Do I need to be an employee to receive parental leave payments?
The short answer to the question ‘do I need to be an employee to receive parental leave payments?’ is yes. However while most consider an employee as someone currently working for an employer, the legislation governing parental leave payments (the Parental leave and Employment Protection Act 1987, the “Act”) has an extended definition of “employee” when considering eligibility for government funded parental leave payments. Consequently, in the writer’s opinion, a person does not need to be employed at the time of birth (or the date they become the primary carer) to be eligible for parental leave payments.
Parental leave entitlements are a difficult subject to navigate and the legislation is complex – there are numerous resources online to assist with determining eligibility and entitlements. One key point which is often misunderstood is the entitlement to leave, and the entitlement to payment, are separate – there is a different test for each of the two entitlements in the Act.
An employee for the purposes of the Act is defined within section 2 as simply a person who is an employee under the Employment Relations Act 2000, section 6. However, the definition also includes, in the context of an entitlement to payment (not leave) a person who was employed at least an average of 10 hours per week for any 26 of the 52 weeks immediately preceding the expected date of birth/assumption of care.
The tests are set out within section 2BA of the Act – in summary:
- To be entitled to leave you must have worked an average of 10 hours a week for the same employer in the 6 months immediately preceding the expected date of birth (or assumption of care). A person has an enhanced entitlement where the same test is satisfied however across 12 months. You must be a current employee to become entitled to leave (if you are not an employee you would not require leave).
- To be entitled to payment you must have been employed (by any employer or combination of employers), for at least an average of 10 hours per week for any 26 of the 52 weeks immediately preceding the expected date of birth (or assumption of care). You must also meet the requirements in section 71D, in particular that during the payment period you must take parental leave, or not be employed at all.
The effect of the extended definition of employee and the payment test above means, in the writer’s opinion, a person does not have to be a current employee at the time of birth (or assumption of care) to be entitled to payment.
How this works in practice can be illustrated with examples:
- You consistently work full time for several years before becoming pregnant. – with 25 weeks left to go before your due date, you decide to resign from employment to enjoy the remainder of your pregnancy without having to worry about work. You are not employed when you give birth nor for almost 6 months prior, however you are still entitled to parental leave payments as you worked full time for 27 weeks of the 52 immediately preceding your due date. You are not entitled to parental leave however this is irrelevant as, because you are not employed, you do not require parental leave.
- You work full time for one employer for several years. You become pregnant, and 2 months before your due date you decide to resign and take a part time job with another employer. Even though you have changed employers you are still entitled to payments under the government scheme. You are not entitled to leave as you have not been with your current employer for at least 6 months – instead, you can make a request for negotiated carer leave under part 3A of the Act or resign (to meet the requirement under section 71D that you must not be employed during the payment period).
The key point is, just because your employment comes to an end prior to your expected due date (or the date you become a primary carer) that does not mean you are automatically disqualified from receiving parental leave payments.
If you have any questions or queries in relation to this topic, please get in touch with the Watermark team directly. We are happy to advise you.