The paid parental leave scheme was passed through Parliament tonight. The scheme will commence on 1 January 2011. Eligible parents can take up to 18 weeks leave with a federal minimum wage (soon to be $570 a week).

Parental leave payments will be administered through the employer’s payroll system but funds will be provided by the Family Assistance Office (FAO).  Employers can choose to commence these payments to eligible employees from 01/01/2011 or to take advantage of the transitional rules for the first 6 months by allowing the FAO to pay the employee directly.

It is the responsibility of the employee to lodge a claim with the FAO who will then determine their eligibility for the scheme. If they are eligible, the FAO will inform the employer. As an employer you will need to do the following:

• Provide your bank account details to the FAO so they can pay the parental payments to you before you are required to pay your employees (via your usual pay schedule)
• Provide details of the pay cycle of the particular employee to the FAO
• Withhold PAYG tax at the normal rates
• Superannuation is NOT payable on paid parental leave payments
• Include details of parental leave on pay slips and annual payment summaries
• Notify the FAO of any changes to the employee’s status. Any unpaid Paid Parental Leave funds must be returned to the FAO
• Notify the FAO of any changes to your business ie. ceasing to trade, selling business etc.

Click here to find out further details of the paid parental leave scheme for employers.