In line with new federal legislation, HR has an important role to play in ensuring that uneven parental leave is no longer a major contributor to the gender pay gap.

When the Senate passed the Paid Parental Leave Amendment (Improvements for Families and Gender Equality) Bill 2022 earlier this month, it was the first meaningful change to PPL legislation since it was introduced in 2011. 

For parents whose children are born or adopted from 1 July 2023, the requirement that 18 of the 20-week paid parental leave entitlement be taken by the ‘primary carer’ will be removed. The new legislation will allow single parents to use the full 20-week entitlement of paid leave, up from 18 weeks currently.

Under the new scheme, PPL will be extended from 20 to 26 weeks by 2026, with an extra fortnight of paid leave added each year from July 2024 until 2026.

Australia was already behind most other OECD nations as the second-last to introduce a government PPL scheme, and while it procrastinated on making such leave more equitable, there were extensive consequences for our gender pay gap.

Australia’s gender pay gap sits at 14.1 per cent, with women on average earning $263.90 less than their male counterparts each week. This divide has remained relatively stagnant over the last two decades. In 2004, it was 14.9 per cent, rising to 18.5 per cent in 2014. Last year, we were pretty much back to early 2000s levels.

By comparison, the gender pay gap average in OECD nations is 12 per cent, having fallen from 18.1 per cent in 2000. 

A major contributor to Australia’s slow progress is the fact that our current PPL scheme actively encourages women to have career breaks and discourages men from doing the same. Also, terminology such as ‘primary carer’ and ‘secondary carer’ sends the message that men should take a back seat.

“The leave imbalance entrenches traditional gender roles. It sends the message that there’s only a minimum role for fathers,” says Dr Leonora Risse, Senior Lecturer in Economics at RMIT University, who specialises in gender equality. “We know there are many fathers who aspire to spend more time with their children to bond with their family, but our current policy settings and cultural norms prevent them from doing that.

“And that matters because we know that if more fathers are involved in parental leave, that is a boost for women’s full-time labour force participation.” 

 Now, as we herald in more equitable legislation, HR can start to bridge that gap.  

“We’re moving into a new phase where it’s not just about the mother or birth giver,” says Risse. “It’s about offering a decent amount of leave allocation for fathers or partners, so caregiving is not so one-sided. 

“If you can rebalance the distribution of caregiving at home, that will be the lever that will enable women to advance further in the paid workforce and correct gender gaps.” 

Issues with the current parental leave system

Australia’s current scheme awards 18 weeks’ PPL to the primary caregiver and two weeks to a secondary caregiver, both paid at minimum wage, which, at the time of writing, is $812.60 per week.

“We’ve had 12 years of very little progress,” says Emma Walsh, CEO of Parents At Work, a consultancy that supports employers with parental leave transition programs. “During that time, the motherhood penalty has wreaked havoc on a woman’s hours of work and earnings potential compared to a man’s because the expectation is that she will take on the burden of the caring load.”

“The leave imbalance entrenches traditional gender roles. It sends the message that there’s only a minimum role for fathers.” – Dr Leonora Risse, Senior Lecturer in Economics at RMIT University

The way this system is structured means parents must decide who will take the bulk of the leave, based on factors such as income and whether the mother chooses to breastfeed. 

Many parents end up making short-term decisions based on their financial situation, says Prue Gilbert, founder and CEO of Grace Papers, a platform designed to empower parents and carers through coaching, consulting and research.

“They’re not factoring in the potential for their careers to grow, or the compounding impact of superannuation through that period,” says Gilbert. “We end up reverting to the traditional gendered stereotype where the mother works part-time and her career stagnates. She still encounters ambition bias [the assumption that working mothers are less ambitious than others] and other gender biases that continue to disrupt the learning process to become a leader.”  

These biases are reflected in the numbers. For example:

• In 2021-22, women used 88 per cent of primary carer’s leave, according to the Workplace Gender Equality Agency (WGEA).
• Women account for the majority of part-time workers in Australia. In the month ending 31 December, men had worked approx. 97,000 part-time hours compared to 210,000 for women.
• Australia has the third-highest part-time employment rate in the OECD. 
• Women retire with 23.4 per cent less super than men, according to the Australian Association of Superannuation Funds.
• A Treasury analysis found that a woman’s earnings fall by an average of 55 per cent in the first five years of parenthood. 

This is where we’ve been, but it doesn’t have to be where we are going. HR can change the culture and encourage more men to take parental leave. 

“This is a unique opportunity for organisations to disrupt gender inequality gaps by having the right policies,” says Gilbert. “But more than that, [organisations] must recognise that it takes more than a policy to close those gender gaps.”

Building a well-rounded parental leave policy

In organisations with more than 100 employees, nearly 62 per cent offer PPL in addition to the government’s scheme, according to the WGEA. In many cases, this amounts to a wage replacement scheme where an organisation pays the gap between the minimum wage and an employee’s usual salary. Of the 62 per cent offering PPL, four out of five also pay superannuation contributions.   

