Government to cut paid parental leave red tape with $10 million in SME support

The federal government will channel $10 million to small businesses administering paid parental leave, as key Senate crossbenchers Jacqui Lambie and David Pocock argue local businesses deserve compensation or carve-outs for delivering parental leave payments to employees.

Labor is attempting to legislate its paid parental leave overhaul, which will expand paid leave entitlements from 20 weeks to 26 while granting each parent four weeks of ‘use it or lose it’ paid leave by 2026.

Both parents will be able to claim up to four weeks of concurrent leave under the plan, which the federal government says will assist families after a birth.

The Australian reports the federal government has now agreed to funnel $10 million towards small businesses, to alleviate the administrative burden of processing paid parental leave through their own payroll systems.

The exact shape of that funding is yet to be revealed.

News of that funding commitment arrives as Labor vies for the support of crossbench senators David Pocock and Jacqui Lambie to secure the bill’s passage through the Upper House.

While the duo have not publicly opposed the paid parental upgrades, they have argued the current system can heap significant time and administrative costs to the small businesses required to pass paid parental leave to employees.

Larger businesses may have dedicated HR and payroll departments capable of directing government parental leave payments to employees, but many small employers must take on the task themselves, adding to their overall workload.

Small business advocates have long argued that it should not fall on small business employers to administer the payment themselves.

In a statement, Pocock said this burden is “felt disproportionately by small business people, many of whom are women”.

Pocock, Lambie, and United Australia Party Ralph Babet have tabled their own amendments to Labor’s bill that would create an opt-in or opt-out system for employers.

Some 40% of government-paid parental leave entitlements are already paid by Services Australia, leading the trio to argue that small businesses shouldering the administration themselves should be compensated for their time.

They propose compensation should take the form of either a direct payment or tax offset.

Their amendments propose carveouts for businesses with fewer than 20, 10, or five employees, allowing them to opt in to process paid parental leave with compensation, or opt-out and leave it to Services Australia to handle.

“I can’t see any downside for small businesses being free to choose whether or not to administer a scheme the government can administer itself, and already does in over a third of cases currently,” Pocock said.

The paid parental leave system has been a recent focus for the Labor government, which this month confirmed it will add superannuation contributions to the government-funded portion of paid parental leave from July next year.