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Paid Parental Leave Bill – Second Reading Today

Minister of Women’s Affairs and Associate Minister of Labour, Laila Harré, today moved the second reading of the Parental Leave and Employment (Paid Parental Leave) Bill.

Speaking in the House, Laila Harré called the Bill a “good start”.

“It acknowledges that the workforce for whom most workplace protections were designed – blokes with wives at home looking after children – has changed dramatically. Women are in the paid workforce in record numbers. Women have babies. And having babies means having to take time off work.”

Acknowledging submitters who called for the extension of the scheme, Ms Harré said “I will continue to work towards extending the scheme. So that more mothers qualify. So that the length of leave is increased to the new ILO standard of 14 weeks at the very least. And so that the amount we pay is at least as much as we pay to those recovering from rugby accidents and car crashes.”

“We have come this far because we have had high expectations. Lets keep it that way.”

The most significant amendment to have arisen out of the Select Committee process clarifies the enforcement role of the Labour Inspectors. Other amendments address some employer concerns about the calculation of entitlements and earnings.

The Bill gives working parents who have been in paid employment with a single employer for 10 hours or more a week 12 weeks paid leave at the birth or adoption of a baby. The payment will be $325 gross per week or 100% of their previous weekly earnings, whichever is lower, and can be shared between parents, including those in same sex relationships.

Contact: Sarah Martin, acting press secretary, phone 04 471 9908/ 021 88 00 28

Fact Sheet: Parental Leave and Employment Protection (Paid Parental Leave) Amendment Bill

The Parental Leave and Employment Protection (Paid Parental Leave) Amendment Bill amends the principal Act to provide a government-funded entitlement of up to 12 weeks’ paid parental leave for female employees entitled to parental leave under the principal Act.

Under the principal Act, an employee is eligible for parental leave if they will have worked for the same employer for 12 months up to the expected date of delivery (or adoption), for at least 10 hours a week. The Bill extends eligibility for parental leave generally, including payments, to employees who work atypical or variable hours by requiring that the employee will have worked at least an average of 10 hours a week (including at least one hour a week or 40 hours a month, to ensure that there is a continuous pattern of work). Where an employee is absent from work on authorised leave with or without pay during the 12 month eligibility period, they will usually be treated as having been in the employment of the employer for the purposes of eligibility.

The definition of “employee” is extended to include homeworkers, in line with the Employment Relations Act, the Minimum Wage Act and the Holidays Act.

The term “spouse” is extended to include same sex partners, consistent with the Human Rights Act 1993. Where two spouses jointly adopt a child under 5 years old, they must nominate which of them is to be primarily entitled to the parental leave payment.

The entitlement is available to those whose baby is expected, or is born or adopted, on or after 1 July 2002.

Primary eligibility for parental leave payments is provided to eligible mothers, but they can transfer their entitlement to their spouse, provided he/she is also eligible for parental leave.

If the mother dies or loses legal guardianship of the child, a spouse who also meets the eligibility criteria can succeed to the payment.

The payment will replace earnings from any job from which the employee is eligible for and takes parental leave. If the recipient has taken leave from more than one job, the payment replaces the total income from all those jobs, up to a cap of $325 per week.

The payment period covers the first 12 weeks of the employee’s parental leave, taken in a continuous period. The employee must be on parental leave to receive the payment.

Payments will be made fortnightly, and will continue until the mother returns to work or resigns from her job, even if the baby is miscarried, dies, or is given for adoption, or the mother herself dies.

The maximum payment will be increased annually to maintain the relationship with average weekly earnings as measured by the Quarterly Employment Survey (QES). The rate can also be increased at the discretion of the Minister.

The statutory payment is treated as taxable income and subject to student loan repayments and child support deductions, but not ACC levies.

Parental Tax Credit
Employees who are eligible for both the Parental Tax Credit and parental leave payments must choose one or other. Once made, the decision cannot be changed.

Employment Agreements
Payments to which employees are entitled under an employment agreement will not be affected by the statutory payment. Employers and employees can negotiate any entitlements they see fit. Employers cannot, however, unilaterally reduce employees’ contractual entitlements in response to the statutory scheme. Contractual provisions that are more favourable in terms of eligibility criteria or leave provisions do not make employees eligible for payments if they do not meet the statutory criteria.

