Revised Explanatory Memorandum
(Circulated by the authority of the Minister for Social Services, the Hon Kevin Andrews MP)
Schedule 7 - Paid parental leave
Summary
To ease administrative burdens on business, the Paid Parental Leave legislation will be amended to remove the requirement for employers to provide Government-funded parental leave pay to their eligible long-term employees.
From 1 March 2014, employees will be paid directly by the Department of Human Services, unless an employer opts in to provide parental leave pay to its employees and an employee agrees to their employer paying them.
Background
Currently under the Paid Parental Leave Act, in the majority of cases, employers are required to provide parental leave pay to their eligible long-term employees. The Secretary must make an employer determination that a person's employer is to pay the person's instalments of parental leave pay, if the Secretary is satisfied that certain conditions are met.
However, an employer determination can be made despite not all of the conditions being satisfied if an employer has made an election to 'opt-in' to pay instalments of parental leave pay to the employee and the employee consents to the employer paying the instalments. If an employer determination is in force for an employer and their employee, the employer must pay instalments of parental leave pay to their employee.
From 1 March 2014, payments of parental leave pay will be made by the Department of Human Services, unless an employer chooses to 'opt in' to manage the payment of parental leave pay to their employees and their employee agrees for the employer to pay them. This will go some way towards easing the administrative burden on business.
The amendments will only require an employer to provide instalments of parental leave pay to a person if an employer determination is in force for the employer and the employee. An employer determination can only be made if the employer has made an election to pay instalments, that election applies to the person, and certain other conditions are met, including the employee agreeing to their employer paying them. PPL funding amounts will then be transferred to the employer from the Department of Human Services for payment to the employee, consistent with current arrangements.
If an employer determination is made for a particular employer and employee, but the employer no longer wishes to pay parental leave pay for that particular employee, the employer can decline the paymaster role. If this happens, the Department of Human Services will pay the employee.
To reflect the non-mandatory nature of this role, employers who do not respond to a notice of an employer determination will no longer be potentially subject to a compliance notice. Review of an employer determination is no longer required because the employer can simply decline the paymaster role.
The amendments made by this Schedule commence on 1 March 2014.
Explanation of the changes
Part 1 - Amendments
Amendments to the Paid Parental Leave Act
Items 1, 2 and 3 amend section 4, which is the Guide to the Act, to reflect the changes made by this Schedule.
Item 4, 5 and 8 amend certain definitions in section 6, to reflect the changes made by items 11, 21, 22 and 32 of this Schedule.
Item 6 repeals the definition of employer determination decision in section 6, as this was only relevant to review of these decisions and is no longer required as a consequence of the amendment made by item 41.
Item 7 inserts a new definition of non-acceptance notice in section 6, which is defined in paragraph 103(1)(b), as amended by item 21.
Item 9 amends the note under subsection 64(1) by removing the reference to 'section 93', consequential to repeal of that section by item 15.
Item 10 amends the third paragraph in section 83, which is the Guide to Part 3-3, relating to payment of instalments by the Secretary.
Item 11 repeals subsection 84(3), to omit reference to an employer having made an application for review of the decision to make an employer determination.
Item 12 repeals and substitutes a new heading for section 85, titled 'Payment of arrears - employer determination revoked before coming into force'. This item is consequential to item 13.
Item 13 repeals and substitutes new subsection 85(1), omitting reference to subsection 84(3), but otherwise re-enacting the subsection unchanged.
Item 14 amends subsection 85(3) and is consequential to items 12 and 13.
Item 15 repeals section 93, and removes the requirement for the Secretary to pay instalments because an employer has sought review of an employer determination.
Item 16 repeals and substitutes a new section 100, which is a guide to Part 3-5 of the Paid Parental Leave Act and gives a brief outline of the matters dealt with in the Part, relating to employer determinations. The changes to section 100 reflect the amendments made by items 17 to 32.
Item 17 repeals and substitutes new paragraphs 101(1)(b) and (c). Subsection 101(1) provides that the Secretary must make an employer determination that a person's employer is to pay the person instalments if the Secretary is satisfied that certain conditions have been met.
New paragraph 101(1)(b) provides that, when making an employer determination, one of the conditions of which the Secretary must be satisfied is that the person's employer has made an election (or 'opted in') under section 109 to pay instalments and that election applies to the person.
New paragraph 101(1)(c) provides that, when making an employer determination, the Secretary must also be satisfied that the person has consented in the claim form to the employer paying instalments of parental leave pay to the person.
Item 18 repeals paragraph 101(1)(e), which removes the condition that an employer has an ABN, when the Secretary makes an employer determination. The requirement to have an ABN is now provided by subsection 109(1) (item 31).
Item 19 amends paragraph 101(1)(f), and is consequential to items 17 and 18.
Item 20 repeals subsection 101(2), and is consequential to the changes made by item 17.
Item 21 repeals and substitutes new section 103, which sets out the required employer response to a notice of an employer determination.
New subsection 103(1) provides that, if an employer is given a notice under section 102 that an employer determination has been made, the employer may, within the period referred to in subsection 103(2) (which is normally 14 days):
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- give the Secretary a written notice (the acceptance notice) that complies with section 104; or
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- give the Secretary a non-acceptance notice, orally or in writing, declaring that the employer does not accept the employer's obligations to pay instalments to the person.
New subsection 103(2) provides that, for the purposes of subsection (1), the period is 14 days, or such longer period allowed by the Secretary, after the date of the notice given under section 102.
