As a small business, the loss of a team member – even temporarily – can have a significant impact. For the most part, the basics of parental entitlements – maternity leave, paternity and partner leave, adoption leave, special maternity leave, and a safe job and no safe job leave – are relatively straightforward. There is also the matter of parental leave pay – which is a government funded payment in most cases.
However, a common area of concern is how to manage the entitlements of the employee on leave and the employment of replacement team members. Replacement workers hold an interesting employment position and there are many important considerations.
When an employee announces that they (or their partner) are pregnant, and your employee intends to utilise their entitlement to unpaid parental leave of up to 12 months, the most important thing is to communicate and confirm everything that has been agreed in writing so that it is clear and there is no ambiguity. It is important to confirm the date that leave will, or intends to commence and for how long – they may not intend to take the full 12 months.
Next, you need to decide if and how you will replace the employee for that period – do you need an equivalent full time employee, can the work be shared by existing employees, or a combination of these two arrangements.
If you choose to engage a new employee – either full time or part time – as a short term replacement, the usual permanent employment arrangement will likely not be applicable because their employment is on a temporary basis only. There is no guarantee of employment beyond the replacement period. If you place this new employee on a permanent employment contract, you might run into trouble when the original employee returns to work.
There are a few options for employment arrangement of the replacement employee, including:
- Fixed term contract which corresponds with the date in which the employee on parental leave is expected to return.
- Fixed task contract which specifies to the replacement employee that the task in which they are undertaking, is the replacement of an employee who is on parental leave, and that the contract of employment will come to an end upon the return of the employee on leave
Fixed term and fixed task contracts are generally protected against claims of unfair dismissal, minimum notice period and termination payments at the end of the period. All other entitlements, such as leave, discrimination protections, etc. still apply.
Extending or Ending Parental Leave Early
If the employee on parental leave chooses to extend the period of leave, ensure that you reissue a new fixed term contract or apply a variation signed by the replacement employee – dont assume that the carryover will not leave you exposed to potentially having to provide reasonable notice based on the implication of an ongoing contract.
Alternatively, if the employee on parental leave requests to return to work earlier, and as the employer you agree (you don’t have to unless there is a stillborn or death of the infant), then terminating the contract prematurely may again leave you vulnerable to penalties. It is therefore recommended to include a specific clause in the contract giving you the right to terminate before the expiry date in the event that the original employee returns to work earlier than originally agreed.
What you should be doing
- Have a clear policy and procedure around parental leave entitlement and notifications, etc.
- Check your obligations, and the employees entitlements to unpaid and paid parental leave before agreeing to anything
- Ensure that you put in place the correct employment arrangement with any parental leave replacement positions.
- Check the relevant award or registered agreement – it may provide extra terms and conditions for a fixed term employee
- Document, document, document – for the existing employee taking leave, and any replacement employees
What not to do
- Discriminate against pregnant employees by assuming they’re not capable of performing their role while pregnant
- Assume that you can delegate the work of a full time employee taking a year of leave to your existing workforce, especially in a small business
- Refuse an employees right to return to work, unless you have reasonable operations grounds to do so – in most cases this will mean redundancy applies
Takeaways (e.g. articles, checklists, resources
- Use the business.gov.au Employment Contract Tool – https://employ.business.gov.au/