Exploring the Parental Leave and Employment Act

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With the election less than two months away, campaigning is in full swing and paid parental leave has become one of the hot topics in political conversation.

Both employers and employees may be wondering -- what are my rights when it comes to parental leave?

The Parental Leave and Employment Protection Act 1987 (PLEPA) is the Act which governs an employee's eligibility for parental leave. 'Parental leave' refers to maternity leave, paternity leave and adoption leave, and is the amount of leave from work an employer is required to give an eligible employee (if the appropriate process has been followed). The PLEPA provides for eligible employees to be paid parental leave for up to 14 weeks. The government (through the Inland Revenue Department) makes the payments, not the employer. In some circumstances, female employees can transfer their paid parental leave entitlement to an eligible spouse/partner.

Under the PLEPA there is a presumption that the employee's position will be kept open for the whole period of parental leave, unless the employer can prove that a temporary replacement is not reasonably practicable due to the employee holding a "key position" or due to a redundancy situation. As such, unless one of these exceptions applies, the employer is best advised to employ a temporary replacement employee on a fixed-term agreement for the duration of the parental leave. That way, the duties of the position will be tended to while the new parent is away, and he or she can easily return to work once the leave is over.

The Federated Farmers' Individual Employment Agreement provides that where an employee is not receiving wages or a salary, but remains in the service tenancy accommodation provided, he or she will be required to pay rent at the agreed rate. This includes where an employee is on parental leave.

An employer can make any employee who is on parental leave redundant if a redundancy situation arises after the employer gave the employee notice that his or her position could be kept open. However, the employer faces a very high hurdle to justify the redundancy. The employer must be able to prove that there was "no prospect" of being able to appoint the employee to a similar vacant position. This has been said to impose a "high standard" for an employer to meet. The employer must also follow a fair procedure, including consulting with the employee. As with any redundancy (or other action by an employer), the test is whether the employer acted as a "fair and reasonable employer", measured on an objective basis, but to the very high standard noted above.

While it is possible to restructure while an employee is on parental leave, extreme caution is required. Merely concluding that the position is not needed while an employee is on leave is unlikely to be enough to provide justification for the redundancy. In addition to this, employers have heightened obligations under the PLEPA. Once an employee is told their position will be held open for their parental leave period, any redundancy can only be based on a new event or circumstances.

This should serve as a reminder to employers to be cautious when restructuring, and doubly cautious when restructuring someone on parental leave.

If you have questions about an employee's parental leave entitlements, or what to do when an employee takes parental leave, call 0800 FARMING for free, advice. Alternatively, the Ministry of Business, Innovation and Employment has information about parental leave on their website: www.dol.govt.nz/er/holidaysandleave/parentalleave/