PARENTAL LEAVE

The legislation
The legislation is called the
Parental Leave and Employment Protection (Paid Parental Leave)
Amendment Act 2001. It amended the existing legislation – I will deal
with the amendment and then the unchanged legislation because people
seem to be having more difficulties recently.Who is eligible for paid
parental leave?

Women whose babies are due on or after 1 July
2002 (or who are adopting babies on or after this date) are eligible to
receive paid parental leave if they have worked for the same employer
for at least 10 hours per week for 12 months prior to the expected date
of delivery. The eligibility criteria are based on existing criteria
contained in the current legislation, the Parental Leave and Employment
Protection Act 1987.

In order to be eligible to receive leave,
women need to work until the final six weeks of pregnancy. There are
exceptions to this for medical reasons.

The baby's mother is the
only person entitled to claim leave (refer attached Form 1). The mother
can choose to transfer the leave to the baby's father, or to a female
partner (as long as these people are also eligible for parental leave)
(refer attached Form 2). At present the scheme does not cover single
men adopting a child, or men whose partners die in childbirth. The
Government has indicated that it will examine these potential loopholes.

Women
who are expecting babies who have changed employers in the 12 months
prior to the delivery date will not be eligible for the paid leave. The
Government has indicated that it will review this aspect of the scheme
after the first 12 months of operation.
One of the most
controversial aspects of the scheme is the exclusion of self-employed
women. It is estimated that this could affect up to 8,000 women per
annum. The Government has indicated that difficulties in measuring what
many self-employed women earn, and whether they will actually be taking
leave, has led to the exclusion of self-employed women from the scheme
at this stage. Once again, however, the Government has indicated that
it will review this aspect of the scheme after 12 months. How much will
the mother receive?

Eligible women receive a maximum payment of
$325 (gross) per week. This is the equivalent of 53% of New Zealand's
male and female average weekly earnings. This equates to a net figure
of $256.75 (based on a 21% tax rate). Women who earn less than $325 per
week will be paid 100% of their normal wages/salary. It is paid
fortnightly and will be subject to the employee's normal tax rate.

Calculating and advising wages to IRD for paid parental leave
As
we know (above), the payment for parental leave replaces wages up to
$325 gross per week. In order for a woman to receive her entitlement
the employer must supply information to the IRD. This requires that an
application form be completed. The form requires that the employer
confirm that:
• The employee is entitled to payment (has met the eligibility criteria); and
• Their earnings.

In
calculating their earnings, you look at average weekly earnings.
However, the application will be made before the date of birth
therefore the employer is required to estimate income based on the
whole pattern. A formula for this is set out below, however as
discussed the website has an interactive guide that will also assist.

For
employees who clearly would have received a wage of more than $325 per
week or $16,000 per year had they been at work for a full year at the
date of delivery/adoption no calculation is required. Record their
current gross weekly wage. The employee should receive the maximum
payment of $325 per week.

For employees whose income is less
than $325 gross per week, and would have had a consistent weekly wage
had they been at work for a full year at the date of delivery/adoption
no calculation is required. Simply record the current gross weekly
wage. The employee should receive their current weekly wage while on
leave.

For employees who are employed on a regular roster or
cycle which would have continued had they been at work for a full year
at the date of delivery/adoption you need to calculate the average. Add
together the gross wages for each week of the cycle and divide by the
number of weeks; the resulting figure should be recorded.

Where
it is unclear that an employee's income would have exceeded $325 per
week or $16,900 per year (eg pay varies from week to week without a
regular pattern: bonuses, commission or overtime have increased the
income) a calculation is required to establish the average weekly
earnings.

• First record the pattern and level of income
earned from one year proceeding the expected date of birth to the last
pay period prior to completing the calculation.
• Then extend the
pay pattern as if it had continued until the employee is due to give
birth or adopt, including any payment they could have expected to
receive, such as commission, bonuses, paid parental leave or annual
leave, but excluding any period of unpaid leave they are expected to
take prior to the birth or adoption. This figure is the employee's
gross annual earnings for the 12 month period.
• Then divide the
amount by the number of weeks covered by the calculation (eg if the
employee plans to commence leave three weeks before the expected date
of birth divide by 49) to identify the employee's average weekly
earnings. This is the figure that should be provided to Inland Revenue.

