Paid Parental Leave

The Paid Parental Leave (PPL) scheme is an entitlement for working parents of children born or adopted from 1 January 2011. Eligible working parents can receive 18 weeks of Parental Leave Pay (PLP) at the rate of the National Minimum Wage.

Full-time, part-time, casual, seasonal, contract and self-employed workers may be eligible to receive PLP. Centrelink (which delivers social security payments and services) determines if an employee is eligible for PPL.

Parental Leave is paid to employees in their usual pay cycle and is taxable.

Paying Parental Leave Pay

Centrelink advises employers when funds are deposited into their bank accounts. Advice will be provided with details of the payment including the name of the employee, the daily rate and start and end dates of the funding for each employee.

You must enter the information in the report into a general ledger account as Inwards Cash.

If an employee is receiving Parental Leave Pay (PLP) for the first time, you must update their employee record:

Using the default pay sets to replace the current pay lines with a line for PLP, or
By manually updating the pay lines for the employee.

Using the default pay sets allows changing the pay lines to another set of pay lines. You can then apply an effective date on the old default pay set to move the original lines back once the PPL is finished.

If you don't use default pay sets, you can update the pay lines manually when the Paid Parental Leave (PPL) starts and finishes.

You can set the default pay line for PLP as a reducing pay line, which records the amount you receive in each payment from Centrelink in the Change field. This will allow the amounts of PPL received by Centrelink to be tracked and will allow only paying the amounts that have been provided by Centrelink, ensuring that additional PPL isn't accidentally paid.

Note: You must include PLP on the employee's pay slip.

Setting up a Transaction Type for PLP

You must set up a Pay transaction type with a rate of $114 per day or an hourly rate of $15. Every employee must be paid 38 hours per week.
The general ledger account selected on the transaction type will must be the same general ledger account into which the Centrelink payment goes. This acts as a clearing account for PLP.
Set PLP as taxable.

Keep in Touch Days

Keep in Touch (KIT) days are allowed during the period of PPL. Set them up like this to enable tracking:

Create a new balance tracked Pay transaction type. This should have no rate.
Add this to the Balances tab of the employee on PPL. Set a maximum overdrawn as 10.
When an employee works a day, enter a line with a quantity of 1 for the KIT day to reduce the 10 days allocated.
The employee must be paid their usual wages and salary for the time they attend work.
Once all the KIT days are used, any further working days will result in their PPL stopping.

Other Information

PLP will not attract accrual of additional leave entitlements. To achieve this, run accruals up to the last working day before going on PPL. Then enter a zero Opening Balance when the employee returns to work.
PLP will must be included the Gross amount on the Payment Summary
Employers can earn interest on PLP funding amounts, but must declare it as income.
An employee can receive PLP in addition to employer provided paid leave such as annual leave and maternity leave.
PLP is not included in the calculations for SGC
PLP is not subject to payroll tax.
PLP is not subject to workers compensation premium liabilities.
PLP can be salary sacrificed.
Employees can take PPL within 12 months of the date of birth or adoption.
Businesses that currently provide paid parental leave through an industrial agreement or other contractual agreement cannot withdraw those entitlements for the duration of that agreement.