The Federal Government’s proposed paid parental leave scheme is a positive move for small businesses, but could force a difficult decision on large employers with generous paid leave initiatives already in place, according to Diversity Council Australia CEO, Lisa Annese.
The Coalition’s proposed scheme will give new mothers 26 weeks of paid parental leave (PPL) at their actual salary, or the national minimum wage (whichever is greater), plus superannuation.
Payments are capped at $50,000, and the plan builds on the existing Government-funded scheme, which was introduced under Labor and provides for 18 weeks’ leave at minimum wage, with no superannuation contribution.
While the DCA is extremely supportive of any measure to provide paid leave to new parents, the Government’s proposal has left many employers uncertain about the future of their own PPL initiatives, Annese told HR Daily.
“A lot of our employers already have really good paid parental leave schemes in place so they’re confused as to what they’re going to do. Do they use this as a top-up? Do they scrap their existing scheme? And then, if they do scrap it and replace it with this one, what if a new government comes in and changes it?
“There’s just so many variables and so many unknowns, and so businesses are quite confused and concerned,” she says.
The Government’s plans to fund the scheme through a tax on big businesses is also worrying, given these companies are often ahead of the curve when it comes to their own PPL schemes, Annese says.
“Large companies who are DCA members are concerned that they’re being imposed [with] a significant cost to fund the program and that that’s not fair, because they’re already providing generous paid parental leave programs for their staff members,” she says.
“We’ve actually done a lot of work as a sector to try and get organisations to implement paid parental leave schemes as workplace entitlements, as they would with sick leave [or] with annual leave, and to put them in a position now where they’re going to have to choose is difficult, because if it changes in the future, then do we go back to the drawing board and start again arguing for paid parental leave?”
Annese believes that if the scheme is introduced, employers will choose either to get rid of existing arrangements in favour of the Government initiative, or use them as a supplement.
“For organisations that will choose to top up and keep their schemes in place, well that’s amazing but I don’t know how many of them will be able to afford to do that,” she said.
The Government’s scheme is, however, good news for SMEs, many of which do not have initiatives of their own in place, says Annese.
“The people who’ll benefit most from this are smaller businesses, and I suppose for them it’s a different question altogether,” she says.
“It obviously will help small businesses, because employees will be able to take paid parental leave at their replacement wage. So that’s a major win for them and they don’t need to bear the burden of the cost.”
Childcare a higher priority for employees
Feedback from DCA members suggests childcare improvements are a higher priority for new parents than a more generous PPL scheme, says Annese.
“Most of our members already have PPL schemes in place, and so they think it’s overkill and they’d prefer that the money went into childcare,” she says.
Consultation with DCA members for its submission to the Productivity Commission’s ongoing review into childcare highlighted three key areas in which improvements are needed: affordability, accessibility and availability.
“Really what their staff members are telling us [is] what they need to continue engaging in the workplace is not a focus on parental leave now, but a focus on childcare,” Annese says.
“The three pillars that come up all the time are around the availability of childcare, which has a lot to do with regulation; the accessibility of childcare, so not enough childcare spaces basically; and the affordability of childcare, so the push from certain individuals who want to see the tax system reformed so that childcare can be either legitimately claimed as a work expense, or that there’s some other sort of tax restructure that makes it more affordable.”
Superannuation addition a win
One big positive the proposed PPL scheme has over the existing Government-funded arrangement is the addition of superannuation, added Annese.
“[Mothers will] have access to superannuation, which is something that lots of paid parental schemes have not had in the past,” she says.
“Including superannuation into paid parental leave is important, because that’s one of the things that contributes to a labour market work-gap deficit in terms of pay for women by the end of their careers.”
First published: 24th June 2014
Source: HR Daily