The 2025 Change: Super on Government-Funded Parental Leave
Currently, when an employee receives the Australian Government’s Parental Leave Pay through Services Australia, employers are not required to pay superannuation on top of these payments. This is because the payment comes directly from the government, not the employer’s payroll.
However, from 1 July 2025, the government plans to change this. As part of its commitment to improving equity in the super system, it will begin paying super contributions directly onto its Parental Leave Pay scheme.
Key Takeaway: The super guarantee rate is legislated to increase to 12% by 2025. This means eligible parents receiving the government PPL will also receive a 12% super contribution paid by the government into their chosen super fund.
Why This Matters for Employees
For parents taking leave, this change addresses a significant gap in retirement savings. Parental leave can span months or even years, creating a pause in super contributions that can have a long-term impact on a person’s retirement balance. This new measure ensures that time spent caring for a new child continues to contribute to their financial future.
- Check Eligibility: You must be eligible for the Government’s Parental Leave Pay scheme, which includes a work test and an income test.
- Know Your Entitlement: The super payment will be calculated at 12% of the PPL you receive (the PPL rate is based on the national minimum wage).
Why This Matters for Employers
While the government will administer these payments directly, employers need to be aware of this change for several reasons:
- Employee Queries: Your staff will likely have questions. Understanding this policy allows you to provide accurate information and direct them to official sources like Services Australia.
- Complementary Employer Obligations: This change does not affect your existing obligations. If you provide employer-funded parental leave top-ups or salary continuation, you must still pay the super guarantee on those amounts as part of your standard payroll process.
Fair Work Compliance: Ensure your parental leave policies are up-to-date with the Fair Work Ombudsman’s guidelines, which cover unpaid parental leave and return-to-work rights.
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.
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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!
