Government to boost parental leave provisions

As part of Budget 2014’s comprehensive package of practical measures to help families and children, the Government will spend an additional $171.8 million over four years to enhance parental leave provisions, Labour Minister Simon Bridges says.

“The Government is committed to doing its part to give children the best possible start in life and this comprehensive range of measures will help to reduce some of the stress placed on families when a new child arrives. 

“The changes will also ensure New Zealand’s parental leave framework better reflects modern working arrangements and today’s diverse family structures.” 

The paid parental leave improvements include:

• Increasing the length of paid parental leave to 18 weeks, up from the current 14 weeks. This will happen in two steps - to 16 weeks on 1 April 2015 and then to 18 weeks on 1 April 2016

“Financial pressures are the main reason parents go back to work earlier than they would like after having a baby,” Mr Bridges says. “Increasing the length of paid parental leave makes it easier for parents to take more time off work to spend with their newborn child if they wish to.

“Each year, around 26,000 people take paid parental leave. This initiative will cost $141 million over four years.”

• Extending paid parental leave to ‘Home For Life’ parents and others with similar permanent care arrangements such as those with parenting orders

“This change reflects the fact that family structures have become more diverse since paid parental leave was first established,” Mr Bridges says.

“Permanent guardianship arrangements, for example Home for Life (a Child, Youth and Family programme that involves providing a home to a child as a permanent fostering arrangement) have become more common than formal adoption.”

This change means that up to 600 more families will be eligible for paid parental leave. It will cost $12.1 million over the next four years.

• Extending parental leave payments to more workers - in particular, to people who have recently changed jobs, seasonal and casual workers, and workers with more than one employer

“Some workers currently miss out on parental leave payments because even though they may have a long work history, they haven’t been working regularly for the same employer.

“Under the extension, this group of workers will not automatically have their job held open for them, but will be able to get parental leave payments if they work a minimum number of hours over a specified period.” 

This change means that up to 800 more parents will be eligible for paid parental leave. It will cost $18.7 million over the next four years.

• Making paid parental leave more flexible

“Current rules prevent a person on parental leave from coming back to work for activities like training and planning days. 

“Making parental leave more flexible will mean people could, for example, work an occasional day during their leave period without jeopardising their entitlement.

“Flexibility promotes connection to the workplace and encourages employees to maintain skills, which can be beneficial to both the employee and employer. 

“Changes around flexibility, as well as the extension of eligibility for paid parental leave, will be finalised after public consultation.

“The changes to enhance parental leave will be complemented by the increase to the parental tax credit from $150 to $220 a week and extending its length from eight to 10 weeks, also announced as part of Budget 2014. 

“These measures, along with the other measures in Budget 2014, will help to improve outcomes for families and children while also being fiscally responsible and recognising current economic conditions.

“When it comes to children, we want parents to make the best choices for their families. Budget 2014’s comprehensive package of measures will help them do that by providing more support and more flexibility,” Mr Bridges says. 

Fact sheet - paid parental leave

• Women can currently get up to 14 weeks’ taxpayer-funded paid parental leave (PPL). To qualify, they must have worked regularly for the same employer, or have been self-employed, for an average of 10 hours a week for at least the previous six months.¹ Parental leave payments can be transferred to a spouse or partner.
• PPL replaces the employee’s earnings up to a maximum payment. Currently this is $488.17 a week before tax. The maximum weekly payment is adjusted each year to reflect increases in the average wage.
• PPL can also be claimed when a person or couple adopts a child under six.
• Around 26,000 families get taxpayer-funded PPL each year.
• Women can also be entitled to up to 52 weeks of employment-protected unpaid parental leave, if they meet the criteria.
• More details about paid (and unpaid) parental leave can be found at http://www.dol.govt.nz/er/holidaysandleave/parentalleave/

1  Including at least one hour in every week or 40 hours in every month.

What is changing?

PPL will be extended to 18 weeks…

• The Government will extend PPL from 14 weeks to 18 weeks.
• This will happen in two steps - to 16 weeks from 1 April 2015 and to 18 weeks from 1 April 2016.
• This extension of PPL to 18 weeks will be introduced in Budget-night legislation.
• Extending PPL will make it easier for parents to take more time off work to spend with their new-born child, if they wish to do that.

…eligibility widened to include permanent carers…

• From 1 April 2016, permanent carers will be eligible for PPL, including:
  • primary carers providing permanent foster care, such as Home for Life parents
  • people who have permanent guardianship, and
  • grandparents caring for grandchildren.
• As a result, up to 600 more families will be eligible for PPL.
• This change reflects the fact that family structures have become more diverse since PPL was first established. Permanent guardianship arrangements, for example, have become more common than formal adoption.

…and payments extended to less-regular workers.

• From 1 April 2016, parental leave payments will be extended to people in less-regular jobs.
• Employees will be entitled to parental leave payments (but won’t automatically have their job held open for them) if they worked an average of at least 10 hours a week with any employer over any 26 of the previous 52 weeks.
• This change will extend parental leave payments to people who have recently changed jobs, more seasonal and casual workers, and a number of workers with more than one employer.
• As a result, up to 800 more employees will be eligible for parental leave payments.

Parental leave will also become more flexible       

• Current rules prevent a person on parental leave from coming back to work for activities like training or planning days.
• The Government therefore intends to make parental leave more flexible for employers and employees.
• This includes, for example, allowing people to work an occasional day or attend a course during their paid and unpaid leave period.
• These arrangements will be with the agreement of both the employer and the employee, and will be limited by law.

Details of changes to the flexibility of parental leave, and to eligibility for PPL, will be finalised after public consultation.

Costs of the package

The administrative cost of implementing these changes is $1.3 million over 2013/14 and the next four years.