However,
the number of weeks you divide by also needs to be reduced where any of
the following circumstances apply to the employee:
• They have taken leave of any kind without pay with your agreement.
• They have been absent and receiving ACC compensation.
• They have had leave for service with the Territorial Army.
•
They have been absent for a reason that a Labour Inspector does not
consider disrupts the normal pattern of work (for example a regular
closedown of the place of work during which time the employee is
unpaid).

(For example, if the employee is commencing leave three
weeks before delivery/adoption and has spent four weeks on unpaid leave
the gross salary should be divided by 45, ie 52-3-4.)

If, when
completing the calculation you experience difficulties, or where there
are differences between yourself and an employee about the calculation,
a Labour Inspector can determine the amount on your behalf.

If you disagree with the Inspector's calculation you may refer to the difference to the Employment Relations Authority.Who pays?
The
scheme is taxpayer funded and it is estimated that it will cost about
$57 million per year (including implementation costs). The Government
has indicated it will retain the parental tax credit. This is a scheme
which gives lower and middle income families up to $150 per week for
eight weeks when they have a baby, regardless of whether either parent
is working. Those eligible will be able to access paid parental leave
or the parental tax credit, but not both.

The Department of
Labour, as the agency responsible for delivery of the scheme, contracts
with IRD to process the payments. The Department of Labour is
responsible for public information on the scheme, and questions
regarding eligibility.

If you have any questions regarding paid
parental leave you are able to ring the Employment Relations
Information Line (0800 800 863) or look at their website
(www.ers.dol.govt.nz). This site has an online system that enables you
to work out a parental leave entitlement as well as the application and
transfer form.How does the scheme fit with existing arrangements?

The
other provisions of the Parental Leave and Employment Protection Act
apply in regard to maternity leave and extended leave. The same rules
and timeframes apply to applying for leave from the employer and to the
employer's obligation to respond. The requirement to hold the job open
unless it is a key position also remains in force.

Employees who
take paid parental leave are not required to return to work at the end
of the 12 week period. In other words, employees will continue to be
eligible to take extended leave of up to 52 weeks following the birth
or adoption of a child.

In cases where an employee wishes to
return to work earlier than 12 weeks after the birth, the employee will
be entitled to receive the paid leave up until he or she returns to
work.

The Government has indicated that it will not require
persons to pay the money back if they decide not to return to work
after taking paid parental leave. This aspect of the scheme has
attracted criticism from a number of employers who have voiced concerns
that this will lead to employees claiming leave where they have no
intention of returning to work and, consequently, to employers having
to keep jobs open or employ temporary staff unnecessarily.

The
Government has indicated that private or voluntary arrangements between
employers and employees are still strongly encouraged. Given the
current level of the payment, it is anticipated that a number of
employers who currently provide paid parental leave at 100% of a
worker's earnings will “top up� the leave provided by the
Government scheme, or simply continue with their own scheme in addition
to that paid by the Government. How does this affect you?

Employers
who currently have paid parental leave schemes in place should have
already reviewed existing parental leave policies. How do they fit with
the new scheme?

This may result in more people electing to apply
for parental leave where they might otherwise have resigned when
leaving work to have a child. It is important to remember that all the
procedural requirements around parental leave still exist – make sure
you do it right. Make it easy for yourself and your staff. Who is not
entitled to parental leave or a parental leave payment?

Someone will not be entitled to leave or payment if they are:
• Self employed
• Not in paid employment
• Fail the eligibility test of 12 months employment at an average of 10 hours per week.Parental Tax Credit

If
an individual is not entitled to PPL, they may be entitled to other
forms of family assistance such as the Parental Tax Credit. Information
on the Parental Tax Credit can be obtained from Inland Revenue. It is a
family assistance payment made through Inland Revenue to parents. The
number of children in the family and the family's level of income are
used to calculate whether the family is entitled to a payment.
Pamphlets on all forms of family assistance are available from Inland
Revenue or the Employment Relations Service.

