Start-ups to feel increasing pressure to provide extra paid parental leave

Start-ups are now under pressure to offer their own paid parental leave programs in addition to the Federal Government’s scheme, with a new survey revealing more businesses are implementing their own schemes as a talent attraction tool.

Consulting firm Mercer surveyed 284 organisations about their intentions in relation to paid parental leave in light of the government’s Paid Parental Leave scheme, which came into effect on January 1.

According to the survey, 72% of organisations already offer some form of paid parental leave entitlement.

Of the 28% of businesses that haven’t introduced their own scheme, about 25% are considering doing so in addition to the government’s scheme.

Tricia Sneddon, leader of human capital strategy and talent consulting at Mercer, says the research shows many organisations are already aware of the benefits that a paid parental leave scheme can offer for both the employee and their employees.

“While many organisations are yet to reevaluate exactly how they will administer their policy, they are not prepared to lose the competitive edge their scheme provides by decreasing their paid parental leave entitlement,” Sneddon says.

“It will be essential for employers to benchmark the various components of their paid parental leave policy and total reward offering to monitor their competitiveness against peer organisations.”

Sneddon says any business thinking of introducing their own scheme should not be deterred by the government’s scheme, and instead should focus on creating the best program they can, particularly in light of the skills shortage.

“If you look at the findings of the survey, you will find that 28% of the people that we surveyed that did not currently have a scheme in place say they will take it as an opportunity to top up the normal rate of pay for the employee,” Sneddon says.

“They are looking at this as a positive thing. They want to be seen as the best employer, so they believe it is important for them to show that as the skills shortage emerges and more people are looking for generous platforms.”

“It’s important to show that you are the best employer, that you’re giving them what they want, and that you will be the most attractive out of any number of businesses.”

According to the survey, the biggest challenge for employers will be the issue of compliance, with the majority of respondents indicating the Government’s scheme will be difficult to administer.

Businesses must act as paymaster under the scheme, handling the payment of money from the Government to the employee.

In addition to developing administrative procedures, Sneddon says businesses should start thinking about how they are going to replace employees who go on leave.

“Continuity of businesses is a key issue here. So how are businesses going to fill particular roles? What are they going to do to make sure the business continues to run?” she says.

“SMEs need to know how they are going to cover those skills – smaller businesses may have more difficulties initially doing so. They need to start getting their minds around that.”