternatively, if a parent initially claims 12 weeks consecutive PPL and enters into an agreement with their employer to access flexible PPL days in instalments once they return to work, the employer will stop making payments when the parent returns to work and the payments will be made by the Government.
Commencement and financial impact
1.14
The amendments are intended to commence from 1 April 2020, but the new flexible measures will start operating from 1 July 2020.
1.15
The explanatory memorandum explains that the earlier commencement date will enable parents to make pre-birth claims. However, under the transitional provisions, parents of babies born before 1 July 2020 will have their claim treated under the old scheme.
1.16
The bill is estimated to cost $25.183 million from 2019–20 to 2012–22. Total DSS funding for measures in the WESP is $17.9 million.
Legislative Scrutiny
1.17
The Senate Standing Committee for the Scrutiny of Bills and the Parliamentary Joint Committee on Human Rights made no comment on the bill.
Conduct of the inquiry
1.18
The bill was introduced in the House of Representatives on 6 February 2020. On the same day, the Senate referred the provisions of the bill to the Senate Community Affairs Legislation Committee (committee) for inquiry and report by 19 March 2020.
1.19
Details of the inquiry, including a link to the bill and associated documents, were placed on the committee's website. The committee resolved to conduct the inquiry on the papers.
Submissions
1.20
The committee wrote to a range of interested parties inviting written submissions by 6 March 2020. The committee received 22 submissions. A list of submissions received can be found on the committee's website and at Appendix 1 to this report. The committee thanks those submitters who contributed to the inquiry.
Evidence to the inquiry
1.21
All submitters to the inquiry expressed support for the measures in the bill and for the broader aim of increasing women's workforce participation.
1.22
Submitters were strongly supportive of the proposal to make the PPL scheme more flexible, noting that the measures in the bill recognise the diversity of family and work circumstances in Australia and would increase the options available to eligible families. Submitters recognised that increasing flexible access to PPL would provide benefits for employees, employers and the wider community.
1.23
The Sex Discrimination Commissioner, Kate Jenkins, described the proposed amendments as 'a further step forward in bringing the scheme of paid leave in Australia in line with international best practice, by increasing flexibility, broadening eligibility and encouraging greater economic independence of women.' Ms Jenkins noted that the proposed changes would meet key national public policy objectives as outlined in the WESP aimed at improving women's economic security, facilitating greater workforce participation and advancing gender equality. Ms Jenkins also noted the measures in the bill will serve to enhance Australia's ability to meet its international human rights obligations.
Provision for greater flexibility
1.24
Submitters noted that the current requirement under the PPL scheme to take PPL in a single block means that parents who need to return to work, whether for financial or other reasons, forfeit the balance of their leave. Submitters noted that under the measures proposed in the bill, parents will have greater flexibility to manage their financial, career or business needs while caring for their child.
1.25
The Sex Discrimination Commissioner submitted that these changes 'demonstrate a more contemporaneous understanding of how modern parenting and work interact'.
1.26
The National Foundation for Australian Women (NFAW) expressed concern that the provision for a 12 week PPL period may have the effect of lowering expectations around how long parents will spend caring for their new child. However, DSS submitted that currently thousands of new parents return to work before they have claimed and used all of their PLP. The flexibility arrangements in the bill will provide parents with the ability to choose when and how to use the remaining six weeks of their entitlement before their child turns two.
1.27
Submitters noted the importance of ensuring that both parents and employers understand the operation of the flexible PPL measures.
1.28
Submitters noted that greater clarity may be required to understand how the process of claiming flexible PPL days will work in practice, particularly for shiftworkers, contractors or self-employed workers. The Police Federation of Australia (PFA) submitted that it is 'a common feature of police work that shifts and duties are unpredictable, and subject to variation.' The PFA questioned whether administration of payment for flexible PPL days may be smoother in the case of shift workers if it were administered by the employer.
1.29
Early Childhood Australia submitted that a significant communication and outreach effort will be required from Services Australia, together with appropriate support for claimants.
