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5 things you may not know about parental leave

By SmartPayroll | October 28, 2020

Expecting a child is one of the most exciting times for a parent. As a business leader the best thing you can do for your people is be informed and understand your obligations. Whether you’ve got someone who is about to go on parental leave, or you simply want to be prepared, here we discuss five things that anyone managing a team should know.

Now, it’s important to understand the correct terminology but where possible we’ve used simpler language. Following is a list of key words and what they mean in the context of this article:

  1. Primary carer/Primary parent/Parent – Gender inclusive terms that mean either the birth mother or person that will take primary responsibility for the child.
  2. Leave (on its own) – Parental Leave.
  3. Unpaid leave – Primary carer and/or unpaid extended leave.
  4. Parental leave payments – Government funded payments.
  5. Entitled/Entitlements – The minimum legislative entitlements in accordance with the Parental Leave and Employment Protection Act 1987.

Alright – let’s get into it.

1. Did you know entitlements can differ between your employees?

Many people believe that parental leave is the same for everyone. However, different work situations don’t only affect the amount of leave someone is entitled to, but also the types of leave they can get.

Let’s say you have an expectant mum who works for you full-time – we’ll call her Charlotte. Charlotte may be entitled to a whole year off work, made up of 26 weeks of primary carer leave, and a further 26 weeks of unpaid extended leave. Charlotte’s eligibility however depends on her meeting what’s called the 6- or 12-month time criteria. If she’s worked for you for an average of 10 hours or more per week for any 26 weeks of the 12 months leading up to her due date, then she’s entitled to the full year. However, if she’s only been working for 6 months at the same weekly average, then she’s only entitled to the 26 weeks of primary carer leave.

Charlotte can also take up to 10 days of unpaid special leave while she’s pregnant for pregnancy-related reasons such as antenatal classes or scans. During her first 26 weeks of leave, she will also receive a weekly sum from the Government, administered by Inland Revenue. The amount she’ll get will be equal to her ordinary weekly pay or average weekly income up to a maximum of $606.46 per week, before tax. The criteria to get parental leave payments differs from parental leave entitlements, so it pays to check these closely.

Employment New Zealand has a great Parental Leave Eligibility Tool that can help you easily work out staff leave entitlements.

2. Employees can work while they’re on leave

Many parents miss the workplace while they’re away. Some miss the social side of things and others simply like to keep their “work brains” engaged. Whatever the reason, Keeping in Touch days are a way for your people to remain connected, by allowing them to work limited hours during their leave period.

If someone wants to come back to do the odd job for you, here’s what you need to know:

  • You don’t have to agree.
  • You must pay them their usual pay rate.
  • They can’t work more than 64 hours all up.
  • Their child must be at least 28 days old.

If they do more than 64 hours or return earlier than 28 days, they’re considered “back at work” and will no longer receive payments from Inland Revenue.

3. Arrangements must be confirmed in writing

The way you approach leave requests is also important and the key is clear communication. The general rule is that anyone wanting to take parental leave needs to give their employer at least 3 months notice before their baby is due. However, sharing the news over coffee isn’t enough, arrangements need to be confirmed in writing and must include:

  • The type of leave they want to take
  • The date they want the leave to start
  • How long the period of leave will be, and
  • Whether they are sharing any part of their leave with their partner and the details of this.

You need to provide a formal response

From the time someone puts in their request, you have 42 days to provide a formal response which is broken down by the following milestones:

  • When you receive their leave request, you have seven days to ask for more information
  • Your employee has two weeks to get the information to you
  • You then have 21 days to provide your formal response.

Letter templates can be downloaded from the Employment New Zealand website.

4. You can’t decline an employee’s request for leave

This shouldn’t come as a surprise, but you can’t deny someone parental leave.

For anyone taking four weeks or less the law requires that their job is kept safe. However, for people taking more than four weeks, there are two situations where you may decide that their role can’t be held, and that’s if:

  1. You define the role as a key position or
  2. There is a redundancy situation.

If someone loses their job for one of these reasons, you’re obliged to give them a 26 week ‘period of preference’ at the end of their parental leave term. This means that at any time during this preference period, if you want to recruit for a role that is  similar, you must offer it to them before anyone else.

5. Staff continue to “accrue” leave while they’re on leave

Under the Holidays Act 2003, parental leave is counted as continuous employment so an employee on parental leave will continue to “accrue” an annual leave entitlement.

However, if the employee becomes entitled to annual leave during parental leave or in the 12 months after they return to work, the pay for any annual leave taken is calculated at the rate of the employee’s 52-week Average Weekly Earnings only (without the comparison to their Ordinary Weekly Pay .

If the employee has any unused annual leave entitlement prior to going on parental leave, then the normal calculation rules for annual leave will apply to that entitlement. In other words, they will be paid the greater of their Ordinary Weekly Pay or Average Weekly Earnings at the time the leave is taken.

It’s a good idea to discuss parental leave plans with your employee as early as possible to make sure everyone is on the same page. Discuss their current entitled annual leave balance, their anniversary date for annual leave, and the effect of parental leave on the payment of annual leave when they return to work.

Get more info

Well, there you have it – the ins and outs of parental leave. If you’d like to know more there are some great resources available at https://www.ird.govt.nz/paid-parental-leave and https://www.employment.govt.nz/leave-and-holidays/parental-leave/.

Disclaimer: The content of this article is general in nature and is not intended as a substitute for specific professional advice on any matter and should not be relied upon for that purpose. We expressly disclaim any liability to you or your business in relation to the information contained in this article, and you rely on any information solely at your own risk.