The Bill amends the principal Act to enable Labour Inspectors to enforce rights and benefits in respect of parental leave and parental leave payments under the Act. This will include the power to assist with disputes, for example over eligibility. These powers reflect those that Labour Inspectors have under the Employment Relations Act and other employment legislation such as the Minimum Wage Act and the Holidays Act, including the ability to issue demand notices.

International conventions
The Bill will improve New Zealand’s compliance with international obligations, possibly enabling New Zealand to remove its reservations against the United Nations Convention on the Elimination of Discrimination against Women (CEDAW) and the United Nations Convention on Economic, Social and Cultural Rights (ICESCR). The Bill will also move New Zealand closer to compatibility with ILO Convention 183 on Maternity Protection. However, there will not be full compatibility as the Convention requires a minimum of 14 weeks’ paid maternity leave for all employed women, without qualifying criteria.

2003 review
The Government has indicated that it will review the effects and implementation of paid parental leave one year after the Act takes effect. The review will look at issues such as eligibility and the level and duration of the payment.


Q. What are the changes in the Bill as reported back?

A. The changes tidy up and clarify the existing provisions. In particular the enforcement role of Labour Inspectors is clarified.

Q. How will the Bill impact on employers?

A. Employers already have to allow their eligible employees to take parental leave of up to 52 weeks (except where it is not practicable to replace the employee on a temporary basis because of the key position they hold in the organisation). The Bill obliges employers to complete part of the paid parental leave application form, to certify the employee’s eligibility and provide information on their earnings for the purposes of establishing the appropriate level of payment. Employers will also have to provide information on employee’s entitlements under the Act.

Q. What help do employers get to comply with these obligations?

A. To assist employers, the Bill provides guidance on how to calculate earnings and the application of eligibility conditions. In addition, information will be readily available from the Department of Labour and the Inland Revenue Department, as appropriate, to help employers to meet their obligations. Labour Inspectors will be able to help determine average hours and average weekly earnings where there is doubt over an employee’s eligibility.

Q. What are the administrative arrangements for delivering payments?

A. The Department of Labour is the department responsible for the Parental Leave and Employment Protection Act. It will provide information on rights and entitlements, and its Labour Inspectors and employment problem solving procedures will be available to resolve disputes between employers and employees about parental leave, including eligibility for payment.

The Department of Labour has contracted the Inland Revenue Department to deliver the payments. Inland Revenue will receive applications, and make payments. Where there is doubt about eligibility, it will refer the application to the Labour Inspectors of the Department of Labour.

Q. Why can’t self-employed people and all mothers having babies get paid parental leave?

A. The principal Act makes parental leave available to employees only. A review in 2003 will consider the issue of eligibility, including eligibility for self employed people. However, the needs of mothers who are not in the labour force are met through family assistance and income support. For example, Parental Tax Credit of $150 a week for 8 weeks is available to mothers with new babies, depending on their income. Mothers eligible for both parental leave payments and parental tax credit can choose whichever is more beneficial to them.

Q. Is the payment available to people who already have negotiated parental leave payments under their employment agreements?

A. Yes. The payment is a statutory payment, paid on the basis of the employee’s earnings to the maximum of $325 a week, regardless of any payments the employee may be entitled to from their employer. When employers and employees have negotiated their own payments, they have sometimes traded off other benefits in the process. Employers and employees are free to negotiate any further conditions they like. However, employers may not unilaterally reduce negotiated conditions or payments.

Q. How does the payment affect people on benefits?

A. Parental leave payments are treated as income for the purposes of family assistance and income support. Beneficiaries who are also employed will be eligible for parental leave payments if they meet the eligibility criteria. Parental leave payments will be abated against benefit entitlements in the same way as the income it replaced would be abated. No beneficiary would be financially disadvantaged by receiving a parental leave payment.

Q. Why should student loan repayments continue to be deducted from parental leave payments?

A. The parental leave payment is treated as income for the purposes of PAYE tax deductions, student loan repayments and child support deductions, and family assistance entitlements. The repayment threshold for student loans in the 2002/03 income year will be $15,496. A recipient of parental leave payments who had no other income during the paid parental leave period would be required to repay $2.70 per week during that period. If they were on unpaid parental leave for part of the year, they would make no payments during that period unless they chose to do so. Their total liability for the year would be assessed by Inland Revenue at the end of the income year, and any over or under payment established. Further interest may be written off in full or in part, depending on whether the student is studying full-time or part-time and on their income level.

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