Supporting small business owners and self-employed women
1.30
The proposed changes are intended to recognise the particular demands on small business owners and self-employed women. In its submission, DSS explained:
For many small business owners and self-employed women, 18 weeks is a significant amount of time to be away from their work. Under these changes, mothers will be able to take an initial period of 12 weeks PPL before returning to run their business. They will then be able to choose when to take the remaining six weeks of their entitlement before their child turns two, at a time that suits their personal business needs.
1.31
The Australian Small Business and Family Enterprise Ombudsman (ASBFEO) submitted that the proposed amendments would support small business owners and self-employed workers who are disadvantaged under the current scheme. The ASBFEO noted that the proposed changes would:
improve a business' ability to retain valued employees;
improve the ability to maintain employee-client relationships;
decrease recruitment costs due to capacity to retain staff; and
decrease employee turnover and resulting on-boarding and training costs.
1.32
Victorian Women Lawyers submitted that the introduction of the new flexible arrangements would help attract and retain female barristers as it would enable parents to take paid work leave following the birth or adoption of a child at times that suit their work flow and capacity.
1.33
The Women Barristers Association (WBA) of the Victorian Bar also expressed support for the measures in the bill, but submitted that further measures may be required to address the particular needs of some self-employed women and small business owners. WBA noted that some self-employed women, such as barristers, will continue to incur significant business expenses throughout the PPL period. WBA proposed amendments to the bill to address what it described as the inbuilt structural disadvantage in the current PPL scheme.
Supporting and promoting shared care
1.34
Submitters noted that the proposed changes to the PPL scheme will make it easier for families to transfer PPL entitlement to eligible partners. NFAW stated:
The enhanced ability in the Bill to transfer flexible PPL days to a secondary carer is consistent with changes in community expectations in respect of the role of the secondary carer. The introduction of “Dad and Partner Pay” (DAPP) has recognised the role of partners when a child is born or adopted. However, there is a growing recognition that parenting is a shared role, and employers are increasingly promoting flexible work arrangements for both parents. The ability to share the flexible portion of PPL will facilitate and accelerate such arrangements, strengthening the bond between the second parent and their child.
1.35
The Workplace Gender Equality Agency (WGEA) submitted:
Research finds that fathers are more likely to take parental leave when it is flexible, incentivised, and shorter in length, and they can maintain contact with the workplace.
1.36
WGEA and SDA also noted research indicating that when fathers and partners take parental leave there is more equal distribution of unpaid work at home and their involvement in childcare and unpaid domestic work is likely to continue following the parental leave period, assisting a smoother transition back to work for women after parental leave.
1.37
However, some submitters expressed concern that some elements of the bill may detract from this goal. For example, the PFA submitted that measures in the bill to implement a 90-day cap on eligibility to claim PLP may act as a barrier for men to become primary caregivers.
1.38
The explanatory memorandum to the bill clarifies that the measures are intended to manage the circumstances in which a person might seek to claim both PLP and dad and partner pay (DAPP) to ensure that a person:
cannot be paid DAPP on a flexible PPL day on which they are paid PLP (new subsection 115CB(FA)); and
is not eligible to claim DAPP if they have already claimed a combined total of 90 days' PLP in relation to a child, whether those days are made up of days in the PPL period, flexible PPL days or DAPP days (amended subsection 115CB(7)).
Further enhancements to the PPL scheme
1.39
A number of submitters suggested ways in which the PPL scheme could be further enhanced. Submitters noted that it has been ten years since the Paid Parental Leave Act 2010 was introduced and suggested that it is timely to consider how to ensure that Australia's system of paid parental leave is consistent with modern parenting arrangements and workforce needs'.
1.40
NFAW noted that the International Labour Organisation Maternity Protection Convention, 2000 (No. 183) (ILO C183) provides a benchmark of minimum standards for maternity leave. While Australia is not a signatory to the convention, NFAW noted that Australia does meet the minimum criteria of ILO C183 in most areas.
1.41
However, submitters noted a range of ways in which they consider Australia's support for families caring for new babies could be enhanced. These are discussed below.
