Parental leave has more moving parts than most employers expect, and getting the administration wrong, on pay, on the return, on the paperwork, sours one of the most significant moments in an employee’s working life and creates compliance risk at the same time. There is the unpaid parental leave entitlement under the National Employment Standards, the separate government-funded Paid Parental Leave scheme (which the employer often helps administer), any employer-paid parental leave the business offers, keeping-in-touch days, and the return-to-work obligations. Superannuation is now paid on government Paid Parental Leave for children born or adopted from 1 July 2025, with the ATO paying the contribution as an annual lump sum directly to the parent’s fund. The first of those lump sums start landing from July 2026. For a parent on an extended PPL block, that super contribution can add roughly $1,000 to $3,000-plus across the leave period depending on the weeks claimed and the national minimum wage rate used for PPL, closing a retirement gap that used to open every time someone stepped out to care for a child. This guide sets out the employer’s role across the whole cycle. It is general information only, not advice.
Published: July 2026
The first thing to get straight is that “parental leave” bundles distinct things, and confusing them is the root of most administrative errors.
These three can run at the same time. An employee can be on unpaid NES parental leave, receiving government PPL, and receiving employer-paid parental leave, which is why clarity about which is which matters for the payroll and the records.
For leave landscape context see leave entitlements by state 2026 and Scale Suite HR services.
For children born or adopted from 1 July 2025, the ATO pays a Paid Parental Leave Superannuation Contribution (PPLSC) on government Parental Leave Pay. The change was legislated by the Paid Parental Leave Amendment (Adding Superannuation for a More Secure Retirement) Act 2024. Previously, government PPL did not attract super, which meant parents (disproportionately women) taking extended leave lost super contributions for that period, compounding the retirement-savings gap over a career.
How it works in practice:
Employer action is communication and policy wording only: explain that super on government PPL comes from the ATO as a later lump sum, not through the ordinary pay run. Where the employer pays its own parental leave on top, the usual super obligations on that employer-paid amount are a separate question and do sit in payroll. Model ordinary super with the superannuation contribution estimator so teams can explain the difference between ordinary SG and the ATO-paid PPLSC cleanly.
A professional services firm offers 8 weeks of employer-paid parental leave at full pay for a $110,000 salary employee. Cash wage cost for 8 weeks is about $16,900. Super on that employer-paid amount at 12% is about $2,030. Total employer cash cost is about $18,930, separate from government PPL. Budgeting only the wage and forgetting super is a common pack error. The benefit is still often cheaper than replacing an experienced employee who never returns because the leave experience was poorly handled.
A useful and often underused feature: an employee on parental leave can perform some work, “keeping-in-touch days”, without ending their parental leave or their PPL, to help them stay connected and ease the return. There are limits on the number of days, and the days are paid (as work), but they do not break the continuity of the leave. Handled well, keeping-in-touch days make the return smoother. Handled carelessly (for example, informal work that is not properly treated as keeping-in-touch days), they can create confusion about the leave and pay status. The employer should manage them deliberately: agreed, recorded and paid correctly.
A marketing lead “just jumps on a few calls” for 6 hours across two weeks while on leave, unpaid and unrecorded. That is not a free favour. It is work that should be treated properly (often as keeping-in-touch days within the rules, or as a risk if it exceeds limits or is poorly documented). Informal patterns create both underpayment risk and leave-status confusion. Process beats improvisation.
The return is where parental leave obligations are most often mishandled, and where the legal protection is strongest.
Getting the return right is both a legal obligation and a retention opportunity. An employee who returns to a well-handled situation is far more likely to stay, and the cost of losing an experienced employee over a mishandled return dwarfs the effort of handling it well. Replacement cost for a mid-level role can easily sit in the $20,000 to $50,000 range once recruitment, ramp-up and lost productivity are counted. See also employee onboarding checklist Australia for structured return-to-work onboarding.
