As new parents, the first few weeks and months after the arrival of a child can be both joyous and overwhelming. It's a time when parents need to bond with their newborn and establish a routine, which can be difficult to do while juggling work responsibilities.
That's why many new parents naturally want to take time off from work without the fear of losing their jobs. However, for many working parents, taking extended leave can be financially challenging, and the fear of losing their job can add an extra layer of stress.
Fortunately, in many countries, there are laws and policies in place to protect the rights of new parents to take time off work to care for their children.
In New Zealand, the Parental Leave and Employment Protection Act 1987 governs the rights of new parents to take time off work to care for their child and sets out an employer’s responsibilities in this regard.
Beyond providing leave entitlements, the Act provides job protection for employees taking parental leave.
Employers must understand the Act to ensure they comply with the law and avoid potential legal issues. But, navigating it can be a minefield for employers, particularly with the many other types of leave available, such as sick, bereavement, and annual leave.
To help you understand when an employee is entitled to parental leave and how much leave they are entitled to, here is our easy-to-read guide.
The Parental Leave and Employment Protection Act 1987
The Act sets out the minimum entitlements for parental leave and aims to protect the rights of employees during pregnancy and parental leave.
All leave provided under the Act is unpaid parental leave unless the employer has agreed otherwise under an individual employment agreement. In other words, the Act doesn’t account for paid parental leave entitlements.
However, employees may be entitled to government-funded parental leave payments during their leave period.
You may be interested in reading about the differences between collective and individual agreements.
Types of Parental Leave
- Primary carer leave - This is the main type of leave available and allows for up to 26 weeks of unpaid leave for the primary carer of a child following the birth or adoption. It also applies to an employee who assumes permanent care of a child under six years.
- Special leave - Allows up to 10 days of unpaid leave for a birth mother for doctor’s appointments, rest, or recovery before the primary carer’s leave begins.
- Partner's leave - Allows for up to two weeks of unpaid leave (depending on the eligibility criteria discussed below) for partners, including spouses, de facto partners, and same-sex partners, following the birth or adoption of a child.
- Extended leave - Allows for up to 12 months of unpaid leave for employees who have exhausted their entitlement to primary carer's leave but still need time off to care for their child.
- Negotiated carer leave - Allows eligible employees, who meet the work time criteria, to leave, despite not meeting the primary carer leave criteria. The employee and employer can negotiate the length and terms of this leave. They’ll also be able to receive parental leave payments from the government-funded scheme.
What are the Eligibility Criteria for Parental Leave?
Six Month Criteria
The 6-month employment criteria require that the employee has worked for their employer for at least an average of 10 hours per week over a period of six months immediately before the expected due date, adoption date or the date when they assume permanent responsibility for the care of a child under six years old.
In this case, your employee can take:
- Partners leave for one week
- Extended leave for six months
Twelve Month Criteria
The criteria are similar for the 12-month rule: an employee must have worked for their employer for at least an average of 10 hours per week over a period of 12 months immediately before the expected due date, adoption date or the date when they assume permanent responsibility for the care of a child under six years old.
In this case, your employee can take:
- Partners leave for two weeks
- Extended leave for 12 months
How is Parental Leave Impacted if the Employee Works During that Period?
The purpose of these days is to allow employees to stay connected with their work and maintain their skills and knowledge while on leave.
What Happens if an Employee Doesn’t Return to Work after Parental Leave?
While employers may be disappointed by an employee's decision not to return to work, it's important to handle the situation respectfully and professionally.
Regarding compliance with the Act and how this impacts your payroll, the employee’s termination date will be when they started their parental leave. This means that if they have any annual leave owing to them, you must calculate it from this date.
It’s worth noting that under the Holidays Act 2003, parental leave counts as continuous employment, which means that employees on parental leave continue to accrue their annual leave entitlements. However, the calculation is based on the average weekly earnings, not their ordinary weekly pay.
You may be interested in reading our Guide to Employment Law NZ: Holidays Act 2003.
If an Employee is Made Redundant During Parental Leave, Do Receive Redundancy Pay?
Yes, if an employer makes an employee redundant while on parental leave, they must still pay agreed-upon redundancy pay.
How Can Cloud Payroll Software Help You Automate Parental Leave Entitlements?
Here are some ways that cloud payroll software can assist with managing parental leave entitlements:
- Tracking eligibility: The software can track an employee's eligibility for parental leave based on their length of employment and hours worked, and can provide notifications when an employee becomes eligible for leave.
- Managing leave requests: The software can allow employees to request parental leave online and streamline the approval process for managers. This can help ensure that leave requests are processed promptly and accurately.
- Calculating entitlements: The software can calculate the number of leave entitlements an employee is eligible for, based on their length of employment
- Managing payroll during leave: The software can automatically adjust employees' pay during parental leave based on their entitlements and any "keeping in touch" days they may have taken.
- Reporting: The software can generate reports on parental leave usage, entitlements, and other relevant data, which can help employers stay compliant with legal requirements and make informed decisions about leave management.
Overall, cloud payroll software can automate many of the administrative tasks associated with managing parental leave entitlements, freeing up HR and payroll teams to focus on other important tasks.
Key Takeaways
As we've discussed, it's crucial for employers to understand their obligations under the Act and to use tools like cloud payroll software to manage parental leave entitlements and ensure compliance.
With the right support and resources in place, employers can create a supportive and inclusive workplace culture for new parents, helping them balance work and family demands and promoting employee retention and satisfaction.
If you’re considering shifting your payroll processes from manual to automated, Pay Cat is a team of experienced payroll specialists who can help you navigate the complexities of implementing cloud payroll software, such as Employment Hero.
Our team has deep expertise in payroll management and compliance, and we’ll work closely with you to understand your unique needs and tailor our services accordingly.
Book a demo today to find out more.