It is not possible
to receive both PPL and the Parental Tax credit. Further, an individual
cannot receive PPL if their spouse or partner has received any parental
tax credit payment in respect of the same child. When parents have
decided what entitlement they will receive, their decision is final and
cannot be changed. While in many circumstances PPL will be more
beneficial than the tax credit, this may not always be the case and it
is advisable to check. There is only one leave (PPL) entitlement
regardless of the number of children born at one time. Therefore, in
the case of multiple births, it is sometimes better to consider
applying for the Parental Tax Credit. Again, for advice an individual
can call the IRD free on 0800 377 777.

Review
The Government
has indicated that the paid parental leave scheme will be reviewed 12
months after its implementation. 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 the level of payment.

The Parental Leave And Employment Protection Act 1987 – An Introduction
The
Parental Leave and Employment Protection Act 1987 provides, in effect,
exactly what the title suggests, parental leave for employees with the
security of knowing their employment will be protected for when they
return to work.

The Act allows both natural mothers and fathers
and adoptive mothers and fathers to take up to a total of 54 weeks
parental leave between them when they are having a baby or adopting a
child under 5 years old. Under the amendments its coverage now extends
to same sex couples.Who does it apply to?

To apply for parental
leave, employees must have worked for the same employer for at least 10
hours a week for 12 months before the expected date of birth or
adoption.

Entitlements under the Act
There are four types of
leave under the Act – special leave, maternity leave, paternity
leave, and extended leave. All types of parental leave under the Act
are unpaid.

Special leave allows 10 days leave before maternity
leave for reasons connected with pregnancy, for example antenatal
checks. This leave is additional to the 52-week period of maternity and
extended leave.

Maternity leave allows the mother up to 14
continuous weeks leave. This can start 6 weeks before the expected date
of birth or adoption.

Paternity leave allows the father up to
two continuous weeks around the time of the birth or adoption. This
leave is additional to the 52-week period of maternity and extended
leave.

Extended leave allows up to 52 continuous weeks, less any
maternity leave taken. Extended leave is available in the 12 months
after the birth or adoption and can be shared by both parents.

Both
parents can take their leave together or one after the other, provided
that the maternity leave and the extended leave taken by both partners
does not add up to more than 52 weeks.

For example, a mother may
take 14 weeks maternity leave and then 26 weeks’ extended leave,
totalling 40 weeks. Her partner may then take the remaining 12 weeks’
extended leave, totalling 52 weeks. The partner of course was also
entitled to take his 2 weeks’ paternity leave around the time of the
birth or adoption.

Employment Protection
If the parental
leave period is four weeks or less – the job must always be kept
open, unless the employer can show that the position cannot be kept
open because of a redundancy situation.

The job must be the same
job occupied by the employee prior to the leave or, if the employee was
transferred to a safer position as a result of her pregnancy, prior to
that transfer.

If the parental leave period is more than four
weeks – the job will be kept open until the end of the leave unless
the employer can show that a temporary replacement is not reasonably
practicable because of the key position held by the employee within the
employee’s enterprise.

Key Position
A key position is determined by, among other things, the size of the enterprise and the training and skills required in the job.
It appears from case law and commentary that the employee will be entitled to their position unless the employer can prove that:
•
The position occupied is of such a crucial and pivotal nature to the
efficient operation of the employer’s enterprise that it is required
to be filled on a permanent basis; and despite that requirement,
• A temporary replacement is not reasonably practicable because of the nature of the position; and
•
The claim of the employer to such non-practicability is such as
outweighs the maintenance of the employee’s right to return to his or
her position at the end of a period of parental leave.

The
employer must establish that it is not reasonably practicable to put in
a temporary replacement because of the key nature of the position.
Reasonably practicable has been interpreted in one case as virtually
impossible. Difficulties - even an impossibility - in finding a
temporary replacement are not relevant unless they arise out of the
nature of the position.

In determining whether a position is
“key� and whether “temporary replacement is not reasonably
practicable due to the key position�, each case must be decided on
its own facts.

The onus of proving a position is key lies on the employer but in practice, very few jobs are key positions.

