More details of government’s paid parental leave scheme leaked: could override existing contracts

The Coalition government’s new paid parental leave scheme could override existing parental leave contracts employers have with their staff, according to independent experts.

Marian Baird, a University of Sydney academic who was reportedly briefed by the government on the plan, told The Australian Financial Review that the step to override existing contracts would be done by using “social welfare powers of the constitution”.

Baird said this was an “unexpected development” as she did not think this power of the constitution had been used in industrial arrangements previously.

Minister for Small Business Bruce Billson was not available to comment this morning on the suggestion, or the impact it would have on small business. However, a spokesperson for Billson said the scheme will help “level the playing field between big and small business when it comes to attracting workers”.

“The legislation we will introduce into the Parliament will reflect the mandate we’ve received from the Australian people. Australians want and deserve a fair dinkum paid parental leave scheme, and its time has come.”

Diversity strategy and compliance consultant Prue Gilbert told SmartCompany she expects small business will welcome an overriding of existing contracts, as they have been generally supportive of the new PPL proposal.

“For small business the cost of paying maternity cover for is significant,” she says.

“The PPL scheme is fair, it lasts for six months, and that is enough time for the parents to care for the child and for the mother to recover from the birth of the baby.”

Gilbert says for small business the scheme means there is no added pressure on employers to pay for leave and for the maternity cover replacement.

“We have recently been consulted by individuals concerned that their employers are asking them to sign contracts amending their parental leave entitlements. These are SMEs that are finding the cost of paid parental leave is hurting the business.”

Gilbert echoes Billson’s view that the scheme can help small businesses play on a level field against big companies in attracting the best female talent. For SMEs who currently offer extra incentives for parental leave to attract the best staff, she thinks if the PPL overrides existing contracts, employers can invest that money into other incentives to help women return to work successfully.

When legislated, the new PPL is designed to offer women expecting a child 26 weeks leave off work, paid at their full wage, but capped at the maximum payment of $75,000.

Critics have argued against its cost at around $5.5 billion a year. It is up from the current scheme that allows women 18 weeks off work, but paid by the government at the minimum wage.

In November 2013, new legislation introduced into the House of Representatives proposed to cut red tape for small businesses when it comes to paying the PPL.

The Social Services and Other Legislation Amendment Bill 2013, will see PPL paid directly by Centrelink from March 1, 2014.

Currently, employers pay the entitlements after receiving the allowance from Centrelink.

“It is unnecessarily complex, and forces small businesses to bear the costs of the extra workload and of restructuring their payroll and accounting systems.”

At the time Council of Small Business of Australia chair Amanda Lynch told SmartCompany that small business was “delighted” that the legislation was introduced into the House of Representatives.