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Paid Parental Leave Trap: “Memo to all employers” – are you potentially caught? Posted on October 9, 2018

The Paid Parental Leave scheme is a new entitlement for working parents of children born or adopted from 1 January 2011 – Parental Leave Pay is available to working parents who meet the eligibility criteria. 

From the 1st July 2011, the obligation to provide paid parental leave shifts to employers. 

So what does the Paid Parental Leave scheme mean? 



It means that employers must provide Parental Leave Pay to an eligible employee who: 

  • has a child born or adopted from 1 July 2011

  • has worked for you for at least 12 months prior to the expected date of birth or adoption

  • will be your employee for their Paid Parental Leave period

  • is an Australian-based employee, and

  • is expected to receive at least eight weeks of Parental Leave Pay

As an employer, there are a number of other things you are required to do: 

  1. Provide Parental Leave Pay (PLP) to your employee for their Paid Parental Leave period within your normal pay cycle and payslips

  2. Withhold tax under the usual PAYG withholding arrangements

  3. Include PLP in your employee’s PAYG payment summary

  4. Keep written financial records of Paid Parental Leave funds received from Centrelink and of the Parental Leave Pay provided to your employee

  5. Notify Centrelink of changes to your employment terms, bank account, or incorrect amounts received

  6. Return any unpaid Paid Parental Leave funds to Centrelink, and

  7. Notify Centrelink if you are ceasing to trade, selling your business, transferring ownership or merging with another business.

While initially it might seem another onerous task for small business, there are some benefits of the scheme for employers which should be taken into account:

  • Retain valuable and skilled staff by encouraging them to stay connected with the workforce when they become parents

  • Enhance existing family friendly workplace conditions with government funding

Some tips for avoiding the trap:

  • Take the time now to understand your obligations

  • Provide necessary details to the Family Assistance Office – register for Centrelink Business Online Services to save time

  • Work out employee eligibility – minimum work periods and an employee’s income cannot exceed $150,000 a year

  • Review your Payroll Tax and Workers Compensation reporting

  • Check your payroll settings – super guarantee is not required and it does not accrue additional leave entitlements

If you would like to know more about how it works and how to streamline this obligation for your business, please contact Robson Partners and we will happily explain how it works.

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talk to us Discover the difference that the right advice can make

Get in touch with our team today and learn how you and your business can grow to the next level. From structuring to sustainability, we'll help you reach your financial goals and live the lifestyle you deserve.

be better off.