Extend the period of PPL
1.42
A number of submitters suggested extending the period of PPL.
1.43
The NFAW recommended that the Government increase the period of PPL to a total of 22 weeks, with ten weeks available as the flexible PPL term. Early Childhood Australia recommended the extension of PPL to at least 24 weeks, noting the critical role of development of a secure attachment between a child and its parents for the child's ongoing development, health and wellbeing.
1.44
Other submitters recommended that the period of PPL be extended to provide a statutory period of at least 26 weeks leave, consistent with World Health Organisation recommendations.
1.45
The Sex Discrimination Commissioner submitted that internationally recognised evidence on the benefits to maternal child health and development suggests 26 weeks PPL should be provided, to allow for breastfeeding. Ms Jenkins further recommended the introduction of an additional four weeks of paid leave for the supporting parent, consistent with the recommendation of the Committee on the Elimination of Discrimination Against Women.
Increase the rate of PLP
1.46
A number of submitters proposed that the rate of PLP should be increased. The Australian Council of Trade Unions (ACTU) and SDA submitted that Australia's full-rate equivalent weekly PLP is one of the lowest in the OECD.
1.47
The NFAW submitted that the Government should consider increasing the rate of PLP 'to wage replacement or the average weekly ordinary time earnings, whichever is the lesser'. NFAW noted that ILO 183 establishes the payment rate as two thirds of the usual payment earned by the parent, whereas the rate of PLP is wage replacement to the level of the minimum wage.
1.48
The Finance Sector Union of Australia (FSUA) and SDA also recommended that the rate of PPL payment be increased to average weekly earnings. The FSUA submitted that this would help make PPL more attractive to parents who traditionally take on the 'secondary' caring role, while the SDA submitted that this would be more reflective of a worker's actual wage.
Superannuation
1.49
Submitters recommended the inclusion of superannuation in PPL payments, noting that superannuation is included in other leave entitlements. NFAW noted that in its 2009 report, Paid Parental Leave: Support for Parents with Newborn Children, the Productivity Commission supported payment of superannuation contributions while parents are on PPL.
1.50
SDA noted that the Productivity Commission had recommended that the introduction of payment of superannuation contributions on PLP be delayed for three years in recognition of the impact of the global financial crisis and uncertainties for employees transitioning to the PPL scheme. SDA submitted that it was now ten years since the introduction of the PPL scheme and recommended the extension of the Superannuation Guarantee to payment of superannuation on both paid and unpaid parental leave for up to 12 months.
Promoting shared responsibility through gender-neutral policies
1.51
Submitters advocated that the Act and the PPL scheme require further amendments to remove gender stereotypes that underpin the concepts of 'primary carer' and 'secondary carer'. Submitters noted that gender-neutral policies are more reflective of contemporary society and family structures.
1.52
Submitters noted that leading practice internationally and in the private sector demonstrates that flexible, gender-neutral parental leave policies benefit organisations, employees and families. The FSUA submitted that increasingly employers in the finance industry are moving away from rigid definitions of 'primary' and 'secondary' carers and are instead offering paid parental leave regardless of gender or the traditional 'primary' or 'secondary' carers roles.
1.53
WGEA also provided examples of private sector employers who have committed to equal access and flexibility in their parental leave policies, citing that within the first two years of engineering company Aurecon introducing its policy, the number of men taking parental leave tripled.
Increasing incentives for men to participate in care
1.54
Submitters commented on the potential for the PPL scheme to more actively influence gender norms and behaviours around paid work and unpaid caring. Submitters recommended that consideration needs to be given to providing incentives for men to take leave to care for their children. NFAW submitted:
In the light of increasingly rich policy environment among Australia’s OECD peers, and 10 years after the first introduction of Australia’s scheme, it is important to assess how the scheme could be reviewed to encourage more men to take leave to care for babies and children and to remain engaged in direct care and unpaid labour to support their families as their children grow.
1.55
NFAW submitted that this could include:
introducing ‘use it or lose it’ elements for fathers and partners;
empowering fathers and partners to access leave benefits; and
removing the conceptual divisions between primary and secondary carers.
