Statutory parental leave to increase – is your business prepared?

Businesses across New Zealand will need to begin preparing for next year’s increase in paid parental leave, recently announced by the Government.

Employees are currently entitled to 18-weeks statutory paid parental leave if they qualify under the 6 month or 12 month criteria. The amount of statutory paid parental leave will be extended to 22 weeks from July 1, 2018, and a further increase to 26 weeks by July 1, 2020. 

Commensurate to the extension of paid parental leave, keep-in-touch days will also be extended from 40 hours to 52 hours of paid work during their parental leave period with a further increase to 64 hours in 2020.

The current statutory payment structure will remain the same, up to a maximum amount of $538.55 gross per week.

How will the changes affect your business?

Employers need to be aware of these latest changes and all of the other legal obligations surrounding parental leave, including the options that are available to employees. Most importantly, businesses need to have clearly defined processes in place to best manage the impact of parental leave on the business.

Senior Consultant at EQ Consultants, Anita Dazzi explains: “For some employers, parental leave can cause a period of uncertainty and leave them wondering:

  • How long will cover be needed?
  • Will the person return to work?
  • How much time off needs to be allowed for, including the period prior to parental leave (i.e. doctor appointments, sickness etc.)?

“We understand that parental leave can cause disruptions, especially within small businesses; however a lack of understanding of parental leave legislation and entitlements may open your business to unpleasant situations. We encourage employers to openly communicate with employees throughout the process. Not only will this ensure a continued collaborative employer and employee relationship, but it will also reinforce positive employer branding.”

Why has parental leave increased?

Prime Minister Jacinda Ardern announced the changes earlier this month, as the Government strives to provide additional support for working families with new-borns and young children.

She said: “We want children to have the best start in life. Evidence shows having a parent at home as long as possible to care for a child provides a huge benefit for that child’s development.

“Some 28,000 parents currently enjoy 18 weeks of paid parental leave, but that’s one of the lowest in the OECD. We know that many primary care givers want to spend longer with their babies. We can do better and we will.”

What does your business need to do next?

The Government has moved to extend parental leave with urgency and the latest changes will take effect from July 1, 2018. Businesses need to ensure that they are up to date with parental leave changes, along with the many other employer and employee obligations required by law. Failing to do so could result in legal consequences for your firm.

For further advice about parental leave and your obligations as an employer, please contact EQ Consultants on (03) 366 4034 or email info@eqconsultants.co.nz