Item 22 repeals subsections 104(2) and (5), which provide the requirement to have bank account information in the acceptance notice. This requirement is now provided in paragraph 109(2)(b) (item 32).
Item 23 repeals section 105, removing the requirement for the employer to give bank account and pay cycle information etc. after an internal review or review by the SSAT, as this is no longer relevant.
Item 24 amends subsection 107(1), and is consequential to item 27.
Item 25 repeals the heading to subsection 107(2).
Item 26 amends subsection 107(2) by omitting the reference to 'a compliance notice given under section 157'.
Item 27 repeals subsection 107(3), and is consequential to item 23.
Item 28 inserts a new item 1A in the table in subsection 108(1). New table item 1A provides that the Secretary must revoke an employer determination made for a person and the person's employer if the Secretary is satisfied that the employer has given a non-acceptance notice for the person under paragraph 103(b). In this situation, the revocation comes into force on the day of the revocation.
Item 29 amends item 2 in column 1 of the table in subsection 108(1), and is consequential to item 21.
Item 30 repeals subsection 108(6), which relates to the notice of revocation of an employer determination to the SSAT, when the Secretary revokes an employer determination, as a review would no longer occur in this situation (consequential to item 41).
Item 31 amends subsection 109(1) by adding the requirement for an employer to have an ABN, before the employer may choose to 'opt in' to pay instalments of parental leave pay to an employee.
Item 32 repeals and substitutes new paragraph 109(2)(b), which sets out the requirements of an election notice (or notice to 'opt in').
New paragraph 109(2)(b) provides that the election notice must be in the approved form and contain information (bank account information) about an account held and maintained by the employer into which PPL funding amounts can be paid.
Item 33 repeals items 10 and 11 in the table in section 146, relating to what constitutes a civil penalty provision. This is consequential to items 21 and 23.
Item 34 repeals and substitutes new subsection 157(1), which relates to compliance notices given by the Secretary, to omit reference to failing to respond to an employer determination or failing to provide certain information after a review. New subsection 157(1) provides that section 157 applies if the Secretary reasonably believes that a person has contravened subsection 82(2), which deals with an employer notifying the Secretary if certain events happen.
Item 35 amends subsection 159(1), and is consequential to item 36.
Item 36 repeals paragraphs 159(1)(b) and (c), relating to infringement notices the Secretary may give in relation to section 103 (which deals with responding to an employer determination) and subsection 105(3) (which deals with giving bank account and pay cycle information etc. after a review).
Item 37 repeals and substitutes a new last paragraph of the Guide to Part 5-1 (relating to internal review of decisions) in section 202. This change reflects the changes made by item 41.
Item 38 repeals the first note under subsection 203(2), which is consequential to the repeal of section 207 by item 41.
Item 39 changes the heading of 'Note 2' to 'Note' under subsection 203(2), which is consequential to item 38.
Item 40 amends subsection 205(1) by removing the reference to section '207', which is consequential to item 41.
Item 41 repeals section 207, removing the right for an employer to make an application for internal review of an employer determination, as an employer can now simply decline the employer determination instead.
Item 42 amends subsection 209(2) by omitting the reference to 'an application under section 207'. This item is consequential to item 41.
Item 43 amends paragraphs 210(2)(a) and (b) by removing the references to 'an employer determination decision', which is consequential to item 41.
Item 44 repeals paragraph 212(1)(c), relating to a notice of a decision relating to an employer determination decision, which is consequential to item 41.
Item 45 amends subsection 212(5), and is consequential to item 44.
Item 46 amends paragraphs 223(1)(a), (b), (c) and (d) by omitting the references to 'an employer determination decision', which is consequential to item 41.
Item 47 repeals subsection 224(1), which allowed an employer to apply to the SSAT for review of an employer determination decision. This item is consequential to the changes made by item 41.
Item 48 amends subsection 224(2) by omitting the reference to 'if the decision is an employer funding amount decision'.
Item 49 amends subsection 224(3), and is consequential to item 47.
Item 50 repeals paragraph 225(2)(b), which is consequential to item 47.
Item 51 amends subsection 278(1), which relates to Commonwealth employees and is consequential to item 52.
Item 52 repeals subsection 278(2), which relates to Commonwealth employees and is consequential to item 17.
Item 53 repeals subsection 299(1) and substitutes a new subsection.
New subsection 299(1) provides that the PPL Rules or the regulations may provide that a person may make an election under section 109 to pay instalments to another person if both persons are in a relationship that is similar to the relationship between an employer and an employee.
Part 2 - Application and transitional provisions
Item 54 is an application provision, which provides that the amendments made by Part 1 of this Schedule apply in relation to an employer determination that is made on or after the commencement of this Schedule in relation to a claim for parental leave pay that is made before, on or after that commencement.
Item 55 is a transitional provision relating to elections made before commencement. This item provides that an election under section 109 of the Paid Parental Leave Act that is in force immediately before the commencement of this Schedule ceases to be in force at that commencement.
Item 56 is a transitional provision relating to revoking employer determinations made before commencement.
Subitem 56(1) provides that this item applies if:
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- an employer determination was made before the commencement of this Schedule for a person and the person's employer; and
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- the determination had not been revoked before that commencement; and
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- the person's PPL period had not started before that commencement.
Subitem 56(2) provides that the Secretary must revoke any determination captured under subitem 56(1).
Subitem 56(3) provides that the Paid Parental Leave Act applies as if a revocation under subitem 56(2) were made under subsection 108(1) of that Act.