Single Incomes: A Guide to Parental Leave

Single Incomes: A Guide to Parental Leave

Bringing a new life into the world is one of life’s most rewarding journeys. For new parents, the birth of a child changes life forever. Of course, a newborn also has a major financial impact; cribs, nappies and clothes add up quickly, as does a leave of absence from work. As an expectant parent, what are your rights – and how can you plan to best manage the financial aspects of the journey ahead? Read on to find out.

Entitlements for Expecting Parents

As the recent case of a widower who was initially denied paid parental leave shows, the rules governing entitlements for expecting parents are myriad and complex. For most families, there are two issues to navigate:
Whether you are entitled to take leave from your job; and
Whether that leave will be paid or unpaid.

Taking Leave

In short, if you are having a baby you will be entitled to a period of parental leave provided that you have worked for the same employer for the previous six months for at least 10 hours per week. There are four types of (unpaid) parental leave – which one you are eligible for will depend on your circumstances.

The primary carer of a child is entitled to up to 18 weeks’ unpaid leave, 6 of which may be taken prior to the baby’s due date. The primary carer is usually the mother of the child, but the mother can transfer her entitlement to her spouse or partner.

A birth mother can take up to 10 days of unpaid leave prior to taking primary carer leave for things like antenatal classes or doctor’s appointments. Further, the primary carer’s spouse or partner (often this means the father) can take up to two week’s unpaid leave.

One or both parents may take extended parental leave. If you’ve worked for the same employer for six months, you are entitled to take six months’ leave (less the amount of primary carer leave you took) – likewise, if you’ve worked for 12 months, you are entitled to twelve months’ leave. This period is split between both parents – so if both parents are eligible for 12 months, they can each take six months or one parent can take the full 12.

While you’re on parental leave, your employer is generally required to hold your role open. Your employer may take a replacement on board on a fixed-term basis to cover your absence, but your position should be safe for the duration of your parental leave.

Paid Parental Leave

Many parents-to-be do not realise that the Government carries the cost of paid parental leave and not employers. Paid parental leave is a government-funded entitlement and, as such, the criteria to receive it are slightly different than the requirements you need to meet to take leave from your job.

If you have worked a minimum of 10 hours per week on average in the six months prior to taking parental leave, you are likely to be eligible for paid parental leave. If your baby is born and expected before 1 July 2018, you will be eligible for a maximum of 18 weeks’ paid leave - this increases to 22 weeks after 1 July 2018, and to 26 weeks after 1 July 2020.

As a self-employed person, you can also receive paid parental leave payments, provided that you’ve worked for an average of 10 hours or more per week over the last six months.

This is only a short summary of the rules, so if you need to clarify whether you’re entitled to take leave or to receive payments, check out the Parental Leave Eligibility Tool at employment.govt.nz.

What if I’m not the Birth Mother?

Parental leave is not just for the birth parents of a newborn baby. You may be eligible to take parental leave if you become the primary carer for a child under six years’ old – such as if you adopt, permanently take in a grandchild or take in a foster child.

If you are the father of a child, you might choose to take up to two weeks’ of partner’s leave. Alternatively, your partner might choose to transfer her entitlement to primary carer’s leave to you, or you might take some of your combined entitlement to extended leave.

It’s not a Cakewalk: Getting By On Parental Leave

Contrary to popular belief, New Zealand’s paid parental leave system does not guarantee your usual earnings. The maximum payment is slightly over $525 per week, which is less than many New Zealanders’ usual weekly earnings. If your income is likely to decrease as a result of taking parental leave, you might consider carefully budgeting for the lower amount – particularly if you spend your full income most weeks.

Going Beyond the Minimum: What Employers Offer

New Zealand’s parental leave provisions set out a minimum standard – that is, every new parent in New Zealand should be entitled to the same minimum amount of parental leave. However, your employment agreement may provide for a longer period of parental leave – for this reason, it might pay to revisit your employment agreement and to seek advice from your union or lawyer if you are not clear as to your parental leave entitlement.

Some employers go beyond the minimum and offer particularly generous parental leave. For example, one of New Zealand’s largest banks recently upped its paid parental leave to 26 weeks two years ahead of schedule.

Heading Back to Work: What to Consider

Once your parental leave is over, it may be time to return to work. You should be able to resume your usual role, although you may need to let your employer know you’re planning to return to work well in advance (particularly if your employer has brought someone in temporarily to cover your absence).

Some new parents do not immediately return to work once their parental leave expires. For some parents, having extra time to bond with a new baby is well worth the foregone earnings. For others, the cost of childcare may mean that returning to work is uneconomic.

Deciding whether to return to work is a highly personal decision. On one hand, returning to work is an economic decision – on the other hand, it involves some very ‘uneconomic’ factors, such as how long you would like to care for your child on an everyday basis. If you are considering returning to work, you will need to account for the cost of childcare – limited Government subsidies are available, but you will largely need to self-fund this cost.

For some families, it might not be economic for both parents to return to full-time work. Equally, you might want one parent to stay at home for a longer period of time to bond with the baby. If your plan involves staying at home for a longer period, you will need to consider whether your family can sustainably maintain its desired standard of living on one income.

There’s no doubt that welcoming a new baby into the world is a time of joy, but it is important to clarify the implications for your finances. The earlier you are able to work through your parental leave entitlements, the better – getting it right now means less cause for stress and panic, and more time for bonding with your wee one when he or she arrives.

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