Australia’s Paid Parental Leave (PPL) scheme is undergoing its most significant expansion, offering greater support to families and introducing new responsibilities for employers. From 1 July 2025, the government-funded PPL entitlement will increase from 20 weeks to 24 weeks, and for the first time, will include a compulsory superannuation contribution.
This blog breaks down these landmark changes, clarifying what the 24 weeks of paid parental leave in Australia means for both employees and employers, and how Workstem’s advanced payroll and HR system can simplify compliance.
The Changes Effective July 1, 2025: From 20 to 24 Weeks
The core update is the extension of the PPL scheme. This is a phased increase, with the 24-week mark being reached in July 2025.
- New Duration: Eligible parents will receive a total of 24 weeks of payments at the national minimum wage (currently $882.80 per week, before tax).
- Key Date: These changes apply to children born or placed for adoption on or after July 1, 2025.
- Flexible Use: The leave can be taken in a single block or in flexible periods within two years of the child’s birth or adoption. Parents can also share this leave, allowing both to balance work and family commitments.
Understanding this new duration is critical for businesses when planning for employee absences and managing leave requests.
The New Superannuation Rule: How the 12% Contribution Works
A pivotal change for employers is the introduction of superannuation payments on government-paid parental leave.
- The Obligation: Employers will be required to pay the superannuation guarantee (currently 12%) on the PPL payments made to their employees.
- Who Pays the Leave? It’s important to distinguish:
- The PPL payment itself is funded by Services Australia and is paid to the employer, who then pays it to the employee.
- The superannuation contribution on this payment is a separate cost that is borne directly by the employer.
- Calculation Example: If an employee receives the standard PPL payment for a week, the employer would calculate 12% of that amount and pay it into the employee’s nominated super fund.
This new financial obligation makes robust payroll software essential to ensure accurate calculation and timely payment of super, avoiding compliance issues.
Employer vs. Government Responsibilities: Who Pays for What?
The updated scheme creates a clear division of responsibilities. Here’s a simple breakdown for employers:
| Responsibility | Paid by Government (Services Australia) | Paid by Employer |
| Parental Leave Pay (24 weeks at min. wage) | Yes |
No (Acts as a pass-through) |
|
Superannuation on PPL (12%) |
No |
Yes |
| Business’s Top-Up Schemes (if any) | No |
Yes (Governed by your Enterprise Agreement or policy) |
The Employer’s Role: Employers remain the “paymaster.” This means Services Australia pays the PPL amount to you, and you must include it in your employee’s regular pay cycle, along with any top-up payments and now, the mandatory super contribution.
Integrating with Existing Enterprise Agreements & Top-Up Policies
Many businesses offer parental leave entitlements that are more generous than the government scheme. The new 24-week PPL and super payment will need to be integrated with these existing policies.
- Coordination: The government PPL payments will be offset against any employer-funded paid parental leave entitlements provided under an award, enterprise agreement, or company policy.
- Topping Up: If your business has a policy of paying an employee their full salary during parental leave, the government’s PPL payment will effectively reduce the amount you need to fund. However, you must now also pay super on the government-funded portion.
- Action Item: Review your current parental leave policies and enterprise agreements to understand how the enhanced government entitlement interacts with your obligations. Workstem’s system can be configured to handle complex top-up calculations automatically.
Workstem: Simplifying Parental Leave Management !
Streamline your leave request submission and approval process, reduce administrative burden, and cut costs with Workstem’s leave management feature. Our platform offers default leave types such as parental leave, annual leave, parental leave, jury duty leave, and long service leave, and allows for additional special leaves as needed.
Stay up-to-date with auto-updates for public holidays and let Workstem handle the calculations for leave balances, entitlements, and leave accrual. Our seamless integration with payroll ensures accurate payment of leave entitlements and proper tax treatment.
Ready to experience the benefits of Workstem?
FAQ: Navigating the 2025 PPL Changes
Q1: How long is paid parental leave in Australia in 2025?
A1:From July 1, 2025, the total entitlement will be 24 weeks for eligible families.
Q2: If my employee has already applied for PPL for a birth due after July 2025, are they eligible for the extra 4 weeks?
A2:Yes. The new rules apply based on the date of birth or adoption. If the child arrives on or after July 1, 2025, the employee will be eligible for the full 24 weeks, even if they applied earlier.
Q3: What are the PPL eligibility requirements from July 2025?
A3:While the government will confirm final details, eligibility is generally based on:
- Meeting an income test (individual adjusted taxable income ≤ $168,865 for 2024-25).
- Satisfying the Australian residency test.
- Being the primary carer of the newborn or adopted child.
- Meeting the work test.
Q4: How can Workstem help manage these changes?
A4:Workstem’s automated payroll platform is designed to adapt to legislative changes. It can:
- Accurately calculate superannuation on PPL payments.
- Manage the seamless integration of government payments and employer top-ups.
- Track leave balances for the flexible 24-week period.
- Ensure full compliance with Single Touch Payroll (STP) reporting requirements.
Book a free demo with our payroll experts and experience how Workstem can streamline your payroll and workforce operations.
Read More：
Parental Leave in Australia: A Comprehensive Guide
Is Your Leave Management System Compliant with Fair Work?
Discover the Benefits of Leave Management Software: Say Goodbye to Excel!
