A recent Employment Court decision highlights the importance of getting it right when applying for paid parental leave – essentially you must use it or lose it!
The case emphasised that applications to take advantage of paid parental leave need to be made before an employee’s return to work. By not doing so, primary caregivers can bring their paid leave entitlement to a premature end.
Parental leave is a tricky area to navigate. Should you require any assistance, please contact a member of our expert Employment Team.
The importance of getting it right
Parental leave is an area of law that has been the subject of significant government consideration in recent times. If applications for paid parental leave are not made correctly, or this leave is not taken advantage of at the right time, primary caregivers risk losing their entitlements.
In Ministry of Business, Innovation and Employment v Duan [2023] NZEmpC 232 (Duan), this risk is clearly displayed.
In this instance, disputes over entitlements, eligibility and return to work dates led to the Ministry of Business, Innovation and Employment (MBIE) asking the Employment Court for some well needed clarification.
The facts in Duan
Ms Duan was employed by MBIE when she became pregnant and had her child in April 2021. Around this time, Ms Duan became the primary carer and briefly took annual leave before working from home from mid-April, with a family friend assisting with childcare.
When Ms Duan subsequently applied for paid parental leave in August 2021, this was declined. This was on the basis that parental leave payments eligibility ends, at the earliest, on someone’s return to work.[1] So, when Ms Duan began working from home in April 2021, parental leave ceased being payable.
Following this, Ms Duan resigned from her role and cared for her baby full-time before resuming part-time work in February 2022. Ms Duan also asked the Employment Relations Authority (Authority) to review MBIE’s decision.
The Authority found that Ms Duan had acted in good faith and had misunderstood parental leave requirements. Ultimately, the Authority granted Ms Duan an entitlement to receive paid parental leave from mid-September 2021 (when she again ceased work) to February 2022.
The Employment Court decision
MBIE then challenged the Authority’s determination at the Employment Court.
The Employment Court found the Authority was wrong in its determination, and that the first decision was correct: Ms Duan became the primary carer when her baby was born and by returning to work from home, Ms Duan had inadvertently given up her paid parental leave eligibility. To keep this available to her, Ms Duan should have applied for parental leave and delayed the start of this to immediately after her annual leave ended.
While MBIE did not seek to recover the money paid to Ms Duan pursuant to the Authority’s decision, this case is a clear example of how navigating parental leave can be tricky. It also shows how confusion can lead to costly consequences for both employers and employees.
[1] Parental Leave and Employment Protection Act 1987, s 71L.
