February 01 - Business Advice - Culture

Everything you need to know about the Paid Parental Leave Scheme

You might be expecting your first, planning for pregnancy or be one or two kids in already but either way, you need to get across what you’re entitled to under the government’s paid parental leave scheme. Planning for maternity or paternity leave as a small business owner can be particularly stressful – who will step into your shoes while you’re gone? How much time off can you afford to take? These are all questions we can help you answer. First thing’s first – knowing how much paid parental leave you’re entitled to under the government scheme.

How much money and how many weeks of parental leave can you expect in Australia?

In Australia, the paid parental leave system is administered by the Australian Government through the Department of Human Services. Under this system, for babies born after July 1st 2023, eligible families can receive up to 20 weeks of paid parental leave pay at the national minimum wage, which currently equates to $882.75 per five day week before tax, for a total of 100 days.

To qualify for parental leave, you must meet these three eligibility requirements:

  • Work Test: You need to have worked for at least 10 of the 13 months before the birth or adoption of your child and have worked for at least 330 hours in that 10 month period, with no more than a 12 week gap between two working days
  • Income Test: Your individual adjusted taxable income should be $156,647 or less in the 2021-22 financial year and $168,865 or less in the 2022-23 financial year. Alternatively, if you meet the family income test of $350k you’re still eligible
  • Residency: You must be an Australian resident and present in Australia on the day your parental leave pay period starts

Who is entitled to parental leave in Australia?

  • Biological Parents: Mothers and fathers who have given birth or have a partner who has given birth to a child
  • Adoptive Parents: Those who have adopted a child under 16 years of age
  • Same-Sex Couples: Same-sex couples are also eligible if they meet the work and income criteria (including for adoption)
  • Primary Carers: In some cases, a grandparent or other relative may be eligible as the primary carer of the child if the child’s parents are unable to provide care

Get more information about eligibility if you don’t meet one of the above here.

Can your employer pay you in addition to the government parental leave pay?

Yes, you can receive paid parental leave benefits from both the government and your employer. Considering the government pay is equal to minimum wage, your employer can then ‘top you up’ to meet your full usual wage (or whatever the agreement between you and your employer is). This does not affect your eligibility for the government scheme.

How to apply for parental leave 

To claim the parental leave pay, you must:

  • Check eligibility: ensure you meet the eligibility criteria mentioned above
  • Apply within 52 weeks of the birth or adoption, if you’re the first parent to claim
  • Chat to your employer: let them know about your intention to take parental leave and then discuss what that arrangement will look like (how much leave can you take, will they provide any additional parental leave pay)
  • The employer must register online here, before you can claim
  • Decide how you want to divvy it up – if you have a partner who intends to use their two weeks + of leave, how much will they take and when? When will you take yours, and for how long?
  • Register online: registering and claiming is done via your Centrelink account, via MyGov. Make sure you’ve created these and have supporting documents ready to go
  • Start your claim. Full process here!

Once your claim has been accepted by MyGov, your employer then has a role to play. Their requirements are detailed here. The parental leave pay will be paid directly to your employer who will then process it for you as per your usual pay cycle. They will withhold the tax as per the usual PAYG arrangements. In other words if you’re the business owner, the parental leave will hit your business account which you will then need to process yourself as you usually would a pay run (if you run a company rather than being a sole trader).

Paid parental leave is one of the many reasons we’re all so lucky to call Australia home, making it possible for most people to stay home with their babies for those 100 days at a minimum. Hopefully this summary provides some structure to your postpartum planning and as always, we’re here to answer questions – particularly for employers who aren’t totally certain of the process on their end!