Parental leave administration touches HR (the leave, the return, the flexibility requests), payroll (any PPL pass-through, keeping-in-touch day pay, and any employer-paid parental leave), and record-keeping (the notice, documentation and continuity of the arrangement). Super on government PPL is not a payroll task: the ATO pays the PPLSC as an annual lump sum for children born or adopted from 1 July 2025, with first payments from July 2026. The errors come from treating parental leave as one thing rather than several: confusing unpaid NES leave with government PPL, mishandling employer-paid top-ups, telling staff that payroll will pay super on government PPL, or fumbling the return. The reliable approach keeps the components distinct, administers any employer payments correctly, communicates the ATO PPLSC mechanics accurately, manages keeping-in-touch days deliberately, and protects the return-to-work position, all documented. That coordination across HR and payroll is exactly what an embedded team provides. Because parental leave rules and PPL settings change (the scheme has been expanding), specific situations should be confirmed against current rules or with an adviser.
What parental leave are employees entitled to?
Under the NES, eligible employees are entitled to up to 12 months of unpaid parental leave with a right to request a further 12 months. This is a leave entitlement (time off with a protected return), separate from any payment. Government Paid Parental Leave and any employer-paid parental leave are separate again.
Is parental leave paid by the employer?
The NES entitlement is unpaid. Government Paid Parental Leave is funded by the government (the employer may help administer it), not the business. Separately, an employer can choose to offer its own paid parental leave as a benefit on top, which is the employer’s own policy and cost.
What changed with super on Paid Parental Leave?
For children born or adopted from 1 July 2025, the ATO pays a Paid Parental Leave Superannuation Contribution (PPLSC) on government Parental Leave Pay at the SG rate (12%), as an annual lump sum after each financial year plus interest. First payments land from July 2026. Previously, government PPL did not attract super. This addresses the retirement-savings gap for parents (disproportionately women) taking extended leave.
Does the employer pay the super on government PPL?
No. Employers do nothing on payroll for the government PPLSC. The ATO pays it directly to the parent’s fund after Services Australia provides the data. Employer action is communication and policy wording only. Super on any employer-paid parental leave top-up is a separate question and follows ordinary SG rules.
What are keeping-in-touch days?
Days on which an employee on parental leave can do some work without ending their leave or PPL, to stay connected and ease the return. There are limits on the number, the days are paid as work, and they do not break the continuity of the leave. They should be agreed, recorded and paid correctly.
What are the return-to-work obligations?
An employee returning from parental leave is generally entitled to their pre-leave position, or the nearest available suitable position if it no longer exists. Employers must properly consider flexible-work requests and refuse only on reasonable business grounds, and must not disadvantage the employee for having taken leave.
Why is the return to work so important?
It is both the strongest legal protection in the parental leave framework and a major retention point. A well-handled return keeps an experienced employee. A mishandled one risks both a legal claim and the loss of that employee, whose replacement cost far exceeds the effort of handling the return properly.
Can parental leave and annual leave be combined?
Employees may have interactions between leave types depending on timing and rules. Treat each leave type under its own rules and document elections carefully rather than informal blending.
Do casuals get parental leave?
Eligibility for unpaid parental leave under the NES and for government PPL turns on specific tests, including service and other criteria. Check eligibility carefully for casual and non-standard workers rather than assuming either way.
Is this advice?
No. This is general information. Parental leave and Paid Parental Leave rules change (the scheme has been expanding, and super on PPL applies for children born or adopted from 1 July 2025 with ATO lump sums from July 2026), so specific situations should be confirmed against current rules or with a qualified adviser.
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We review and check this guide periodically. At the time of writing (July 2026), all information was current. Scale Suite is a registered BAS Agent, not a licensed tax advisor or financial advisor. This content is general information only and does not constitute professional tax, financial, or legal advice. Some details may change over time.
Scale Suite is a Sydney-based provider of outsourced finance and HR services for Australian SMEs. We deliver bookkeeping, financial reporting, payroll processing, fractional CFO support, recruitment, employee onboarding, people and culture support, and fractional HR oversight, all as a fully embedded team that works inside your business.
Employment Hero Gold Partner, CA-qualified, and Xero Certified, we replace fragmented finance and HR processes with one responsive, senior-level function at a fraction of the cost of full-time hires. We serve growing businesses across Sydney, Melbourne, Brisbane, and Perth, with packages starting from $1,500 per month and no lock-in contracts.
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