If
the employee is dissatisfied with the employer’s finding that the
position is a key one, the Act provides a disputes procedure, whereby
the employee may refer the complaint to mediation or to the Employment
Relations Authority for a determination if it remains unresolved.

The
Act promotes settlement of disputes, although it is also armed with the
remedies of reinstatement, reimbursement and compensation.What Happens
to the Position?

If the job is a key position and cannot be kept
open, the employer must give the employee preference, over a six-month
period after the end of parental leave, for any available jobs which
are substantially similar to the employee’s old job.

If the
job is not a key position and remains open for the employee, employers
may hire a temporary replacement. The replacement must be fully
informed by way of written notification that he or she is employed on a
temporary basis to replace someone on parental leave, and that the
person may return from leave early.

Written Requirements
Virtually
every step on the way to parental leave and back to the work force
afterwards requires written notice both from the employee and employer.

In
most cases the employee must give the employer three months’ written
notice before the baby is due, unless the employer agrees this is
unnecessary or in the case of an adoption.

The letter must specify:
• what leave is required;
• the start date of the leave period; and
• the length of the leave.

If extended leave is also being taken, the letter must also specify:
• the dates on which both partners plan to start and finish each period of leave;
• the partner’s name and address of his or her employer; and
•that the total leave of the partners is no more than 52 weeks (excluding the paternity leave).

A
doctor’s certificate must also be attached stating when the baby is
due and a male partner must also include a written declaration from his
partner confirming that he is her partner and is going to share the
care of the baby.

The Act also provides special provisions for
the written notice required in an adoption situation as it is not
always known in advance when responsibility for the child will be
required.

The employer then has seven days in which to ask for
any required information that has not been given. The employee must
provide this within 14 days.

The employer must reply to the
application within 21 days. The Act provides standard forms for
replying. The reply should specify:
• whether the employer is entitled to take parental leave, and if not, the reasons why not;
•
whether the job can be kept open or not. If it cannot, the letter
should tell the employee that he or she will have preference for
similar jobs for six months after the end of the parental leave; and
• the main rights and obligations of the employee under the Act.

Other written requirements include:
•
Once the leave period has started, the employer must write to the
employee to confirm the arrangements made. This must be done within 21
days after the employee has gone on leave. The letter should give the
date on which the employee is to return to work and remind him/her to
write to the employer 21 days before returning.
• The employee
must write to the employer 21 days before the leave ends, giving the
date of return. If the job has not been kept open, the employee should
advise the employer 21 days in advance of the date when they will be
available for work. This date then becomes the start of the six-month
preference period.
• If the employee decides not to return to work, the employer must be notified 21 days before the leave period ends.
•
If the employee wishes to return to work earlier than arranged, because
of miscarriage, the baby is stillborn or dies, or is adopted or cared
for by someone else, he or she must notify the employer 21 days before
the return. The employee may also return to work earlier if the
employer agrees.
• Failure to comply with notice requirements may
result in notices being set aside (if they are defective), or in the
case of an employee, the loss of ability to take parental leave.
•
There are provisions in the Act that give people “a second change�
to fix any defects in their notices. The form of the notices are set
out in a Department of Labour brochure and are available on the
Employment Relations Service Website. Other Employment–related
benefits/entitlements while on leave
• Superannuation

Most super schemes require payments whilst on leave.
• Service Entitlements

Time on leave counts as unbroken service (except for apprentices) for the purposes of service-related entitlements.
• Holiday Pay

If
the employee becomes due for annual holidays during the leave or in the
following year, the holiday pay is paid at the average rate of the
employee’s earnings over the whole of the previous year.

The
employee is entitled to the same amount of holidays but the pay is
reduced according to the amount of leave taken in that year.

For
example, the mother works for six months and then is on leave for six
months. Total the amount she earned in the six months she worked and
then divide that by 52. This will be her pay for each week of holiday.
• Income Support

Sole
parents can usually get a domestic purposes benefit while on parental
leave. Other forms of income support may also be available to parents.

Relationship to Employment Agreements

An
employee may negotiate more favourable terms of parental leave under an
employment agreement. Parental Leave clauses in employment agreements
are lawful under the Act providing they make arrangements for the
following:
• who can take parental leave;
• how long the various types of leave last;
• how well the employee’s job is protected during and after the leave;
• whether or not the leave is paid;
• what procedures have to be followed.

