After 12 months of continuous employment, employees are entitled to 3 weeks paid annual holidays. If an employee is on parental leave for part of that 12 months, then they are still deemed to be in continuous employment so are still entitled to 3 weeks annual paid leave.
However, there is a major disincentive for employees who are on parental leave to take their paid annual holidays at this time. When on parental leave, although employees are still entitled to 3 weeks paid annual leave, the way that this leave is calculated leaves them with considerably less in holiday pay because of the parental leave then what they would have otherwise received.
If an employee becomes entitled to paid annual leave while on parental leave and takes the leave at that time, then that holiday pay is calculated using the average weekly earnings for the 12 months before the annual leave is taken. If the employee has been on parental leave, then they would have been earning no money from their employer for their period of parental leave. So when their average earnings over the past 12 months are calculated, their weeks on parental leave are included as nil earning weeks.
As an example – Kate earns $1000 per week at her job. On June 1 Kate began 12 months of parental leave. 6 months into her parental leave Kate became entitled to her 3 weeks of annual leave, as this was the anniversary of her starting at the company. If Kate decides to take the holiday pay at this point, then it will be worked out as her average weekly earnings over the past 12 months.
the first 26 weeks Kate was earning $1,000 per week ($1000 x 26)
the later 26 weeks Kate was on parental leave so was not earning any money ($0 x 26)
So Kate’s holiday pay if she was to take her entitlement to leave would be $26,000 + 0 = 26,000. This total would then be divided by 52 to get the weekly average. In this case it would be $500 per week of annual leave, this is half what Kate would get if she did not have a block of parental leave in the past 12 months.
So, although employees do still accrue and become entitled to annual leave while on parental leave, the amount they receive if they choose to take it will not be as much as had they been working full-time.
