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With Paid Parental Leave increasing to 18 weeks from 1 April 2016 we thought we’d take the chance to update you on what you can expect as an employer, an employee or as a self-employed person.   Please note that this post covers only paid parental leave.  Extend unpaid leave is also available for new parents – refer to the New Zealand at Work website for details on this – www.employment.govt.nz.  Paid parental is paid by the IRD, not an employer, and is available to both employees and the self-employed.   The maximum level of payment is currently $516.85 per week before tax. You are entitled to either your gross weekly rate of pay (your pay before tax) or $516.85, whichever is lower.  Its really important to note that if you are eligible for paid parental leave then you cannot work, either in a paid or voluntary capacity during the time that you are receiving these payments.

Employers

You can ask your employees to write to you at least three months before a baby is due to outline what leave they intend to take.   The New Zealand at Work website has some useful guidelines and links to template letters for outlining leave – www.employment.govt.nz.  Having the leave period documented provides clarity for both the employer and the employee.

Employees

You are eligible for parental leave if you have worked for the same employer for an average of at least 10 hours a week, and at least one hour in every week or 40 hours in every month, in the six or 12 months immediately before the baby’s expected due date or the date you have assumed the care of a child you intend to adopt.

If you have worked for the same employer for more than 12 months but have an inconsistent work pattern and do not meet the average hours of work criteria over the twelve months, you should also calculate your entitlement over six months as you may still be eligible for parental leave under the six month criteria.

The primary entitlement for paid parental leave rests with the birth mother. Where you have assumed the care of a child you intend to jointly adopt, the primary carer can transfer some or all of the payment to their spouse/partner, if they are also eligible. If the adoption is by one person alone, only that person can apply for paid parental leave. The spouse/partner must also meet either the six month or 12 month eligibility criteria as described above, or meet the self-employed eligibility criteria.

Self-employed

Like employees you must work for an average of at least 10 hours a week, and at least one hour in every week or 40 hours in every month, in the six or 12 months immediately before the baby’s expected due date or the date you have assumed the care of a child you intend to adopt.  To meet the definition of self-employed, which means you must have been:

a) Providing goods or services for hire or reward under a contract for services

b) Carrying on a business (including a profession, trade, manufacturing operation or an undertaking carried on for profit), including in partnership for another person, or

c) Working for a trust in a business carried on by the trust.

You are required to provide evidence of your self-employment income, and this needs to be verified by a Chartered Accountant.