Paid parental leave changes: what families and ECEC employers need to know

Australia’s Paid Parental Leave scheme is expanding, with more paid days, superannuation on government-funded payments and greater flexibility for families. For early childhood education and care employers, the changes may also affect workforce planning, rostering, staff retention, enrolment timing and centre profitability.

Australia’s Paid Parental Leave scheme is undergoing a staged expansion, with changes designed to give families more time at home with a newborn or recently adopted child, support shared care and strengthen long-term financial security for parents.

The changes are particularly relevant for early childhood education and care (ECEC) employers, where a predominantly female workforce means parental leave settings can have a significant impact on workforce participation, retention and retirement savings.

They may also influence when some families first enrol children in early learning, particularly in nursery rooms, as longer paid leave gives parents more flexibility around return-to-work timing.

From 1 July 2025, eligible families with a child born or adopted from that date can access up to 120 days of Parental Leave Pay, equal to 24 weeks based on a five-day week. From 1 July 2026, this will increase again to 130 days, or 26 weeks. 

The payment rate is linked to the national minimum wage. For the 2025–26 financial year, Services Australia lists the rate as $189.62 a day before tax, or $948.10 for a five-day week. 

A major reform also came into effect from 1 July 2025, with the Australian Taxation Office (ATO) to pay a superannuation contribution on government-funded Parental Leave Pay for eligible parents with a child born or adopted from that date. The contribution is based on the superannuation guarantee rate and will be paid directly into the recipient’s superannuation fund after the relevant financial year ends. 

The scheme continues to support shared care between parents.

For children born or adopted from 1 July 2025, 15 days are reserved for a partner. From 1 July 2026, this increases to 20 days. Single parents can access all Parental Leave Pay days, although they may choose to share the payment with another parent. 

Families can also take more leave at the same time. For children born or adopted from 1 July 2025, parents can take up to 20 days of Parental Leave Pay at the same time, compared with 10 days for children born or adopted before that date. 

Superannuation on paid parental leave

The introduction of superannuation on government-funded Parental Leave Pay is a significant change.

Eligible parents with a child born or adopted from 1 July 2025 will receive an additional contribution based on the superannuation guarantee rate. Services Australia states that the contribution will be calculated and paid automatically, and parents do not need to submit a separate claim. 

For ECEC employees, this reform may be particularly important given the sector’s gender profile and the long-term effect that time out of paid work can have on superannuation balances.

Eligibility and income testing

Parents must meet Services Australia’s eligibility rules to receive Parental Leave Pay. This includes caring for a newborn or recently adopted child, meeting the work test, meeting the income test, meeting residence rules and not working on the days Parental Leave Pay is received, except for allowable reasons.

For the 2024–25 financial year, the individual adjusted taxable income limit is $180,007 or less. Where a person does not meet the individual income test, the family income test may apply, with a family income limit of $373,094 or less for 2024–25. Services Australia uses income from the financial year before either the claim date or the child’s birth or adoption date, whichever is earlier. 

What it means for families

For families, the changes mean more government-funded paid time at home with a newborn or newly adopted child, greater flexibility in how leave is shared and a new superannuation contribution that recognises the long-term financial impact of caring responsibilities.

The increase to 26 weeks from 1 July 2026 completes the staged expansion of the scheme, which has progressively increased the number of available Parental Leave Pay days.

Longer paid leave may also give some families more choice about when formal care begins. Some parents may still need care earlier because of employment, financial or personal circumstances. Others may choose to delay enrolment, begin with fewer days, or stagger their return to work.

What it means for employers

For employers, including ECEC approved providers and service operators, the changes do not replace existing obligations under the Fair Work Act.

Eligible employees can access up to 12 months of unpaid parental leave and may request a further 12 months, up to 24 months in total. The Fair Work Ombudsman notes that parental leave can be taken as a single continuous period, as flexible parental leave, or as a combination of both. 

Flexible parental leave days are unpaid and can be taken within the first 24 months of the birth or placement of an adopted child. The amount of flexible parental leave available depends on the child’s date of birth or placement, rising to 120 days for children born or placed between 1 July 2025 and 30 June 2026, and 130 days for children born or placed on or after 1 July 2026. 

Employees must also give notice before taking parental leave. The Fair Work Ombudsman states that employees generally need to give at least 10 weeks’ notice before starting unpaid parental leave, and at least four weeks’ notice of specific flexible parental leave days. 

Employers may need to review parental leave policies, workforce planning processes and employee communications to ensure they reflect the expanded Paid Parental Leave scheme and its interaction with unpaid parental leave entitlements.

What could this mean for centre operations

The paid parental leave changes are unlikely to create a large direct payroll cost for most services, because government-funded Parental Leave Pay is funded by the Australian Government.

The new superannuation contribution on government-funded Parental Leave Pay will also be paid by the ATO directly into the recipient’s superannuation fund. This means employers do not need to calculate or pay that contribution.

However, the commercial impact for ECEC services may still be material.

The most immediate pressure is likely to be replacement staffing. When an educator, teacher, room leader or centre manager takes extended leave, services may need to use casual educators, agency staff or fixed-term appointments to maintain ratios, continuity and operational coverage.

These options can carry higher hourly costs, recruitment costs and onboarding time.

