The Paid Parental Leave Amendment (More Support for Working Families) Act 2024 completed its final phase on 1 July 2026. For any child born or adopted from that date, government-funded Parental Leave Pay now runs to 130 days, which is 26 weeks based on a 5 day working week. The expansion has been arriving in stages since 2024, and this is the endpoint the legislation was building toward.
For employers, the change is easy to misread. The 26 weeks is a government payment administered through Services Australia, not a new leave entitlement your business funds. But the employer still has real obligations inside the scheme: a paymaster role for many employees, record-keeping duties, and an unpaid leave framework under the Fair Work Act 2009 that sits underneath the whole arrangement. This guide covers what changed, how the 2026 paid parental leave settings work, and where Australian employers actually carry responsibility.
What changed on 1 July 2026
The Act lifted the shared family entitlement from 120 days (24 weeks) for children born or adopted in the year from 1 July 2025, to 130 days (26 weeks) for a child born or adopted on or after 1 July 2026. This is the last step in a phased expansion that moved Australia's paid parental leave scheme from 20 weeks to 22 weeks in July 2024, then to 24 weeks, and now to 26.
Alongside the extra leave days, the settings for couples shifted. For partnered claimants, 20 days are reserved for the other parent on a use it or lose it basis. Reserved days cannot be transferred, and if the other parent does not use them, they are forfeited. Single parents are not affected by the reservation and can access the full entitlement. Beyond the reserved days, couples can share leave flexibly, using days at the same time as each other or separately, and the split within the family is largely up to them. Parents can take up to 20 days at the same time as each other, a separate limit from the reserved days, and exemptions to the concurrency limit exist. In practice the primary carer usually takes the early block, with the reserved days protecting the other parent's share. The fine detail sits with the scheme rules, and for anything beyond the headline settings it is worth having employees check Services Australia directly rather than relying on workplace folklore.
How Parental Leave Pay works in 2026
Parental Leave Pay is a government payment made for days the employee is not working and is caring for the child. The main settings, as they stand for the 2026-27 financial year:
- Rate. The payment is based on the national minimum wage rate. For 2026-27 it is $1,004.90 per week before tax ($200.98 per day), up from $948.10 per week in 2025-26. It is taxable income, and PAYG withholding applies when it moves through payroll.
- Flexibility. Days do not need to be taken in one single block. After an initial period, employees can take them flexibly: as smaller blocks, or even single days, at any time before the child's second birthday.
- Claiming. Employees claim Parental Leave Pay through Centrelink, and can lodge a claim up to three months before the expected birth or adoption. The employer does not lodge anything to start the process.
- Timing. Days can only be paid for periods when the person is on leave or not working, which is why the payment and the workplace leave arrangement need to line up.
Eligibility: the work test and the income test
Eligibility is assessed under the scheme rules, not by the employer, but managers field the questions, so the outline is worth knowing. To meet the work test, the claimant needs around 330 hours of paid work in 10 of the 13 months before the birth or adoption of the child, with no more than a 12 week gap between work days. That is roughly one day a week, and every hour of paid work counts, which is why long-serving casual employees frequently qualify. An income test also applies, with individual and family limits assessed on taxable income and related components. The thresholds are indexed every year, so send employees to the Services Australia website for current figures rather than quoting last year's numbers. Employees may separately be eligible for Family Tax Benefit, which runs on its own rules.
Superannuation is now paid on Parental Leave Pay
For children born or adopted from 1 July 2025, superannuation is paid on top of Parental Leave Pay. The contribution is 12 per cent of the payment, and it is paid by the ATO directly to the employee's super fund as a lump sum after the end of the financial year in which the payment was received, with an interest component included.
The employer's role here is nil, and that is the point payroll teams need to hear clearly. You do not calculate super on the instalments you pass on, you do not report it as your contribution, and you do not pay it. The Paid Parental Leave Superannuation Contribution is a transaction between the ATO and the employee's super fund.
The employer's role: paymaster, not funder
For many employees, the employer is the channel the money flows through. Services Australia decides whether your business must provide the payment and notifies you in writing. In general, you will be required to administer instalments where the employee has 12 months of continuous service with their employer before the expected date of birth or adoption, remains your employee for the payment period, and is receiving at least 8 weeks of the payment in a single continuous block. Outside those settings the employee is paid directly, and employers can also agree to administer payments in cases where they are not obliged to.
The mechanics are designed so the employer is never out of pocket:
- The funds arrive in your nominated account in advance, in instalments, either fortnightly or every 6 weeks, before your pay cycle cut-off.
