Chapter 1: The case for change

Entitlements for the 21st century

The 1973 introduction of the Maternity Leave (Commonwealth Employees) Act 1973 (the Act) marked a ground-breaking turning point in the Australian industrial landscape, legislating the first formal provision of paid maternity leave in Australia. Only seven years after the Commonwealth marriage bar was abolished, the introduction of paid maternity leave, in addition to protections for continuity of service and against pregnancy discrimination, represented a dramatic advancement in protecting the employment of women Commonwealth public servants.

This chapter examines how expectations since 1973 have changed, and notes that entitlements in the Act do not meet the needs of today's employees or of agencies and the talent they seek to attract and retain.

"The Australian Public Sector should be at the vanguard of offering non-discriminatory employment terms and benefits that align to community values and expectations. We support any move to change policy to bring it into line with the proposition expected by our current employees and the talented people we want to attract to our mission."

- Agency submission[1]

Though unprecedented when it was introduced, the Act's provisions are increasingly falling behind the expectations of employees and the offerings of other large employers in Australia. The Act has largely been maintained in its original form, with the exception of introducing a minimum qualifying service period and removing entitlements to paid paternity leave. Since then, interrelated entitlements under the Fair Work Act 2009 (Fair Work Act) and the Paid Parental Leave Act 2010 (Paid Parental Leave Act) have supplemented the Act, but this has further complicated its administration.

Stakeholders have raised concerns regarding the prescriptive nature of the Act, the resulting administrative burden on agencies, and the interpretation difficulties it often poses for both agencies and employees. A key issue is whether the Act provides appropriate support to new parents in the 21st Century.

For example, maternity leave is generally required to be taken in one continuous period despite this not being explicitly stated in the Act, and paid leave cannot be taken at half pay. The original Act provided one week of paid paternity leave for fathers, which was repealed in 1978. At the time the paid leave was considered 'unnecessary' and 'ahead of community standards',[2] however many current day parental leave schemes now provide for at least one week of paid leave for fathers. The Act does not provide support to adoptive parents or other permanent carers.

Currently these gaps are being filled by enterprise agreements, bargained by individual agencies. This results in inconsistent entitlements between agencies, barriers to mobility within the Australian Public Service (APS), and increased administrative burden. The Review recommends that a revised Act should reflect the strong level of existing support within the APS for more generous parental leave provisions.

Women's economic equality

Parental leave entitlements for both women and men have flow-on effects for women's economic equality. Women are more likely to take time out of the workforce due to unpaid caring responsibilities, and bear the brunt of career disruption and the systemic disadvantages this brings.[3] A 2022 KPMG report found that the gendered impact of years not working due to career interruptions, part-time employment and unpaid care and work together account for 33 per cent of the gender pay gap.[4] The impact of this pay gap accumulates over a lifetime, leading women to have less retirement savings than men and in some cases, an increased likelihood of living in poverty in old age.[5]

"Provisions for new parents should be improved and should not penalise a woman for taking time off for childbirth which should also be regarded as a key contribution to our society."

- Individual submission[6]

The current Act only entitles female employees to leave and does not facilitate sharing of unpaid caring responsibilities between parents. While the Act serves to protect maternal health and job security, it provides minimal choice for families of Commonwealth employees in dividing caregiving and reducing the economic impact on women of having children.

"Women are much more likely than men to make adjustments to their paid work after having a child, while paid work patterns for men remain essentially unchanged when they become fathers"

- Women's Budget Statement 2021-22[7]

Encouraging men to take parental leave

When all parents have access to paid parental leave and flexible work arrangements, families have greater choice about how to manage work and care.[8] Research has found that Australian men and women overwhelmingly believe (90 per cent) that men should be as involved in parenting as women.[9] However, parental leave and flexible working policies that provide minimal or no entitlements for fathers create major barriers to men playing a greater role in caregiving, setting a standard for future family dynamics that places mothers as primary caregivers.

For parental leave policies to be successful in improving gender equality, they need to be provided in a context that also enables or encourages uptake by men.[10] Research demonstrates that fathers are more likely to take parental leave when there is incentive to do so, and cultural acceptance is also critical in improving uptake.[11] This includes managers and senior leaders promoting the use of parental leave and flexible working arrangements, and using these entitlements themselves where they are eligible. Extending paid parental leave to fathers and actively supporting them to use it helps employers attract and retain talent, but also improves women's labour market outcomes and workforce participation.[12]

More choice for families

Parental leave has a number of proven positive social impacts such as better health, economic and employment outcomes for working women, as well as improvements in attracting candidates, retention and productivity for employers.[13] Large employers are also increasingly recognising the need to provide parents with more choice in dividing their caregiving roles, and how more equal parental leave entitlements facilitate retention, gender equality and inclusion. While common in other policies, the Act does not provide the scope for such flexibility, and does not allow for any transfer of leave or the ability to take leave at half pay.

"For parent(s), giving birth to a baby is life changing - there is nothing that can prepare you for the changes you experience as a parent."

