One of the controversial proposals in the Federal Budget 2015 of the Australian government is the revision of the paid parental leave. Previously, employees could get their paid parental leave from their employers and the government, which led to the moniker, “Double Dipping”.
This proposed Federal Budget 2015 revision focuses on limiting the paid parental leave employees receive from the government, and increase the government funds, by forcing them to select only the one with the better paid parental leave scheme.
The Double Dipping provision requires employees to select only the larger paid parental leave incentive from the two, significantly cutting the expected paid parental leave incentives of the working parents in Australia.
There are two scenarios for your employees:
1. If your paid parental leave scheme is lower than the government’s offer capped at $11,500, the government will offer to fund the remaining balance until it hits the $11,500 paid parental leave limit.
2. If your paid parental leave scheme can match or is higher than the government’s offer capped at $11,500, then your employees have no choice but to take your offer since they won’t be able to access the government’s paid parental leave scheme.
Now, how will this revised paid parental scheme affect you and your business?
1. Tighter competition
What happens first is that the level of competition becomes tighter overnight.
The scramble to look for and keep talented employees become harder as they will now be starting to look for better pay and benefits elsewhere to keep their families’ financial health in check. That would mean you, the owner of the business, will be forced to increase employee wages and offer better benefits in order to keep the talented employees on your side.
However, struggling businesses will have a tough time keeping up. Increasing wages and benefits will be detrimental to the struggling business as a whole by jeopardizing the business’s already tough financial standing. The budget that should have been allocated for product expansion or improved machinery will now be diverted.
Failure to take this action will leave your business with three scenarios:
The bad: a business with mediocre staff
The worse: a business with incompetent staff
The worst: a business with no staff at all
Which one shall it be for your business?
2. Wage and benefits revision
If you’re fortunate to have proactive employees concerned about the revised paid parental leave scheme, they might knock on your office door and negotiate for better payment terms and benefits. While it’s understandable and expected, it poses business challenges that might significantly interrupt your business’s daily operations.
To have your employees resigning might mean scrambling for better employees, but employees negotiating for better pay and benefits will mean a need for consultants to oversee the transition as seamless as possible. That will incur more costs and downtime for your business.
Failure to provide an open discussion for the proposed negotiation leaves your business open for work stoppage, which you don’t want to happen—at all.
The best way to stave off this impending problem is to keep consultants and professionals at the ready to manage the resulting process as flawlessly as possible.
3. Dip in employee morale
Another thing you should be wary about the change in paid parental leave scheme is that your employees’ focus may go awry and get anxious.
Expect that employee productivity might significantly drop as they try to look for ways to handle the paid parental leave revision at the expense of your business’s working time. While understandable and expected, this will put your business at risk. Employees intending to resign might be lax in their performance or employees intending to negotiate their salary terms and benefits might focus more on their negotiation attempt than their core business function.
Either way, it’s bad for your business.
Be proactive as much as possible. Keep the conversation open and try to quell the fears and doubts of your employees to keep the morale up while searching for efficient ways to walk the fine balance between keeping your business profitable and your employees secure and happy.
4. Potential of moonlighting
Last but not the least, the paid parental leave revision will open a huge potential for your employees to moonlight.
In addition to their full-time job at your business, your employees will probably take on another job at night just to make ends meet or secure their families’ needs.
This is a big problem on so many levels.
Expect to see your moonlighting employees’ energy and work enthusiasm significantly reduced. Not only working two jobs in a day tiring, this might also lead to consequences like sickness, poor performance, and burnout.
Your employees’ poor immune system, brought upon by trying to juggle two jobs at the same time, makes them vulnerable to sickness which might affect your other employees. Not only this, employees who chose to stay in will mean you’ll be looking for temporary workers to fill in or to risk overworking other employees, which will mean more overtime expense for your business and more stress for other employees.
Poor performance might lead to disruptive business-related problems that might cost your business or a huge insurance coverage in case of accidents and injuries at work. A potential liability you can’t afford to incur.
Having burned out employees on your team runs the risk of a disruptive workplace or worse, employees lashing out at customers. While the former has a huge tendency to happen, the latter happens too, albeit at a bigger cost now that social media and smart phones are prevalent.
Keep your employees from moonlighting by providing a better payment scheme and benefits structure. It’s a win-win for your business and your employees that everyone can appreciate.
In light of the recent changes of paid parental leaves under the Federal Budget 2015 of the government of Australia, it’s understandable when the points discussed happen as the reaction of parents who only want to look out for their family.
However, as business owners, we have the responsibility to keep our business profitable, to serve our customer to the best of our abilities, and to take care of our employees as best as we can, which forces us to keep ahead of changes, to be always on our toes. One of the best ways to achieve that is to look for experienced professionals with integrity who will help your business in any way they can.
Contact us and let us help you with your business responsibility to keep ahead.