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2010
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF REPRESENTATIVES
PAID PARENTAL LEAVE (REDUCTIONOF COMPLIANCE BURDEN FOR EMPLOYERS) AMENDMENT
BILL 2010
EXPLANATORY MEMORANDUM
Circulated by authority of
The Hon Bruce Billson MP
Paid Parental Leave (Reduction of Compliance Burden for Employers) Amendment Bill 2010
OUTLINE
In June 2010, the Parliament passed a Paid Parental Leave scheme which comes into effect from 1 January
2011. The scheme provides for eligible recipients to receive up to 18 weeks paid parental leave per child,
paid in instalments, at the national minimum wage.
Under the scheme, payments are administered by Centrelink's Family Assistant Office for the first six
months after which employers will be obliged to receive payments from the Commonwealth for on-
forwarding to eligible employees. Significant fines may be imposed against employers that fail to comply
with the numerous obligations and compliance requirements imposed under the scheme.
This Bill seeks to remove the administrative and compliance burden costs and risks the Government wants
to impose on employers by obliging the employers of eligible recipients to carry out this `pay clerk'
function. These unnecessary and avoidable costs and risks include the need for employer to become
familiarised with their obligations and responsibilities under the Government's scheme; necessary changes
to payroll and accounting systems; staff training; the receipt, handling, processing and timely payment of
instalment amounts; compliance, verification and reporting requirements; and the opportunity costs of this
displaced effort and resources.
Employer organisations and the small business community are deeply concerned about being forced to be
the `pay clerk' for the Government's paid parental leave scheme because of the costs, `red tape' and
compliance burdens and risk this will impose.
The Government has failed to provide any persuasive justification or considered account of the likely
benefits that it believes will arise compared with the clear and uncontested costs and risks that arise for
employers as a result of the imposition of the `pay clerk' responsibilities under the scheme
This Bill aims to amend the Paid Parental Leave Act 2010 to remove the ability to impose the `pay clerk'
responsibilities on employers and to indefinitely maintain the role of the Secretary to administer payments
to eligible recipients (via Centrelink's Family Assistance Office) beyond the first six months of the scheme.
FINANCIAL IMPACT
The Bill will have no financial impact. The cost involved in establishing and implementing the system will be
incurred under either the `direct payment' process or whether the employer receives payments for on-
forwarding to eligible recipients and both involve a similar Commonwealth process for payment .
NOTES ON CLAUSES
Short title
This Act may be cited as the Paid Parental Leave (Reduction of Compliance Burden for Employers)
Amendment Act 2010.
Commencement
This Act commences on 1 July 2011.
Schedule 1 - Payer of parental leave
The Bill removes references to the employer wherever the Act refers to either an employer or the Secretary
(of the relevant Department) paying parental leave, and places the obligations and duty solely on the
Secretary.
Item 1
This item concerns the payment of parental leave by instalments and removes reference to employer and
places the duty solely on the Secretary.
Item 2
This item repeals section 64 to remove reference to instalments to be paid by the person's employer and
substitutes an amended section that to refer only to the secretary in relation to calculating the
commencement of the instalment period and payday.
Item 3
This item amends subsection 67(1) to omit reference to "An employer or the Secretary" and substitutes
"The Secretary" in relation to the deductions from paid parental leave entitlements for other employee
benefits.
Item 4
Amendment to Subsection 67(1) also repeals the note as the note refers to salary sacrifice deductions by
employers. As the Bill aims to relieve employers of `pay clerk' responsibilities, the note is redundant.
Item 5
This item amends section 68 to omit reference to "An employer or the Secretary" and substitutes "The
Secretary" in relation to PAYG deductions.
Items 6 & 7
These items repeal subsection 69(1) as it relates to the employer duty to deduct funds for child support
from PPL instalments as the Bill aims to remove employer `pay clerk' responsibilities.
Item 8
Currently this Subsection 70(2) states "An employer must comply with subsection" as it relates to the
restriction on what deductions can be made from PPL instalment payments. This amendment repeals this
subsection and the note concerning penalties for non-compliance as the Bill aims to remove the `pay clerk'
role for employers.
Item 9
This item repeals Part 3-2 that contains the operational provisions for the payment of instalments to a
person by the person's employer.
Item 10
This item repeals the Guide to section 83 as it relates to the employer obligation to make payments
including after a Fair Work Ombudsman and replaces it with a new Guide to section 83 that removes
references to employer responsibilities, retaining references to the obligations on the Secretary.
Item 11
Section 84 is repealed by this item as it concerns the responsibility of the Secretary to where an employer
determination is not conclusive and inserts a replacement section obliging the Secretary to pay instalments.
Item 12
This item repeals sections 85 and 86 as it concerns the Secretary's responsibilities to make instalment
payments where arrears payments arises from an employer determination is revoked or never came into
force. This section is redundant as the Bill aims to remove the `pay clerk' role for employers.
Item 13
Sections 93 and 94 are repealed as these sections are no longer required as they relate to the effect on
instalment periods when the Secretary make payments to accommodate employer determinations coming
into force or being revoked after review and `stop gap' payments are required. These sections are
redundant as the Bill aims to remove the instalment payment processing obligation on employers.
Item 14
This item repeals Part 3-5 that details the employer obligations to pay instalment payments when an
employer determination is in force. This section is redundant as the Bill aims to remove the instalment
payment processing obligation on employers.
Items 15 - 17
These items repeal various subsections in section 117 that concern the Secretary's powers to obtain
information to enforce the obligation of employer to pay PPL instalment payments. This section is
redundant as the Bill aims to remove the instalment payment processing obligation on employers.
Items 18 & 19
These items repeal the heading in section 133 and the subsection 133(1)(b) reference to employers failing
to comply with PPL instalments payment obligations and the penalties that apply to conviction of offences
under the Criminal Code. These provisions are redundant as the Bill aims to remove the instalment
payment processing obligation on employers.
Item 20
This item omits reference in subsection 138(2)(a) to "the PPL funding amount" paid by the Secretary to an
employer for certificates prepared by the Secretary for evidentiary purposes to support prosecution for
non-compliance with employer obligations under the Act. This section is redundant as the Bill aims to
remove the instalment payment processing obligation on employers.