Paid Parental Leave – A Great Start
November 7 2001 Media Statement
Paid Parental Leave – a great start
From July 1 2002 20,000 working women a year will qualify for 12 weeks paid parental leave following the birth or adoption of a child, Labour Minister Margaret Wilson and Associate Labour Minister Laila Harré announced today.
The scheme will cover about two thirds of working mothers who have babies, the rest are either self employed or don’t meet the eligibility criteria set out under the Parental Leave and Employment Protection Act 1987. These women will still qualify for the Parental Tax Credit if they are on low incomes.
Margaret Wilson said paid parental leave is a significant social policy advance and represents a major achievement for the government and the unions and women’s groups who have campaigned for such a change over many years.
“The Labour Party campaigned at the last election for paid parental leave, supporting a 12-week period as soon as economic conditions allowed.
“The scheme as announced today is a cost-effective enhancement of working conditions for New Zealanders. It continues the process of bringing employment conditions in New Zealand into line with the norm for similar countries”.
Laila Harré said the Alliance has consistently put 12 weeks paid parental leave forward as a priority, and today's announcement will go down in history as one of our most significant achievements within the Labour-Alliance Coalition Government.
"This paid parental leave scheme should be seen as a good starting point. It's now up to New Zealanders to decide how it can best be expanded, and how this should be paid for.
“This is the first non means-tested piece of income policy since the family benefit was abolished. The fact that this Government has introduced paid parental leave as a universal provision is a significant shift.”
Eligible women will receive a maximum payment of $325 gross per week, which equates to 53 per cent of New Zealand’s average male and female weekly earnings. The annual gross cost for the scheme is estimated at about $57 million once PTC savings and tax are accounted for. The new government money needed is estimated at around $42 million, including implementation and delivery.
This equates to a net figure (based on a 21 per cent tax rate) of $256.75.
Up to half of female wage and salary earners will get 80 per cent of their earnings, and about one third will get 100 per cent.
Eligibility for paid parental leave will be based on the existing criteria set out under the Parental Leave and Employment Protection Act 1987.
This means parents who have been in paid employment with a single employer for 10 or more hours a week for a full year before the due birth or adoption date of a child will receive $325 gross per week or 100 per cent of their previous weekly earnings, whichever is lower.
The Department of Labour as the agency responsible for delivery of PPL will be contracting IRD to process the payments. The Department of Labour will be responsible for public information on the scheme and responding to inquiries about eligibility.
Payment can be shared between eligible partners, including those in same sex relationships.
The existing criteria for unpaid extended leave of up to 52 weeks will not change.
QUESTIONS AND ANSWERS
1.What does the New Zealand scheme offer?
Parents who have been in paid employment with a single employer for 10 or more hours a week for a full year before the due birth or adoption date of a child will receive $325 gross per week or (equivalent to 53 per cent of New Zealand’s male and female average weekly earnings), or 100% of their previous weekly earnings, whichever is lower. This equates to $256.75 net based on a 21 per cent tax rate.
Payment will be provided for 12 weeks and the mother can choose to transfer it to her partner, as long as they are also eligible, including those in same sex relationships.
2.Who is eligible?
Expectant mothers with a due date on or after July 1 2002 will qualify for Paid Parental Leave and will be able to claim payment. The Department of Labour will provide advice on how to go about this.
The entitlement for unpaid parental leave will remain the same, meaning it will be available to working parents meeting the criteria set out in the Parental Leave and Employment Protection Act 1987 (see question one).
3. Will I have to return to work in 12 weeks if I take PPL?
No. Parents meeting the eligibility criteria will still be able to take extended unpaid leave of up to 52 weeks following the birth or adoption of a child.
Private or voluntary arrangements between employers and employees for parental leave payments are still strongly encouraged in addition to the government scheme.
4.How many New Zealanders will benefit, and who gets what?
An estimated 20,000 mothers will qualify for Paid Parental Leave; this includes about 5000 mothers who work part time and 15,000 who work full time
With the maximum payment set at $325 a week before tax, those earning up to this rate will get 100 per cent of their wages.
Women earning over this amount will receive the maximum payment.
This means up to half of women wage and salary earners will get 80 per cent of their earnings, and about 40 per cent of women will get 100 per cent.
5.How will Paid Parental Leave interact with the Parental Tax Credit?
The Parental Tax Credit is not Paid Parental Leave. One third of families who currently receive the PTC do not appear to experience any loss of income on the birth or adoption of a child as the mother was not receiving any income.
In an estimated 23 per cent of families that receive the PTC, the mother will be eligible for PPL from July 1 2002.
These people will be able to access either PPL or the PTC, but not both. This enables them to select whichever scheme is most beneficial to them.
6.How many families will qualify for either PPL or the PTC?
Around 20,000 working mothers will be eligible for PPL. A further 7000 low income working mums will be eligible for the PTC, plus another 5000 low income families where mum may not have been working.
7.How much will this scheme cost?
The annual gross cost of the scheme is estimated at about $57 million once PTC savings and tax are accounted for. The new government money needed is estimated at around $42 million a year. This will cover the implementation and delivery of 12 weeks income replacement paid to a maximum of $325 gross per week.
8.How much will it cost my employer or me?
Nothing. PPL will be government funded.
9.Can I still claim 12 weeks leave if I intend to return to work six weeks after my baby is born?
No. To be eligible for paid leave you must meet the criteria set out under the Parental Leave and Employment Protection Act and actually take leave from work. So if six weeks leave is taken, we expect that six weeks leave can be claimed.
10.Will I have to pay the money back if I decide not to return to work after taking PPL?
11.My partner and I both meet the eligibility criteria for PPL. Who is entitled to claim it?
Mothers can claim PPL in the first instance but can opt to transfer some or all of the leave to the other parent, either the child’s father or their same sex partner.
12.I have been working for the past 12 months but for several different employers. Will I qualify for PPL?
Not under the initial scheme, but this is one of the issues the government will be looking at in its first review of PPL which is set down for 2003.
13.My baby is due in June 2002. Will I qualify for any PPL?
No. The government will not be introducing retrospective legislation.
14.Will I have a chance to have a say on the final form of this legislation?
Yes. The bill will have its first reading in Parliament before the end of this year, after which it will be referred to a select committee for public submissions.
15.Where to from here?
PPL will be reviewed 12 months after it is implemented. This review will include an evaluation of the scheme's longer term funding options and possible extensions to entitlements, including the period of leave and level of payment.
16. How does the New Zealand PPL scheme compare with overseas paid maternity leave schemes?
Country Duration Payment rate Maximum "weekly"
rate in NZ$
Canada 15 weeks 55% of income to C$413/week $639
France 16 weeks 100% to FRF469.66/day $775
Germany 14 weeks 100% funded by insurance to DEM25/day (plus employer top-up) 100% of earnings
Sweden 450 days 80% to SEK273,000/annum $1205
Britain 18 weeks 6 weeks @ 90% and 12 weeks @ ₤75 (or all at ₤75/week) $265
New Zealand 12 weeks 100% to $325/week $325
NOTE: Australia and the United States do not have federal legislation for paid parental or maternity leave.