Parental leave explained

Dealing with parental leave can be tricky for employers.

At a minimum employers must do what is required by the Parental Leave and Employment Protection Act 1987. However, it is a piece of legislation notoriously difficult to interpret and the costs associated with getting it wrong can be significant, as can the risk of negative public comment.

If we strip it back, a employers key obligation is to allow relevant employees time away from work. On top of that, employees have separate entitlements attached to the leave, chiefly to parental leave payments from the Government.

Those two concepts – time away from work and payments from the Government - tend to get used interchangeably but they are in fact different. Once that is understood, the rules associated with parental leave can be easier to digest and understand for employers.

In this article we discuss this further in relation to some of the different types of parental leave. We also touch on some of the obligations employers have in relation to parental leave.

Primary carer leave (previously ‘maternity leave’)

Focusing first on primary carer leave, employers must allow employees who are primary carers to take up to 26 weeks away from work if taken continually and if they meet one of the following tests:

• Employee has worked for the same employer on average 10 hours per week in the 6 months leading up to the due date or the date on which they become responsible for a child (6 month test)

• Employee has worked for the same employer on average 10 hours per week in the 12 months leading up to the due date or the date on which they become responsible for a child (12 month test)

The two similar but different tests have an impact on the entitlements while on leave – which we discuss later.

Separate to the right to take leave, primary carers are entitled to payments from the Government for up to 26 weeks. In order to receive that, they must meet the following test:

• Individual must have been employed for at least 10 hours a week for any of the 26 of the last 52 weeks leading up to the expected delivery date

What this means is that it’s easier for employees to qualify for Government parental leave payments than it is to qualify for time away from work to go on parental leave. For example, the first tests (relating to time away from work) require employees to work for the same employer, whereas the second test (relating to payments form the Government) does not.

These differences matter when a newly-employed employee is to become a primary carer – because the employer may be able to decline the parental leave application. There’s a specific process that must be followed by both parties but employers can refuse to accept a request provided they are unable to accommodate it on specific grounds (set out in the Act, for example, inability to reorganise work among existing staff). In those cases, an employee might take a shorter period of time off work. An employee who does this may still be eligible for parental leave payments if they meet the Government payment test.

Extended leave

If primary carers satisfy the 12 month test, then in addition to the 26 weeks of primary carer leave, the employer must allow them to take up to a total of 12 months away from work, and protect their employment in the meantime. There is no additional entitlement to Government payments beyond 26 weeks.

Matters affecting leave payments

The only payment provided for in the Act is the 26 weeks Government payment. This is capped at $754.87 gross per week. If an employee returns to work earlier than 26 weeks, the payments will stop – even if the employee then returns to parental leave. The only exception to this is ‘keeping in touch hours’ – which were allowed for by an amendment in 2016. Employees are entitled to perform up to 64 hours of work as a way of ‘keeping in touch’ while on parental leave, and this will not affect their entitlement to Government payments.

Note that some employers also agree to make additional payments to employees on parental leave. For example, they may agree to pay a top-up to the employee’s ordinary salary, or some benefit after the 26 week Government payment is expired. This will be detailed in the employment agreement or in a workplace policy.

Partner’s leave

Employers must provide partners of primary carers either one or two weeks away from work if they meet the 6 month or 12 month test.

Partners of primary carers are not entitled to payments from the Government. So, any time away from work is unpaid unless the employer offers payment as a special benefit.

Special leave

Pregnant employees are entitled to 10 days unpaid special leave for pregnancy-related reasons. For example, midwife appointments or scans.

Summary

As you can see, employers must provide time away from work in some parental leave situations but they are not actually responsible for any mandatory payments.

Other obligations

Employers have a number of other obligations when it comes to parental leave, including, for example:

• Keep the role open – employers must keep a primary carer’s role open during a parental of period leave (either for 6 or 12 months, whichever applies). There are limited exceptions to this for employees taking more than 4 weeks away from work.

• Preferential re-employment – perhaps one of parental leave’s best kept secrets is that if an employee is terminated during parental leave because their role cannot be kept open, they must be given preference over other applicants for any substantially similar roles within the business, for 26 weeks following their termination.

• Continuous employment – while an employer does not need to pay employees during parental leave, they must treat their employment as continuous. There are some complex arrangements for determining how annual leave is paid following a return, and it may be useful to seek specific advice on the question of how leave balances should be treated, both before and after parental leave.