An employee can choose to be bound by the agreement provisions or the provisions under the Act, but not parts of both.

Disputes or Problems
If
a problem cannot be resolved between the employer and employee an
employee may take a parental leave complaint to the Employment
Relations Authority for investigation. A complaint may be on the
grounds that an employer:
• wrongly advises that the employee is not entitled to parental leave;
• refuses to keep the job open without good reason;
• dismisses the employee because she is pregnant;
• does something to disadvantage the employee in respect of their parental leave rights;
•
unfairly tells the employee to begin maternity leave early for safety
reasons or because he or she believes the employee cannot do their work
adequately;
•  unfairly transfers the employee to another job for
safety reasons or because he or she believes the employee cannot do
their work adequately.

A complaint may also be made where the
employee returns from leave to find their job or their conditions of
employment have changed to the extent that the job was not
substantially similar to their original job.

A complaint must be made before whichever is the latest:
• 26 weeks after the action complained about;
• 26 weeks after the expected date of birth;
• eight weeks after the end of parental leave.

In
some circumstances a complaint could be made to the Human Rights
Commission. For example, for discrimination on the grounds of gender.
You cannot, however bring a claim in both the ERA and the HRC for the
same set of facts – you have to choose which one you want. A
successful complaint under the Parental Leave Act can result in the
complainant being reinstated, receiving reimbursement of lost earnings
or receiving compensation.

Developing Your Leave Management Practises
It
is important that this area of leave management is handled properly.
Often, while it is a happy time, employees are concerned about job
security, money and their health. For that reason, the stress and
anxiety levels can be high.

People generally want to know what they have to do. They then want certainty around what is happening to them.

A
good idea is to be pro-active. Have an information package or tip sheet
available for people that might need it. There is also nothing wrong
with offering them the information or at least letting them know it is
available without them asking for it. (Of course, you need to be
sensitive in terms of timing). Information should be available early on
– remind people of the timeframes involved.
If someone is not
getting what they are asking for (for example, their position is deemed
key), meet with them and explain why. If you are unsure what they are
asking for – talk to them.

Try and resolve any
misunderstanding or issues sooner rather than later. At the very least
you will know whether you really have a problem, if not, how to solve
it. Talking early also enable parties to attend mediation before going
on leave. Otherwise you can end up running out of time!

Remember,
be pro-active. Offer the information and get back to people promptly.
Do not create unnecessary stress for either yourself or the employee
through delay.

BIRTH MOTHER EMPLOYEE'S SAMPLE LETTER[Date]
Mr A Green
Green and Black Plumbers Ltd
13 Main St
Middleton

Dear Mr Green

I wish to inform you that I want to take parental leave.

I attach a certificate from my doctor saying when my baby is due.

I
want to take leave between November 14 2002 and February 20 2003 as
maternity leave, and then February 21, 2003 to August 19, 2003 as
extended leave.

My partner, Jason Smith, is also applying for
parental leave from his work at Smart’s Supermarket, 21 Kowhai St,
Middleton. He will take partner's/paternity leave for two weeks when
our baby is born, about the end of November 2002, and then extended
leave between August 20 and November 13, 2003.

The total leave we are applying for is no more than 52 weeks, excluding my partner's paternity leave.

Yours sincerely

Julie Brown

PARTNER/SPOUSE EMPLOYEE'S SAMPLE LETTER
[Date]
Mrs B Smart
Smart’s Supermarket
21 Kowhai St
Middleton

Dear Mrs Smart

I wish to notify you that I want to take parental leave.

I
attach a copy of my partner Julie Brown’s medical certificate and her
declaration that I am her partner and that I intend to share
responsibility for looking after the baby.

I will take two
weeks’ partners/paternity leave about the end of November when our
baby is born, and then extended leave from July 20, 2003 to November
13, 2003.

Julie is also applying for parental leave from Green
and Black Plumbers Ltd, 13 Main St, Middleton. She will take maternity
leave from November 14 to February 20, 2003 and then extended leave
from February 21, 2003 to August 19, 2003.