There may also be a productivity impact. New or temporary staff need time to understand service routines, children’s needs, family expectations, programming systems and compliance requirements. This can place additional pressure on existing leaders and educators, particularly in services already operating with tight staffing margins.

The increased flexibility of parental leave can create further complexity. Services may need to manage more fragmented leave patterns, more return-to-work negotiations and more roster adjustments across the first two years of a child’s life.

Continuity of care is another economic consideration. Changes to key educator relationships can affect family confidence, particularly in nursery and toddler rooms where relationships are central to quality and retention. Poorly managed staffing transitions may contribute to family dissatisfaction or enrolment instability, which can flow through to occupancy and revenue.

Potential impact on enrolment timing

The expansion of Paid Parental Leave may also influence when some families first enrol children in early learning.

With eligible families able to access 24 weeks of Parental Leave Pay from 1 July 2025, increasing to 26 weeks from 1 July 2026, some parents may choose to delay the start of formal care, particularly for infants.

For centres, this could affect nursery room demand, waitlist conversion and start-date forecasting. Services that traditionally rely on children commencing care before six months of age may see some families defer enrolment until government-funded parental leave has ended, or until a parent returns to work.

The impact is unlikely to be uniform. Some families will still need care earlier because of employment, financial or personal circumstances. Others may use the added flexibility to stagger return-to-work arrangements, enrol gradually or begin with fewer days.

This makes enrolment conversations more important. Services may need to maintain closer contact with waitlisted families, confirm intended start dates earlier, and plan for more variation in nursery occupancy across the year.

Later entry into care may also affect room progression and staffing forecasts. If a cohort of infants starts later than expected, centres may need to adjust staffing, orientation schedules and transition planning across nursery and toddler rooms.

There may also be a revenue timing impact. A delayed start does not necessarily mean a lost enrolment, but it may shift fee income into a later period. For services operating with tight margins, even small changes in commencement timing can affect cash flow, roster planning and utilisation.

At the same time, families who take longer paid leave may be more intentional when choosing care. Services with strong orientation processes, clear communication and flexible enrolment pathways may be better placed to convert enquiries into confirmed enrolments when families are ready to begin.

In practical terms, providers may wish to review:

• nursery occupancy assumptions for 2025 and 2026
• waitlist follow-up processes
• enrolment deposit and commencement policies
• orientation and transition timelines
• staffing forecasts for nursery and toddler rooms
• communication with families planning a return to work
• cash flow assumptions where several start dates shift into a later quarter.

A retention opportunity for ECEC employers

The reforms may also offer a positive commercial opportunity.

Services that manage parental leave well, through clear policies, flexible return-to-work arrangements, supportive communication and strong backfill planning, may strengthen employee loyalty and reduce turnover.

Given the cost of recruiting and onboarding new educators, retaining experienced team members after parental leave can support both quality and profitability.

In practical terms, approved providers may wish to consider:

• building parental leave scenarios into workforce forecasts
• reviewing the cost difference between casual, agency and fixed-term backfill
• identifying internal educators who can step into acting roles
• planning earlier for room leadership changes
• maintaining communication with employees on leave
• aligning return-to-work planning with occupancy and ratio requirements
• reviewing whether employer-funded parental leave or return-to-work incentives support retention.

The commercial risk is not the government payment itself. The greater risk lies in weak planning, unfilled shifts, higher casual costs, leadership gaps, delayed enrolment starts and avoidable turnover.

For well-managed services, the reforms may support stronger retention and a more family-friendly employment offer.

What does this mean for the ECEC sector?

For the ECEC sector, the paid parental leave changes have implications beyond individual families. They intersect with workforce participation, staff retention, gender equity, service-level workforce planning and enrolment patterns.

Many educators and teachers will either access the scheme themselves or work in services supporting families through the transition to parenthood. The introduction of superannuation on government-funded Parental Leave Pay is particularly relevant, recognising that time spent caring for children can have a long-term impact on retirement savings.

For approved providers and service leaders, the expansion of Paid Parental Leave may also shape conversations about recruitment, retention and return-to-work planning. Services may see more employees taking longer or more flexible leave, including leave taken in separate periods across the first two years of a child’s life.

This makes clear communication essential. Employers should ensure parental leave policies, induction materials and internal guidance reflect the current government scheme, while distinguishing it from any employer-funded paid parental leave and unpaid parental leave entitlements under the Fair Work Act.

The changes may also affect rostering and continuity of care. Longer or more flexible periods of parental leave can require earlier workforce planning, stronger casual and relief staffing arrangements, and careful communication with families where key educators or teachers are preparing to take leave.

For services working directly with families, the changes also provide an opportunity to strengthen family engagement. Educators and leaders may be asked general questions about paid parental leave, return-to-work timing or care arrangements. While services should refer families to Services Australia for individual advice, awareness of the changes can help teams respond with confidence and direct families to the right information.

In practical terms, ECEC providers may wish to review:

• parental leave and return-to-work policies
• rostering and backfill processes
• communication templates for employees taking leave
• workforce planning for 2025 and 2026
• nursery room occupancy forecasts
• waitlist and enrolment conversion processes
• links between parental leave, flexible work and retention strategies
• how services refer families to official government information.

A strong response will not only support compliance. It may also help ECEC employers position themselves as family-friendly workplaces that understand the realities of caring responsibilities, for employees and the families they support.