- You pass the payment on through your usual pay cycle, withholding tax as you would for wages.
- You must give the employee written notice of each payment amount within one working day of paying it. A payslip line item satisfies this.
- The full amount must reach the employee. An employer cannot deduct administration costs from it, and the instalments are not business income to spend.
Record-keeping
Keep the determination letter, the instalment records, and payslips showing the payments as a distinct line item, the same way you would retain wage records. If the arrangement ends early, for example the employee resigns mid-block or returns to work sooner than planned, notify the agency promptly so instalments stop, and document the change. Unreturned or misapplied funds are the paymaster problem that takes the longest to untangle after the fact.
Where the paymaster role goes wrong
Where this goes wrong in practice, it is rarely the transfers. It is the coordination: a payroll system that treats the instalment as ordinary wages and accrues leave on it, a manager who assumes the Centrelink claim replaces the leave request, or records that cannot show which weeks were government-funded. The obligations are administrative, but they are auditable.
Getting the administration right is a systems question, and it is worth solving before the first claim lands rather than during it. Businesses engage Brookvale HR Solutions to put the leave documentation, payroll treatment and manager guidance in order, with every engagement delivered personally by Daniel Holbrook. A fixed-fee HR Compliance Audit will pick up parental leave gaps alongside the rest of your framework, and the fee is fully credited toward any follow-on work. Call Daniel on 1300 23 44 23.
Parental Leave Pay versus unpaid parental leave
The most common source of confusion in parental leave requests is the difference between the money and the time off. They come from different systems.
The time off: unpaid parental leave under the NES
Unpaid parental leave is the workplace entitlement, and it comes from the National Employment Standards in the Fair Work Act 2009. Employees can take parental leave if they have completed 12 months of continuous service, for up to a year unpaid, and they have a right to request an extension of up to a further year, which the employer can refuse only on reasonable business grounds after genuine discussion. The employee on leave also holds a return to work guarantee: the job they left, or a comparable available position, is theirs to come back to. Up to 10 keeping in touch days let the employee do paid work during the leave without breaking it, which is useful for handovers, training days and staged returns.
The money: Parental Leave Pay
Parental Leave Pay is the income support that arrives while the employee takes the leave. Unlike annual leave or sick leave, it is not something that accrues or appears on the leave balance; it is a government-funded payment timed to coincide with absence from work. Approving one is not approving the other. An employee lodges a leave request with the employer under the NES or your policy, and separately lodges a payment claim through the government system. Many workplace policies still describe all of this as maternity leave; the NES term is parental leave, and it applies to either parent. If your documentation still frames the parental leave entitlement as paid maternity leave for mothers only, it is due for review alongside the rest of your policy suite.
Employer-funded paid parental leave stacks on top
If your business offers its own paid parental leave scheme, the government-funded payment does not replace it and is not reduced by it. Employer-provided paid leave and the government scheme are designed to be taken together, and an employee can receive both. Common structures include a top-up to full salary for a set period, or a block of employer-funded leave followed by the government-funded paid parental leave period. Annual leave can also be layered around them. What matters is that the policy states the sequence clearly, because payroll needs to know which dollars are wages, which are employer parental leave, and which are government money passing through.
Common employer mistakes
Five patterns account for many of the parental leave problems that end up needing advice:
- Treating the payment as the whole obligation. It does not discharge the NES unpaid parental leave entitlement, the extension request process, or the return to work guarantee. Those exist regardless of who funds the pay.
- Conflating the claim and the leave request. The payment claim tells you nothing about what leave the employee has requested from you. Handle the request on its own terms and timeline.
- Missing eligible casuals. The work test looks at hours worked, not employment status. Regular casual employees who take the leave are often eligible for the payment, and long-term casuals have unpaid parental leave rights under the NES.
- Payroll treatment errors. Withholding is required, but super on the instalments is not the employer's to pay, and leave should not accrue on government-funded days. Set the pay codes up once, correctly.
- Forgetting the return to work conversation. The guarantee is legal, and the reboarding is practical. Many disputes trace back to a role that quietly changed shape while the employee was away.
The 26 week scheme is mature policy now, and employees will increasingly arrive knowing exactly what paid parental leave in Australia provides. The employers who handle it well are the ones whose policies, payroll and managers already agree on how the pieces fit. If an employee announced a pregnancy tomorrow, your leave entitlement documentation, paymaster process and return to work plan should already know what happens next. For help getting the framework to that standard, employee management support and ongoing HR support on a fixed retainer are the two ways businesses typically work with Daniel on it.