When considering the benefits of offering PPL, many organisations go to cost first. They weigh up the short-term price tag, but rarely consider the long-term benefits associated with PPL – in particular, attraction, retention and productivity. 

“For a long time, the support offered by organisations has been seen as a nice-to-have, rather than a talent retention strategy,” says Gilbert. “But it’s more than that. It’s a critical path to closing the gender pay gap, the leadership gap and the super gap, and increasing female participation in the workforce.”

Parental leave is also an opportunity for both parents to gain human skills that subsequently benefit their employers.  

“We’ve heard from leaders and CEOs who have found that men who take parental leave experience better leadership development than what they’d get in any leadership course,” says Gilbert. “They develop empathy, they develop patience. These human skills are essential for the future of work.” 

One parent who experienced the benefits of a well-rounded policy is Ward Olivete, Head of Legal at global information services organisation Experian. He was the first male in the company’s Asia-Pacific region to take primary carer’s leave. 

Olivete and his husband welcomed their child Xander, who was born in the US via surrogacy, in March 2020. As the primary carer, Olivete took four months of PPL. 

“I had an incredibly positive experience during parental leave. I was treated the same as any other primary carer,” he says.

He describes how drawn-out and stressful the surrogacy process was, but he always felt supported by his organisation. 

“To be treated equitably and have that sense of belonging meant everything to me. I was able to spend every single minute with my son for the first four months of his life.” 

Companies that don’t offer PPL are shooting themselves in the foot, says Olivete. “There are so many kinds of families in Australia – heterosexual couples, same-sex couples, couples who adopt, single-parent families. It’s not just one man and a woman with 1.6 children. I was treated the way anyone else – man or woman – would have been treated in that situation. To me, that’s true equity.”

An equitable parental leave policy shouldn’t stop at offering PPL. HR will play a significant role in normalising both parents taking leave and introducing policies to support them before, during and after leave. 

You can start by sending deliberate messages about your parental leave policy and how the company will support a parent during these critical years, says Walsh. 

“Very loudly and proudly signal to your employees the policies you have in place, what to expect and examples of people doing it.” 

HR can do this by hosting ‘town halls’ about parental leave and encouraging leaders, in particular male leaders, to ‘leave loudly’ and talk about their parental leave experiences in public forums such as LinkedIn, or even in a staff newsletter. 

“Very loudly and proudly signal to your employees the policies you have in place, what to expect and examples of people doing it.” – Emma Walsh, CEO of Parents At Work

Senior leaders who may not be in that life stage can also play a role. 

“Senior executives at grandparent age could take time off to spend time with their grandchildren because they might have missed out on that with their own children,” says Risse. “It’s that human element that’s important for sending reassurance to the next generation of men.” 

Supporting the transition to parenthood 

When coaching parents preparing for parental leave, Gilbert has found that many feel anxious about what will happen to their role while they are away. They worry about their replacement outperforming them, or their position being made redundant if their tasks are distributed throughout the team, she says. 

“When employees take those anxieties into parental leave, they’re less likely to stay connected with their organisations and are less likely to stay engaged with their career during their childbearing years. 

“Organisations have a critical role to play in setting up successful parental leave transitions, and not leaving it all on an individual to navigate it themselves.”

Gilbert recommends including these implementations to ease the transition: 

1. Handovers: A handover shouldn’t just be the responsibility of the person going on leave. It should be conducted by an individual, but with the oversight and responsibility of the leader. 

 Also, to help ease their anxiety, encourage the employee to outline how they’d like the role handed back to them when they return. For example, they might be included in emails in the two weeks before they return. 

2. Introduce sponsors: A sponsor is someone who is across a person’s work and can be their on-the-ground spokesperson. 

For example, they could nominate the employee for particular projects when they return, ensuring they don’t miss out on career development. 

3. Keep-in-touch programs: These allow those on parental leave to stay connected with the company without losing their entitlement to parental leave pay. Employees can access 10 days (one hour or more counts as a day) to participate in check-ins, training or planning. These programs lower ambition bias and make the transition back to work easier.

 A 2018 RMIT study found that those who participated in these programs were perceived as having higher levels of ambition and greater commitment to work. 

4. Encourage flexible work: For example, to make work more family-friendly, companies can institute meeting-free times during school pick-up hours. 

Shifting the narrative 

There’s a clear business case for offering PPL and instituting a family-friendly culture, but there’s more to parental leave than a simple cost-out. Equitable parental leave is a human rights issue. And this is HR’s opportunity to step up, help companies live their values and make a tangible difference to Australia’s gender pay gap. 

“Of course, parental leave is a strategic investment for businesses. But more than that, it’s about people and principles,” says Risse. “Your bottom line will fluctuate, but your principles should stand firm.”

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