SMEs urged to consider paid parental leave on top of government’s scheme to attract skilled workers

The majority of employers are now offering their own paid parental leave programs and many are considering starting such a plan in light of the Government’s own scheme which kicked off at the start of the month, a new survey from Mercer has revealed.

The survey also comes as the Greens have revealed their plan to extend parental leave to 26 weeks of payments and include superannuation would cost a total of $2.7 billion.

Mercer leader of human capital strategy and talent consulting, Tricia Sneddon, also says businesses need to think about creating their own strategy for paid parental leave as the labour market becomes more competitive.

“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,” she says. 

The new Mercer study has found that out of 284 organisations surveyed, 72% already offer some type of paid parental leave entitlement, with the median being 12 weeks of leave at full pay. It also found the education and research industry offers the highest amount of leave on average, at 23 weeks.

The next highest industries include energy and utilities, healthcare, federal and state governments and local governments.

A total of 44% of respondents also said they had planned on facilitating government payments from the start of this year, with 39% saying they will wait until the mandatory deadline begins on July 1

The survey also reveals that out of the 28% of businesses that haven’t introduced their own scheme, about 25% are considering doing so, on top of the government’s new scheme. Mercer says many are intending to offer the difference between the government’s scheme, (which is set at $570 per week), and the employer’s full salary.

Sneddon says any business thinking of introducing their own parental leave scheme shouldn’t be put off by the Govenrment’s plan, and instead should focus on creating the best program they can – particularly as the skills shortage begins to emerge.

“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.”

“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.”

She also points out that employers largely believe they will keep current entitlements at the same level, with 71% of those businesses with the ability amend those programs saying they are unlikely to do so.

“That was a big stand out for us, in that many businesses that have the opportunity to change those plans are not taking away from them.”

But the survey also serves as a warning for businesses, Sneddon says, pointing that SMEs need to keep in mind that even though paid parental leave payments will be taken care of by the government, they will still need to act as a paymaster.

The issue for employers, Sneddon says, will be making sure they are actually complying with the government’s regulations regarding the new scheme. According to the survey, nearly 33% of organisations are unsure as to how the government scheme will integrate with their own.

“This is one of the biggest concerns we have. Until July 1 businesses have the opportunity to integrate with the plan and start distributing payments, but after that date the employers must administer it all.”

“There were a number of businesses suggesting it is going to be difficult for them.”

The survey also shows about 59% of businesses without parental leave say they expect the government plan to be moderately difficult to implement, with 22% believing it will be simply “difficult”. Only 14% say they think it will be easy.

Sneddon says businesses need to start thinking about those plans now, and start developing administration procedures for handling the payments, designating responsibilities, and so on.

She also warns that businesses should start thinking about how they are going to replace those 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?”

“The scheme will increase the short-term labour market, so there is a positive there. But 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.”

Meanwhile, the Greens have said their plan to extend paid parental leave to 26 weeks and include super payments will cost $1.9 billion over the next four years, although this proposal has been attacked by Coalition finance spokesman Andrew Robb who says the Greens have not put forward any savings proposals.

The Coalition previously promised to introduce a scheme 26 weeks long that would pay a worker’s full salary up to $150,000. However, this caused a large amount of debate last year after it said a tax would be imposed on large businesses to pay for the scheme.