Parental leave scheme relies on honour system

A key element of Labor’s new parental leave scheme forces employers to rely on an honour system in determining the leave entitlements of employees.

Under draft National Employment Standards released by Workplace Relations Minister Julia Gillard last week, a couple with a new child is entitled to request up to 24 months unpaid leave – either 12 months each, or the full 24 months for one parent.

That means an employer can only be clear on whether an employee is entitled to claim a period of unpaid parental leave if they are able to find out whether the employee’s partner has taken any leave.

The draft NES on parental leave requires an employee to stipulate the amount of leave their partner has taken when they request an additional 24 months leave, but it does not provide for any means for employers to confirm the accuracy of statement.

The consequence, according to Australian Business Lawyers managing partner Tim Capelin, is that employees are limited more by their ability to afford extended parental leave than any cap on entitlements.

“Most employers will either ignore the cap or proceed on an honesty basis. People will make a statement that they are ‘taking maternity leave and my partner hasn’t’, and that’s it. There is no government register or way of checking in the system,” Capelin says.

And, in practice, employers may find it very difficult to come up with reasonable grounds to refuse an additional 12 months parental leave for an employee that has already taken a year, Capelin says.

“If an employer has survived for 12 months with someone away on parental leave, it’s unlikely you’ll be able to reasonably say you can’t handle another 12 months,” Capelin says. “The suggestion that an employer would have any real chance to assert it was unreasonable for an employee to have another 12 months may prove to be illusory.”

For more on Labor’s IR changes, see Peter Vitale’s rundown on the laws and what they will mean for your business.