Parental Leave Pay Rises to 130 Days: What Payroll Teams Must Get Right

Since 1 July 2026, Australian families expecting a child can access 130 days of government Parental Leave Pay, up from 120. For employers, the harder problem isn't the increase. It's keeping two separate payment streams straight on every payslip.

Most payroll teams can tell you their parental leave policy. Far fewer can tell you whether their payslips clearly distinguish government Parental Leave Pay from employer-funded parental leave, as the Fair Work Act requires. That distinction now matters more than it did a month ago.

Quick answer: Since 1 July 2026, Australian families expecting a child can access up to 130 days (26 weeks) of government Parental Leave Pay, up from 120 days (24 weeks). It is administered by Services Australia at the National Minimum Wage rate and is separate from any employer-funded parental leave. Separately, Parental Leave Pay for a child born or adopted from 1 July 2025 attracts a 12% superannuation contribution, which the ATO began paying directly to employees' funds from July 2026. Under the Fair Work Act, employers must show Parental Leave Pay as a distinct, clearly identified payment on employee payslips.

What changed on 1 July 2026

Parental Leave Pay is an Australian Government payment, administered by Services Australia, that eligible working parents can claim while on leave from their job to care for a new child. It is separate from any leave entitlement or payment an employer provides directly.

The 130-day increase

Eligible carers of a child born or adopted from 1 July 2026 now have access to 26 weeks (130 days) of Parental Leave Pay to share as a family, up from 24 weeks (120 days) for children born between 1 July 2025 and 30 June 2026. The amount is set at the National Minimum Wage.

The superannuation change

For children born or adopted from 1 July 2025, Parental Leave Pay also now attracts a 12% superannuation contribution. The Australian Taxation Office pays this directly to the employee's superannuation fund, with payments having started in July 2026. Employers are not the paying party for this contribution, but they remain responsible for making sure their own payroll records and payslips don't create confusion about which body paid what.

The mechanics: two payment streams, one payslip

Employees can receive parental leave payments from two distinct sources at the same time:

1. Australian Government Parental Leave Pay, claimed directly through Services Australia and paid at the National Minimum Wage rate.
2. Employer-funded parental leave, provided under an enterprise agreement, employment contract, or workplace policy, typically paid at the employee's usual wage.

Under the Fair Work Act, employees receiving Parental Leave Pay must receive a payslip for each payment, and that payslip must clearly identify it as Parental Leave Pay, separate from any employer-funded entitlement. Only certain deductions can be made from Parental Leave Pay, which means a payroll system that applies the same deduction logic across both payment types is already non-compliant before anyone notices.

This is not a hypothetical edge case. A full-time employee on 12 months of parental leave under an enterprise agreement that includes 12 weeks of employer-funded paid leave will typically receive both payment types concurrently for at least part of that leave. Payroll needs to track eligibility windows, payment sources, and superannuation treatment for each stream independently, for the full duration of the leave.

Where mid-market employers get this wrong

Three failure patterns show up repeatedly in Australian organisations with manual or semi-manual payroll processes:

1. Payslips that don't separate the payment types. A single "parental leave" line item that blends Services Australia funds with employer-funded pay fails the record-keeping standard and makes an audit trail impossible to reconstruct.
2. Superannuation confusion. Because the ATO pays the 12% contribution on government Parental Leave Pay directly, payroll teams that also calculate and pay superannuation on that portion risk duplicate contributions or, more commonly, incorrectly withhold super on employer-funded payments that should still attract it under normal Superannuation Guarantee obligations.
3. Deduction logic applied uniformly. Standard deductions that are permissible against ordinary wages are not automatically permissible against Parental Leave Pay. Systems built for general payroll deductions, without a specific rule set for this payment type, create compliance exposure quietly, often for months before anyone reviews the payslips.

None of these are edge-case risks. They are structural risks that scale with headcount and with the number of employees taking parental leave in a given year, which is rising as the entitlement grows.

What good looks like

Organisations that handle this well share the same practical habits:

1. Payslips clearly and separately label Parental Leave Pay and employer-funded parental leave, with dates and sources visible to both the employee and to an auditor.
2. Superannuation treatment is coded correctly for each stream from the point an employee's leave is set up, not reconciled after the fact.
3. Deduction rules for Parental Leave Pay are configured as a distinct category, not inherited from general payroll settings.
4. HR, payroll, and finance share a single source of truth for which payment is active on which date, so an employee moving between employer-funded leave and government-funded leave doesn't create a gap or an overlap in the records.

For organisations managing this across multiple sites, awards, or enterprise agreements, the manual version of this process is difficult to sustain reliably at scale. Automated award interpretation and payroll compliance tools that treat parental leave payments as a distinct, rules-based category, rather than a variation on ordinary pay, remove much of the manual judgement call that leads to the errors above.

The practical next step

The Parental Leave Pay increase to 130 days is a modest legislative change. The record-keeping and payslip obligations attached to it are not new, but from 1 July 2026 they apply to more employees for longer periods, across Australian workplaces of every size.

With the change now in effect, Australian employers should:

1. Confirm payslips label government Parental Leave Pay and employer-funded parental leave as separate line items, per Fair Work Act record-keeping requirements.
2. Check that superannuation coding reflects the ATO's direct 12% contribution on Parental Leave Pay, rather than duplicating or omitting it.
3. Review deduction rules applied to Parental Leave Pay against the restricted deduction list, rather than the standard payroll deduction set.
4. Confirm HR, payroll and finance share one record of which payment type is active for each employee, on each date, across the leave period.

OAHI's Pay Rules engine applies award and entitlement logic. Book a demo to see how it handles this for your workforce.

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