The total leave we are applying for is no more than 52 weeks, excluding partner's/paternity leave.

Yours sincerely

Jason Smith

Notice from Employer to Employee in Response to Request
To be given to an employee within 21 days after the employer receives notice that the employee wishes to take parental leave.

To [insert name and postal address of employee]

Your notice stating that you wish to take parental leave is acknowledged.
[For section 2 below, choose ONE option, complete the details and then delete the option that DOES NOT apply]

1 You are entitled to take parental leave commencing on / /
and ending on / /
or

2 You are not entitled to take parental leave because-
-
you will not have been employed, for the immediately preceding 12
months, for at least an average of 10 hours a week (including at least
1 hour in each week or 40 hours in each month) at the expected date of
delivery of the child (or at the date on which you, with a view to
adoption, assume care of the child).

2 [state which of the
reasons given above applies to the employee, plus, if applicable, any
other reasons why the employee is not entitled to take parental leave]

3
[Use section 3 where the employee IS ENTITLED to take parental leave
and then delete whichever option does NOT apply. Delete the whole of
section 3 where the employee is NOT entitled to take parental leave].

Your employment can [or cannot] be kept open until the end of your parental leave.

4
[Choose section 4 where the employee IS ENTITLED to parental leave, but
their employment CANNOT be kept open. Delete the whole of section 4
only where the employee is NOT entitled to take parental leave, as
indicated in section 2 above].
• Your employment cannot be kept open because [delete whichever option does NOT apply]:
of the occurrence of a redundancy situation
or
in
the case of certain periods of leave exceeding 4 weeks, a temporary
replacement is not reasonably practicable due to your key position.
•
You will, for the period of 26 weeks beginning with the day after the
date on which your parental leave ends, be given preference over other
applicants for any position that is vacant and that is substantially
similar to the position held by you at the beginning of your parental
leave.

5 [CHOOSE SECTION 5, EITHER WHERE THE EMPLOYEE’S
APPLICATION FOR PARENTAL LEAVE IS DECLINED OR THE EMPLOYMENT CANNOT BE
KEPT OPEN. DELETE THE WHOLE OF SECTION 5 IF PARENTAL LEAVE IS BEING
APPROVED AS IN OPTION 2 ABOVE].

YOU MAY, BY A PARENTAL LEAVE
COMPLAINT MADE UNDER SECTION 56 OF THE PARENTAL LEAVE AND EMPLOYMENT
PROTECTION ACT 1987, DISPUTE MY STATEMENT THAT [DELETE WHICHEVER OPTION
DOES NOT APPLY]:

YOU ARE NOT ENTITLED TO TAKE PARENTAL LEAVE.

OR THAT

YOUR POSITION CANNOT BE KEPT OPEN.

IF
YOU WISH TO MAKE SUCH A COMPLAINT, DO NOT DELAY AS THE TIME FOR MAKING
SUCH A COMPLAINT IS LIMITED. YOUR UNION REPRESENTATIVE OR YOUR
SOLICITOR OR THE DEPARTMENT OF LABOUR WILL ADVISE
YOU.__________________________ / /

Employer
Notice to employee whose job is being kept open

To be given to an employee within 21 days after the employee begins his or her parental leave.

To [insert name and postal address of employee]

1 Your parental leave ends on / /
2 You will be required to return to work on / /

You are required to give to*
not
later than 21 days before the date on which your parental leave ends, a
written notice stating whether or not you will be returning to work at
the end of your parental leave.
[*insert name of employer or me]
3 You should read the information below.

__________________________ / /
Employer

Notice to employee whose job is not being kept open

To be given to an employee within 21 days after the employee begins his of her parental leave.
To [insert name and postal address of employee]

1 Your parental leave ends on / /
2 You will, during the period of 26 weeks beginning on* / / be given preference by†

over
other applicants for any position that is vacant and that is
substantially similar to the position held by you at the beginning of
your parental leave.
[*insert the date of the day after the employee’s parental leave ends
[†insert name of employer or me]
3 You should read the information on below.

 

__________________________ / /
Employer

Ends.