After years of parliamentary debate and vigorous campaigning, it is expected that from 1 July 2002 approximately 20,000 working mothers will be eligible for paid parental leave. This article summarises the history behind paid parental leave and what it means for working New Zealand parents.
HistoryA campaign for 12 weeks paid parental leave was first advanced actively before Parliament in 1993. Laila Harré, upon becoming elected on the Alliance list in 1996, enthusiastically endorsed the proposal and led the fight for its introduction. When the Labour/Alliance coalition government was elected in November 1999 the introduction of a Bill became more of a reality. Different schemes were mooted, with the most contentious issues being the length of the leave, the amount of the payment, and how it should be funded. The options for funding the scheme were:
- By general taxation;
- By employers; or
- By a payroll tax similar to ACC.
The government ultimately chose general taxation.
Reasons For Paid LeaveThe percentage of women in the work force has risen dramatically over the last 60 years. In 1996, 76 percent of mothers of teenage children were in paid work, 30 percent of women with a baby under 1 and 50 percent of women with 1 – 4 year olds. With the New Zealand economy relying so heavily on women in paid employment, the parental leave campaigners believed that government policy should reflect this fact by providing a paid parental leave scheme. Such a scheme would assist mothers during the first weeks after the child is born without their feeling the economic necessity of returning to work. The rationale is that paid leave will improve health outcomes by giving babies the best possible start in life and mothers time to recover from childbirth. It is also advocated that employers who provide good schemes for their workers benefit in the long run by having better productivity and a happier working environment.
Details Of The PaymentThe government funded scheme (which has an estimated annual cost of $57 million) provides $325 per week (gross) on the following terms:
parents will have to have been in paid work with a single employer for 10 or more hours a week for a full year before the birth or adoption date;
the due date for the baby must be 1 July 2002 or later; those earning less than $325 will receive 100 percent of their wages; a mother can transfer part or all of her entitlement to the other parent (including a same sex partner); adopting parents are eligible; this may result in payments being made twice for some babies as the birth mother would also be entitled to them. Existing EntitlementsThe current entitlements under the Parental Leave and Employment Protection Act 1987 will remain. As well as making it unlawful for an employer to discriminate on the grounds of pregnancy or parenting, the Act entitles a parent to up to 52 weeks of unpaid leave following the birth or adoption of a child, provided certain criteria are met.
There is also a Parental Tax Credit ("PTC"). The aim of this is to assist low and middle income families. It entitles the parent to $150 for every week the baby is in parental care for up to eight weeks after birth (a maximum of $1,200). It is heavily means-tested and is only for families who are not receiving a welfare benefit. It aims to assist one-earner couples and traditionally has had a low take-up.
It is estimated that up to 34 percent of workplaces in New Zealand currently has some voluntary scheme for paid parental leave. Such schemes are seen as being of huge benefit to employers, with the staff on leave keeping in contact and therefore more likely to return to work.
IssuesIt is doubtful whether the weekly rate of $325 adequately compensates parents who are out of the work force. It equates to 53 percent of the average New Zealand wage. The net figure (based on a 19.5 percent tax rate) equates to $256.75 per week.
The payment New Zealanders will receive is considerably lower than in other countries. For example, in Britain payment is for 18 weeks with six weeks at 90 percent and a flat rate of 75 pounds per week for a further 12 weeks. The maximum weekly rate equates to NZ$265, but is payable for much longer. In Canada, payment is for 15 weeks at 55 percent of the person’s income and a maximum weekly rate of NZ$639. In France and Germany 100 percent of earnings is paid for 14 – 16 weeks, with a maximum weekly rate of NZ$775.
Parental leave may affect womens' career prospects. Employers could try to get employees to agree not to take such leave. This would to lead to a raft of human rights issues and litigation. There could be prejudice in the hiring and firing of employees despite the current employee protection legislation.
The current law does not allow leave to be paid to a parent who has changed employers within the 12 months before their child is born. This seems very unfair, particularly if the parent has been in continuous work but has changed jobs. The situation will also arise where an employee keeps the same job but the employer has changed, for example, by way of company restructuring.
Payment will only be made to parents whose babies are born, due or adopted on or after 1 July 2002. This may lead to parents whose child is due in late June to question whether the official dates can be ‘stretched’ to make the due date after 1 July. Often mothers are given differing dates and it is uncertain which one authorities will accept.
SummaryWhile the introduction of paid parental leave in New Zealand can be seen as a step in the right direction, there are a huge number of administration and ethical issues that are still unresolved.
If a Labour government continues in power, the Act will be reviewed in its entirety 12 months after it comes into force. This is likely to lead to a number of amendments. It remains to be seen how another government would treat the Act.
Copyright The Lawlink Group Ltd 2002
Every effort has been made to ensure that this information is accurate. However, it is general introductory information only. It does not constitute legal advice and should not be relied on as such. Specialist legal advice should be sought in particular matters. Any reference to law and legislation is to New Zealand law and legislation.
Toni Green is an associate of the Invercargill Lawlink firm Arthur Watson Savage.
Web site:
Arthur Watson SavageEmail: toni.green@aws.co.nz
June 2002