New Zealand: NZ Government Announces Paid Parental Leave Scheme

Twelve weeks paid parental leave will be available to parents on and after 1 July 2002, according to an announcement made yesterday by the Minister of Labour, Margaret Wilson, and the Associate Minister of Labour, Laila Harre.

Funded by the Government, the main features of the scheme are:

• an entitlement of up to 12 weeks’ leave;
• a maximum payment of $325 per week gross, or 100% of the parent’s previous weekly earnings, whichever is lower.

The eligibility criteria for the scheme will be the same as those found in the Parental Leave and Employment Protection Act 1987, which covers parents who have been in paid employment with a single employer for at least 10 hours per week for a full year before the birth or adoption of a child. In the first instance, it is only the mother of the child who may claim the paid parental leave, but there will be provision for the transfer of payment to the child’s other parent, whether the child’s father or the mother’s same-sex partner.

Although the scheme will be administered by the Department of Labour, the IRD will process the payments. The Government estimates that the annual gross cost of the scheme will be about $57 million, representing a $42 million increase in Government spending per year. These figures are based on an estimate that around 20,000 working mothers will be eligible for paid parental leave each year.

The Government also notes that it will strongly encourage private or voluntary arrangements between employers and their employees in addition to the Government scheme.

The Alliance party is claiming much of the credit for the introduction of 12 weeks paid parental leave, and it has been on the Alliance’s political agenda since 1996. However, the new scheme as announced has already drawn criticism in two areas. The first is that working mothers who have not been in the same job, but have been working, for the 12 months prior to giving birth will not be eligible for paid leave, which could be seen as unfair. Secondly, a further critique is that the scheme does not offer any income protection for self-employed or casual workers.

Employer comment remains generally opposed to the paid scheme in principle.

The Government promises a review of the new scheme in mid-2003, with a view to eventually extending the entitlements, both in terms of the period of leave and the maximum payment.

If you would like any more information, or have any questions about the Government’s announcement, please do not hesitate to contact us. We will keep you informed of any further developments. Meanwhile, employers should begin to amend their existing parental leave policy documents to ensure their consistency from 1 July next year with the proposed scheme. If they have an existing voluntary self-paid parental leave scheme, they should consider its compatibility with the newly-announced government-paid one.

If you require further information please contact Minter Ellison Rudd Watts.