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CHANGES TO PAID PARENTAL LEAVE
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Thursday’s Budget announcement included some significant parental leave developments, including the extension of paid parental leave to 18 weeks. We take a look at the key changes and what they mean for working families and their employers.

What are the changes?

 

Paid parental leave will be extended to 18 weeks
Paid parental leave will increase from 14 weeks to 16 weeks on 1 April 2015, and then to 18 weeks on 1 April 2016. The change aligns New Zealand with Australia, where parents are also entitled to 18 weeks paid parental leave.

 
Eligibility will be widened to include permanent carers  
Eligibility for paid parental leave is also to be extended so that ‘Home for Life’ caregivers (legal guardians of foster children) and others with similar permanent care arrangements become eligible for the payments. Labour Minister Simon Bridges said this change “reflects the fact that family structures have become more diverse since paid parental leave was first established”. 


Payments will be extended to less regular workers
Currently, to qualify for paid parental leave it is necessary to have worked regularly for the same employer, or to have been self-employed, for an average of 10 hours or more a week for at least the previous six months. These requirements will be relaxed to enable many seasonal and casual workers with intermittent or irregular work patterns, those who have recently changed jobs, and workers with more than one employer to qualify for parental leave payments (although this group of workers will not automatically have their jobs held open).


Parental leave will become more flexible
The rules will also be made more flexible to allow parents on leave to take part in employer training and planning days or work occasionally without losing their entitlements. Currently, parental leave payment cease when an employee “returns to work”. This means that if an employee returns to work during their parental leave - even just for a single day or a single meeting - they risk losing their entitlement to parental leave payments. 

This issue arose in Oliver v Department of Labour[1],  where the Department cut Ms Oliver’s parental leave payments after she returned to work for one day to help out her short-staffed employer five days after going on parental leave. Fortunately for Ms Oliver, she was able to successfully challenge this decision in the Employment Relations Authority (ERA). The Inland Revenue Department did not give her the information telling her that any return to work, whatever the period, would lead to her payments being cancelled. The ERA found that she had not deliberately returned to work in breach of the Act, and that she did not know that her undertaking work would render her ineligible to receive payments. This case demonstrates that the problematic nature of the current ‘return to work’ rules. 

It is intended that the new flexibility will promote a connection to the workplace and encourage employees to maintain skills which can be beneficial to both the employee and employer. The details of the changes to the flexibility of parental leave will be finalised after public consultation. 

Overall, the Government estimates that the changes will enable about 1,400 more families to qualify for payments. 

What’s in it for employers?


The changes announced by the Government are intended to benefit families financially, rather than making the parental leave legislation easier for employers to administer. For employers, there are still a number of risks and pitfalls around parental leave. This is particularly true in the area of holding the position open while the employee is on leave, as the Act prohibits dismissal by reason of pregnancy or parental leave. 

In the recent Authority determination of Ledger v Delmaine Fine Foods Limited [2],  an employee was made redundant during her absence on maternity leave. While she was away, Delmaine had temporarily re-allocated Ms Ledger’s duties to other employees, and decided as a result that the permanent re-allocation of her duties could result in costs savings. The Authority held that the Delmaine failed to meet its statutory obligations to keep her position open during the period of parental leave. Ms Ledger was awarded over $19,000 for lost wages and $15,000 for humiliation, loss of dignity and injury to feelings. Delmaine was also ordered to pay a penalty of $2,000. 

What should you do?


Employers’ obligations under the Parental Leave and Employment Protection Act are complex, and as the above case demonstrates, getting it wrong can be costly. If in doubt, we recommend that you speak to one of our employment law experts. 

 

 

[1]  ERA Wellington WA5/09, 15 January 2009
[2] [2014] NZERA Auckland 10

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