IRD provides incorrect advice re parental leave payments

The provision of incorrect advice from the Inland Revenue Department (IRD) regarding a mother’s entitlement to parental leave payments has highlighted there may be a need to simplify the tests for eligibility for parental leave payments and parental leave entitlements under the Paid Parental Leave and Employment Protection Act 1987 (the Act).

The Employment Relations Authority (the Authority) case of Walton v Ministry of Business Innovation and Employment[1] resulted in the Authority ordering the Ministry of Business Innovation and Employment (MBIE) to pay Ms Walton her parental leave payments following the IRD’s incorrect advice regarding Ms Walton’s eligibility.

On 8 September 2020, prior to the birth of her child, Ms Walton contacted IRD to ascertain whether she would be eligible for parental leave payments. Ms Walton was advised by a senior IRD officer that she would not be eligible for parental leave payments because she was not currently employed. Ms Walton’s child was born on 9 December 2020. Due the belief that she was ineligible for parental leave payments, Ms Walton decided to return to work (in new employment) in April 2021. In October 2021, Ms Walton re-enquired as to her eligibility for parental leave payments. She was referred to MBIE who advised that because she had not applied for parental leave payments before she returned to work, she was ineligible.[2]

The Authority found that the IRD had incorrectly linked Ms Walton’s then current employment status to her entitlement to paid parental leave payments and that Ms Walton had relied on this incorrect advice to her detriment.[3] Due to Ms Walton’s reliance on the IRD’s incorrect advice the ERA reversed MBIE’s decision. As the IRD’s incorrect advice highlights, it is easy to conflate the eligibility test for parental leave payments with the test for entitlements to periods of parental leave.

Whether an employee is eligible for parental leave payments and/or a period of parental leave is governed by separate tests.

Important points to note (subject to some exceptions and notice requirements):

  1. A person is eligible for parental leave payments from the government if they have been employed as an employee for at least an average of 10 hours a week for any 26 of the 52 weeks immediately preceding the expected date of delivery of the child or the first date on which the person or their spouse or partner becomes the primary carer in respect of the child.
  1. An employee is entitled to a period of 6 months parental leave from their employment if the employee will have been employed by the same employer for at least an average of 10 hours a week in the 6 months immediately preceding the expected date of delivery of the child or assumption for the care of the child.
  1. An employee is entitled to a period of 12 months parental leave from their employment if the employee will have been employed by the same employer for at least an average of 10 hours a week in the 12 months immediately preceding the expected date of delivery of the child or assumption for the care of the child.
  1. The tests have also been adapted for people who are self-employed.

The confusion of IRD representatives regarding eligibility under the Act begs the question of whether the 35-year-old Act remains fit for purpose.

Click here for more Employment law articles.

 

 

[1] Walton v Ministry of Business Innovation and Employment [2022] NZERA 278.

[2] At [2]-[9].

[3] At [7]-[9].

Meet the team that makes
things simple.

Maria Green
Grace Courtney