The government’s new system of paid parental leave is set to come into effect on January 1, 2011. Employer groups say the matter is being debated as companies come to grips with the new scheme, which provides 18 weeks’ pay at the minimum wage of $570 a week. Unions fear that companies will reduce their voluntary payments to employees, but make up the difference with the government funds.

“There are plenty of companies who might say, ‘We are in tight financial circumstances, we have been offering paid parental leave voluntarily, is this something we can continue to afford to do in light of the introduction of the government scheme?’ It will be those companies having a close look at their policies.

When the Labor government introduced the scheme, it made a point of amending the bill to state that the payments would be additional to existing entitlements. But it is still possible for employers to change existing leave provisions if they are contained in company policy rather than enterprise bargaining agreements. Unions are planning to ask companies to shift provisions in policy to enterprise agreements when they come up for renegotiation.

Australian Chamber of Commerce and Industry director of workplace policy David Gregory said any roll backs would be hard to implement in a tight labour market. “I think there would be a lot of resistance from employees as well as their unions if any employer tried to scale back entitlements,” he said.

Paid parental leave amounts to $10,260 before tax and will be paid to employers by the Family Assistance Office. Employers then funnel the payment to their employees.

The Coalition introduced legislation seeking to have the payments made directly to workers last week. A spokeswoman for the Minister for Families, Jenny Macklin, said companies that continued to pay existing entitlements would fare better with retaining staff. Paid parental leave has been championed by Labor MP Tanya Plibersek, who gave birth to Louis Paul, her third child with husband Michael Coutts-Trotter, the director-general of the NSW Education Department, last month.