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Paid Parental Leave Requirements For Payroll

By The Team | June 1, 2016

Paid Parental Leave (PPL) requirements have changed. In this article we have outlined the basics of the updated law, and what your obligations are whether you are an employer or an employee.


What is Paid Parental Leave?

Paid Parental Leave is a monetary supplement paid to new parents while they are on leave from work. It ensures parents do not have to take their annual leave to have funds to raise their child for the first few weeks, or need to quit their job. It also gives employers the ability to give their employees time off to raise their child without being out of pocket themselves, as the Government pays the parent direct.

Who does Paid Parental Leave cover?

From the 1st of April 2016 there have been changes to ensure the term “parent[al]” covers the now broad range of people who care for children, not just biological parents. Covered people include:

  • Biological parents
  • Adoptive parents
  • Home for Life parents
  • Whangai
  • Grandparents (with full time care)

Other permanent guardians (these are people who have the permanent primary responsibility for the care, development and upbringing of a child under six)

What are the requirements to qualify for Paid Parental Leave?

  • Care Arrangements Qualifying for Paid Parental Leave
    Expectant mothers;
    Spouse or partner – if the Mother transfers part or all of her entitlement to you;
    Other primary carers (as listed under “Who does Paid Parental Leave cover?”;
    Adoptive parents – with a view to adopt a child under the age of six.

  • Work Situations Qualifying for Paid Parental Leave
    If you’re an employee:
    You have worked for at least an average of 10 hours per week for at least 26 weeks of the 52 weeks up to your due date, or the date in which the child is to enter your care. This does not have to be for one singular employer, it covers people with multiple employers also. For example, if you work 10 hours per week for Mr John’s Bigsale then you qualify. If you work 2 hours for Mr John’s Big sale, and 8 hours for Sally’s Super-mart, then you also qualify
    If you are self-employed:
    You have been self-employed for at least an average of 10 hours per week for at least 26 weeks of the 52 weeks up to your due date, or the date the child is to come into your care
    What if I resign, or cease self-employment?
    Your Paid Parental Leave entitlement will not be affected. Under the old law, your entitlement would have ended

For how long can I receive Paid Parental Leave?

Paid Parental Leave is paid for a period of up to 18 weeks

How much will I receive?
The maximum PPL payment is $516.85 a week before tax. The actual rate you will be paid is the average of your highest 26 weeks of the 52 weeks of earnings up until the date the child arrives in your care.
If you are self employed, the minimum PPL payment is $147.50 a week before tax and the maximum is $516.85 a week before tax. You will receive the minimum payment if you earn less than $147.50 a week before tax, or your business makes a loss.

You say, “before tax”. Is the PPL subject to tax deductions?
Yes. The PPL payment is taxed just like regular income. This includes any student loan repayments.

What if my baby is born prematurely?
You may qualify for additional payments if your baby is born prematurely. If your baby is due on or after 1 April 2016, and born before the 37th week of pregnancy, you’ll qualify for the additional payments to cover the time between your baby’s date of birth and the end of the 36th week. Your regular PPL payments will start at the start of the 37th week.

But what if I’m not the birth mother, yet I have care of a prematurely born baby?
You can claim the additional payments, as long as you have (or have had) the primary care of the baby during the pre-term period.

If I’m the mother, but my partner is going to stay home to raise our child, how does this affect the PPL payments?
You can opt to have your PPL transferred to your partner or spouse, provided they also meet the PPL requirements listed above. You can transfer all, or just part, of your PPL entitlement.

Working while receiving PPL
You can still work while receiving PPL, however there are restrictions. You are able to work limited “Keeping in Touch” hours without losing your PPL entitlement. The “Keeping in Touch” hours are a maximum of 40 hours in the 18 week PPL period.

Is PPL the same as Parental Tax Credit?
No. You can’t get Paid Parental Leave and Parental Tax Credit jointly, however if you:

  • Earn less than $26, 876.20 a year from the job you are taking leave from;
  • Are expecting more than one child, from multiple births or adoptions;
  • Or, you’re taking less than the maximum number of weeks paid for parental leave

Then the Parental Tax Credit may offer you more money than the PPL.

Advice for Employers
You cannot decline parental leave requests, but you can decline to hold open the applicant’s position if:

 

  • Your employee will be gone longer than four weeks, and;
  • You can prove the position is crucial to your business, and;
  • You can prove it’s not possible to find short-term cover for the position.

When an employee applies for parental leave you must:

 

  • Ensure they are aware of their Paid Parental Leave entitlements. Therefore, it is imperative that you understand these entitlements. In addition to our information above, you can find some more information on parental leave, click here;
  • Approve or decline their request within 21 days;
  • Confirm the employee’s leave arrangements in writing

 

Pregnant employees also can take up to 10 days unpaid special leave for things such as midwife appointments, doctor’s appointments, antenatal classes etc.

In addition to the 18 weeks paid parental leave your employee may qualify for, they also would qualify for 52 weeks of unpaid parental leave.

Summary

Parental leave can be complicated for both employee and employer, but IRD and MBIE are there to help. You can visit the IRD website or the Ministry of Business Innovation and Employment (MBIE) website for further information, or contact IRD on 0800 227 774 or MBIE on 0800 20 90 20.