Alex is Sprintlaw’s co-founder and principal lawyer. Alex previously worked at a top-tier firm as a lawyer specialising in technology and media contracts, and founded a digital agency which he sold in 2015.
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What’s Changing?
From 1 July 2026, Australia’s government-funded Paid Parental Leave scheme will increase from 120 days to 130 days, equivalent to 26 weeks.
This change applies to eligible parents and carers of children born or adopted on or after 1 July 2026. While the payment is funded by the Australian Government, employers still need to understand how the change may affect workplace planning, payroll administration and employee entitlements.
Why This Matters For Employers
For employers, the biggest impact is not necessarily the cost of the payment itself. In most cases, the government funds Paid Parental Leave. However, businesses still need to manage the practical and legal consequences of an employee taking parental leave.
This can include arranging temporary cover, managing workloads, updating workplace policies, responding to flexible work requests and ensuring employees are not treated unfairly because they are taking parental leave.
If parental leave requests are handled inconsistently or incorrectly, employers may face complaints, disputes or legal risks relating to unpaid parental leave entitlements, flexible work requests, discrimination, adverse action or return-to-work rights.
Example: How This Could Affect A Small Business
Imagine a small accounting firm with six employees. One of its senior accountants plans to take parental leave after welcoming a child in late 2026.
Although the government funds the employee’s Paid Parental Leave, the business still needs to manage their absence. The employer may need to redistribute client work, arrange temporary support and prepare a clear handover before the employee begins leave.
When the employee returns, they may also request a phased return or flexible working arrangement, such as working three days a week for the first few months. For a small business, this can affect client service, deadlines and team capacity.
This is why the 2026 changes are not just an administrative update. They can also affect workforce planning, staff management and legal compliance.
How Does This Interact With Unpaid Parental Leave?
Government-funded Paid Parental Leave is separate from unpaid parental leave under the National Employment Standards.
Eligible employees may be entitled to up to 12 months of unpaid parental leave and can request a further 12 months. This means an employee may receive government-funded payments while also taking unpaid parental leave from their employer.
Employers should be careful not to treat the 26-week payment period as the employee’s total leave entitlement, as their unpaid parental leave rights may extend beyond this.
What If You Offer Your Own Paid Parental Leave?
Some employers offer paid parental leave benefits on top of the government scheme. If this applies to your business, it is important to check how your policy is worded.
For example, your policy should make it clear whether employer-funded leave is paid at the same time as government Paid Parental Leave, after government payments end, or as a top-up payment.
Unclear policy wording can lead to confusion, inconsistent treatment between employees and disputes about what the business is required to pay.
What About Superannuation?
From 1 July 2025, superannuation became connected to government-funded Paid Parental Leave through the Paid Parental Leave Superannuation Contribution.
These contributions are generally paid by the ATO into the employee’s nominated super fund. For most employers, this means they do not need to fund superannuation on the government-funded Paid Parental Leave payment themselves.
However, if an employer provides its own paid parental leave, it should check whether superannuation applies to those employer-funded payments.
What Should Employers Do Before 1 July 2026?
Before the changes commence, employers should review their parental leave policies, employment contracts, payroll processes and internal procedures. Managers should also understand how parental leave, flexible work requests and return-to-work obligations operate in practice.
It may also be worth seeking legal advice if your business offers its own paid parental leave, has outdated policy documents, is unsure how government payments interact with employer-funded benefits, or is dealing with a complex parental leave request.
Key Takeaways
From 1 July 2026, eligible parents and carers will be able to access up to 26 weeks of government-funded Paid Parental Leave.
Although the payment is funded by the government, employers still need to prepare for the operational and legal impacts. Updating policies early can help businesses avoid confusion, manage absences more smoothly and support employees returning from parental leave.
If you would like a consultation on preparing for the 2026 paid parental leave changes, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.
Alex SoloCo-Founder