1.56
WBA also expressed support for the introduction of government initiatives to encourage fathers to take more parental leave, including consideration of 'use it or lose it' entitlements.
Negotiating access to flexible PPL
1.57
Some submitters noted that there is currently no obligation on an employer to provide flexibility to a worker after the birth of a child and expressed concern that employees who lack bargaining power and agency at work can be left in a vulnerable position. The explanatory memorandum to the bill acknowledges that if an employee wishes to access flexible PLP they will need to negotiate time off work or a part time return to work with their employer.
1.58
The Australian Nursing and Midwifery Federation (ANMF) expressed concern 'that the burden of claiming the flexible component of PPL may be too great for individual claimants'. ANMF noted that many people, particularly people in low paid roles, from culturally and linguistically diverse backgrounds or who are vulnerable in their employment, may have limited ability to negotiate a flexible work arrangement. Some submitters recommended that consideration should be given to strengthening formal avenues for resolving disputed flexible work applications.
1.59
The Australian Industry Group (Ai Group) noted that the proposed amendments 'support, and are consistent with, greater parental workforce participation and the desire by many businesses to provide wider return to work options for employees returning from parental leave.' Ai Group submitted that it is important that any associated legislative changes take account of the needs of employers to manage their businesses effectively.
Removal of limitations on timing and duration of concurrent leave
1.60
The FSU submitted that the limitation of concurrent leave to two weeks for the 'secondary carer' can place unnecessary stress on families. The FSU sited examples of circumstances in which women may need additional support in the home post-birth, noting:
Employers in the finance industry have recognised that there are a variety of reasons that families might need additional concurrent leave and have increased flexibility of accessing this leave to allow families to make decisions that are best for their individual circumstances.
Broaden eligibility for PPL to permanent carers/foster parents
1.61
The PFA submitted that the eligibility requirements should be extended to include care of newborns through care orders. The PFA provided the example of one of its members who unexpectedly received custody of her newborn niece and needed to use carer's leave and annual leave to care for the child. The PFA stated that this was not the first example of this within its membership and submitted that excluding care of newborns in such circumstances appeared to be incongruous with the intention of the Act.
Committee view
1.62
The committee notes the clear and widespread support for the measures proposed in the Paid Parental Leave Amendment (Flexibility Measures) Bill 2020. Submitters to the inquiry have emphasised the positive impact the bill will have on the range of options available to working parents accessing paid parental leave and the flow on consequences of this for women's workforce participation.
1.63
The committee notes that currently thousands of new parents return to work before they have used all of their parental leave. The provision of a six week period that parents can use in blocks as small as a day at a time, at any time before their child turns two, will better support parents to balance work and family responsibilities. This increased flexibility will also better support parents who wish to share the care of their child, by making it easier for mothers to transfer their entitlement to their partner.
1.64
The committee also notes the significance of this flexibility for small business owners and self-employed women who may not be able to contemplate a continuous 18-week period of time away from their work. Submissions to the inquiry indicate that this flexibility will go some way toward addressing the challenges that parents in this position face.
1.65
Notwithstanding the high level of support for the measures in the bill, the committee notes the practical proposals put forward by submitters to further enhance the paid parental leave scheme. These submissions highlighted that at this ten year anniversary of the introduction of the Paid Parental Leave Act 2010, it is timely to consider avenues for ensuring that Australia' paid parental leave scheme continues to improve over time.
1.66
The committee recognises that this bill is part of a suite of measures designed to implement key aspects of the Women's Economic Security Package announced in the 2018–19 Mid-year Economic and Fiscal Outlook. The bill builds on the amendments made to the Act by the Paid Parental Leave Amendment (Work Test) Act 2019 which extended access to the paid parent leave scheme. Subject to the passage of this bill, the government intends to make complementary amendments to increase the flexibility of the existing unpaid parental leave entitlement in the Fair Work Act 2009.
1.67
The committee recommends that the Senate pass the bill.
Chair