Employer Funded Parental Leave is a range of entitlements an Employer can choose to provide to their Employees on top of Government Funded Parental Leave.

The benefits and conditions of Employer Funded Parental Leave can be stipulated in an Enterprise Agreement, Employment Contract or by developing a Company Policy. Parental Leave company policies may include both financial and non-financial benefits. 

This User Guide covers some of the most common financial benefits offered to Employees as part of Employer Funded Parental Leave. Please be mindful that it is at the full discretion of the Employer to offer any of these additional benefits to their Employees. Employers do not have a requirement to implement a Parental Leave policy within their Organisations. 

If you would like to find out more about Employer Funded Parental Leave, please refer to our Paid Parental Leave blog available on our website.

Accrue Superannuation on Government Funded Parental Leave

The Parental Leave pay scheme does not include the provision for Employers to pay Superannuation. However, Employers can still choose to accrue and pay Superannuation on Government Funded Parental Leave as an additional benefit payable to their Employees. 

1. Follow the same steps to set up the standard Government Paid Parental Leave
2. However, leave both the pay rate and the Exempt from Superannuation Guarantee option blank
   
   è  The Parental Leave Pay - Pay Item
   
   

Accrue Leave Entitlements on Government Funded Parental Leave

Parental Leave is considered by Fair Work as Unpaid Leave, whilst an Employee is on Parental Leave, Annual, Personal, and Long Service leave stop accruing temporarily. Accrual of Leave entitlements whilst the Government subsidises Parental Leave could be another benefit included in a Parental Leave company policy.

1. In the Employee contact, select the [Leave] Tab
   
   è  The Employee's Leave Tab
   
   
   
   
2. Click on on leave accrued hours
   
   è  The Employee's Leave Tab
   
   
3. Change the option Leave Calculation Method to: Fixed Amount Each Period
4. Type the number of hours the employee accrues annually
5. Click on [Save]

Top-Up the Government Funded Parental Leave to match the current Employee Pay Rate

Government Funded Parental Leave is paid at the current Minimum Wage Pay Rate. However, an Employer may choose to 'top-up' the payment funded by the Government to match the Employee's regular pay rate, as an additional benefit included in a Parental Leave company policy. 

Create the Parental Leave Pay Top-Up Pay Item

1. From the Organisation Menu go to Settings > Payroll Settings
2. Click on the [Pay Items] > [Earnings] Tab
3. Click on [Add] > Ordinary Time Earnings
4. Select/Enter the following details:
   • Earnings Name > Type: Parental Leave Pay Top-Up
   • Display Name > Type: Parental Leave Pay Top-Up
   • Rate Type > Select: Rate per Unit
   • Type of Units > Select: Hours
   • Rate per Unit > Leave Blank
   • Account > Select: Employees - Wages & Salaries (460)
   • Exempt from PAYG Withholding > Leave Blank
   • Exempt from Superannuation... > Leave Blank
   • Reportable as W1... > Select this option 
5. Click on [Add]
   
   è  The Pay Item screen
   
   

Set Parental Leave Pay in the Employee Pay

1. Go to Payroll > Employees
2. Open the Employee contact and select the [Employment] Tab
   
   è  The Employee's Employment Tab
   
   
   
   
3. In the Ordinary Earnings Rate select Parental Leave Pay Top-Up
4. Click on [Save]
5. Select the [Pay Template] Tab
6. Click on the Ordinary Hours Pay Item
   
   è  The Edit Earnings Line screen opens
   
   
   
   
7. Select/Enter the following details:
   • Earnings Rate > Select: Parental Leave Pay Top-Up
   • Calculation Type > Select: Enter Rate
8. Click on [OK]
9. Click on [+Add Earnings Rate]
   
   è  The Add an Earnings Line screen opens
   
   
   
   
10. Select/Enter the following details:
    • Earnings Rate > Select: Parental Leave Pay
    • Calculation Type > Select: Use Earnings Rate
11. Click on [OK]
    
    è  The Parental Leave Earnings Line is added to the Employee's Pay Template
    
    
    
    
12. In the Parental Leave Pay Top-Up line, enter the difference between the employee's regular pay rate and the National Minimum Wage pay rate
    Note: in this example, the employee regular pay rate is $30.00 and the minimum wage rate is $20.33 ($30 - $20.33 = $9.67)
13. Set the hours of Parental Leave pay to the Full-Time hours applicable to your Pay Period (38 weekly | 76 fortnightly | 152 monthly)
14. Click on [Save]

Extend Paid Parental Leave over the Government Funded 18 weeks

The Parental Leave Pay Scheme provides financial support to Primary Carers of a newborn or newly adopted child only up to 18 weeks of the Parental Leave period. However, Fair Work Australia allows employees to take up to 52 weeks of Unpaid Parental Leave, plus another 52 weeks. Employers may choose, as part of their Paid Parental Leave policy, to extend the Paid Parental Leave period to an additional number of weeks.

As Government-Paid Parental Leave and Employer-Paid Parental Leave are reported under the same STP category, you can use the same Employer-funded Parental Leave pay item to pay for additional weeks.