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Change to paid parental leave: What it means for your business

From 1 July 2018, the number of weeks a parent can receive government-funded parental leave payments increases from 18 weeks to 22 weeks. Here's what you need to know.

What you need to know

Becoming a parent is stressful enough without wondering how you’ll cope financially. Parental leave helps eligible working parents or other primary carers temporarily stop working to care for their newborn baby, or for a child under six who is now in their care.

Knowing what rules apply to parental leave helps small business owners or managers prepare their resources for when their employees go on leave.

The extension of paid parental leave to 22 weeks aims to reduce financial stress on working families with newborns and young children. It will allow more time for those carers who aren’t in a position to take additional unpaid leave to bond with their children.

Remember that these changes will apply from 1 July 2018, so entitlements will be different for different staff, depending on when their leave starts.

Parental leave payment (external link) — Employment New Zealand

Paid parental leave extended (external link) — Employment New Zealand

How will it affect my business?

Employers are already required to provide a minimum of six months (26 weeks) of job-protected leave to eligible employees (if the employee has been working for them for between six and 12 months.) For employees who have worked for them for 12 months or more, the period of job-protected leave is one year.

The change doesn’t require employers to provide any additional leave. It might provide more certainty for employers, given the likelihood that more parents may take the full 26 weeks if the majority of the leave is paid. So, it could give employers greater confidence about the length of time they need to backfill the role.

Inland Revenue makes the parental leave payments, not employers.

Inland Revenue makes the parental leave payments, not employers.

From 1 July 2018, the number of hours that an employee can do paid work (‘keeping in touch’ hours) while they are on parental leave increases from 40 hours to 52 hours during the parental leave period, and will further increase to 64 hours from 2020.

Who is eligible for parental leave payments

  • The primary carer of a child under 6 years (mother, spouse or partner or someone otherwise taking permanent primary responsibility for the care, development and upbringing of the child) who has:
    • worked at least an average of 10 hours per week over any 26 of the 52 weeks before the baby’s due date, or the date a child under six comes into their care.
    • been self-employed for at least an average of 10 hours per week for at least 26 of the 52 weeks up to the baby’s due date or the date the child comes into their care.
  • Some employees who aren’t eligible for parental leave can still get parental leave payments, as long as they aren’t working.

Parental leave eligibility tool (external link) — Employment New Zealand

Parental leave payment scenarios (external link) — Employment New Zealand

Amount of weekly parental leave payments

If you’re an employee, the amount is the greater of the following, up to the maximum weekly amount of $564.38:

  • your ordinary weekly pay, or
  • your average gross weekly income.

If you’re self-employed, the amount is the greater of the following, up to the maximum gross weekly amount of $564.38:

  • your average weekly earnings, or
  • the minimum amount of parental leave payable to an eligible self-employed person.

Employees and self-employed can apply to Inland Revenue for paid parental leave before the baby’s birth, or any time up until 12 months after the child’s arrival. They must apply before they return to work for any employer or to self-employment.

Do you have more questions about paid parental leave?

Do you have more questions about paid parental leave?

Contact Employment New Zealand on 0800 20 90 20 or email employment@employment.govt.nz

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