- Individual submission[14]

Being an employer of choice

Increasingly, Commonwealth agencies are competing with state and territory public services and the private sector to attract and retain talent. As more large employers improve their parental leave offerings, a review of the Act provides an opportunity to ensure employees remain attracted to a career in Commonwealth employment and are supported to return to work once they start a family.

"A more modern Act will also enhance [agencies'] value proposition to current and future staff, boosting our ability to attract and retain the talent we require. It will assist us better compete with private sector and other non-government employers, who offer significantly enhanced parental leave benefits to their employees."

- Joint agency submission[15]

Large employers cite attraction, retention and productivity improvements as the main drivers behind improvements to parental leave offerings.[16] While the Act was ground-breaking in its inception, its review seeks to ensure the Commonwealth remains an employer of choice in order to meet the needs of modern Australia.

"I come from the perspective of a young woman in her late twenties who is planning on having a family within the next five years. Better maternity leave entitlements is something that I will factor into my considerations to take a job outside the public service. The public service used to be the pinnacle of maternity leave entitlements, but in recent times these entitlements are being outstripped by better offerings by some areas of the private sector."

- Individual submission[17]

While improvements to parental leave may create an upfront cost for employers, there are long-term advantages and cost savings related to recruitment and training, as well as increasing productivity and morale.[18] Research from the Workplace Gender Equality Agency (WGEA) indicates that parental leave can be a cost-effective means of retaining valued employees, and increasing the number of employees returning to work after parental leave.[19] Providing paid parental leave also signals an employer's values in supporting diversity and equality.[20]

Employees provided with support and flexibility when caring for a new child are more likely to be productive upon returning to work and to remain loyal to their employer.[22] A 2017 Boston Consulting Group study found that providing paid parental and 'family' leave results in clear benefits for employers including improved employee engagement, morale, and productivity.[23] In particular, providing these entitlements brings cost savings associated with retention, such as costs in replacing and retraining employees.[24]

More broadly, improving women's economic security and participation in work and leadership has flow-on benefits for business, industry, and the economy.[25] "[Agencies'] greatest asset is the ingenuity and drive of its people. Ensuring [agency] can attract, support and retain the best talent is critical to protecting and advancing Australia's national security."

- Joint agency submission[26]

Superannuation

Across the Commonwealth, eligibility for payment of superannuation during parental leave varies depending on the superannuation fund and workplace entitlements. Employees who are members of a statutory fund administered by the Commonwealth Superannuation Corporation (CSC) and have their employer contribution calculated on a Fortnightly Contribution Salary (FCS) are generally entitled to be paid superannuation during their entire period of leave under the Act. However, if the employer contribution is calculated on Ordinary Time Earnings (OTE) or is provided through a non-statutory fund, often an employee is only eligible to be paid superannuation on the paid portion of their leave.

On average, Australian women are retiring with 42 per cent less superannuation than their male counterparts.[27] Women of retirement age represent the fastest growing homeless population in Australia[28], with the disparity in retirement savings acting as a major contributor to the gender pay gap and increases the vulnerability of Australian women as they reach retirement age. Therefore, the Review considers payment of superannuation on parental leave a key issue when considering what future parental leave entitlements in Commonwealth service looks like. Superannuation is discussed further in Chapter 6.

Language

The move towards more inclusive language in the national Paid Parental Leave scheme, the Fair Work Act, and in state and territory and private sector polices, highlights the complex and outdated language of the Act. The use of inclusive language is designed to promote gender equality and inclusion of employees of all genders, and provide choice in dividing caregiving roles while fostering women's economic equality and participation. However, the use of gender neutral language should not neglect considerations of biology where appropriate, including in considering the health needs of pregnant and breastfeeding employees, including in the immediate post-partum period.

The Act continuously references a pregnant woman's 'confinement' and is not written in plain, modern English. Its drafting is out of step with contemporary language about pregnancy and parenthood, and leads to confusion for both agencies and expecting parents about the period of leave they are entitled to and when they are expected to commence leave.

"[The Act] is drafted in archaic language, and very difficult for employees, HR practitioners and lawyers to understand. This leads to agencies spending significant time in trying to interpret it, and often dealing with disputes about its application."

- Individual submission[29]

Review of the Act

The Review heard from almost 190 submissions from individuals, APS and non-APS agencies, unions, academics, advocacy groups and peak bodies calling for change. The Review team has used feedback from these submissions and consultation with a range of stakeholders to present this report and its recommendations. In light of the changing social landscape surrounding work and parenting, the Review presents this report and its recommendations with a view to improve flexibility and ease of administration, improve women's economic equality and choice for families, and ensure the Commonwealth remains an employer of choice. This will ensure the Commonwealth remains effective in accommodating changing family structures and modern expectations, and provides appropriate support to employees embarking on the journey of parenthood. While the Review has placed emphasis on a new or revised Act, there may be options for the recommendations to be implemented over time through different means as opportunities arise.