Paternity Leave and Benefit Bill 2016

By Daisy Downes

Under proposed legislation, new fathers will be entitled to two weeks of paternity leave and paternity benefit from later this year. Unlike most EU Member States Ireland currently has no provision for paternity leave.

Who’s entitled to paternity leave?

The Paternity Leave and Benefit Bill 2016, published on 20 June 2016, is expected to be enacted by the end of July. Under the proposed legislation, an employee who is a relevant parent in relation to a child will be entitled to two weeks’ paternity leave to be taken at any time within 26 weeks of the birth or placement. The definition of a ‘relevant parent’ has been drafted to provide for same sex couples.

Paternity leave can be taken by one person only. However, in the case of adoption, the proposed legislation allows for circumstances where the birth father will have taken paternity leave, by ensuring that the adoptive father can subsequently also take paternity leave.

The proposed legislation says that the entitlement to paternity leave will apply where the date of confinement — or, in the case of adoption, the date of placement of the child — falls on or after 30 September 2016.

Self-employed fathers who meet certain social insurance contribution requirements, set out in Section 31 of the Bill, will also qualify for paternity benefit.

Rates and notice period

The weekly rate of paternity benefit, set out in Section 61D of the proposed legislation, will be an amount equivalent either to the amount of illness benefit, including any increases of that benefit, which the person would otherwise receive if he or she was entitled to that benefit, or €230, whichever is the greater.

Paternity leave will usually need to be applied for four weeks in advance and taken in a single two-week period.

Tax implications

Mark Ludlow, tax solicitor at Ronan Daly Jermyn, says paternity benefit is likely to be taxed in the same way as maternity benefit.

“The Paternity Benefit Bill amends the Taxes Acts to provide that Paternity Benefit will be a taxable benefit, just as Maternity Benefit currently is. It is anticipated that Revenue will recover the Income Tax due in the same manner as they do for Maternity Benefit. Revenue will receive details from the Department of Social Protection of recipients of Paternity Benefit and we expect they will then reduce the individuals’ tax credits and rate bands accordingly. The individual’s employers will then effectively recover the Income Tax due on the Paternity Benefit through payroll. Paternity Benefit should not be chargeable to USC or PRSI. However any ‘top up’ payments paid by an employer to the individual should be subject to Income Tax, USC, and PRSI as normal.”

Business impact

Patricia Callan, director at the Small Firms Association, says, "The cost and administration of paternity leave is concerning for small businesses where the absence of a member of staff is felt more than in a larger firm. Finding and training a replacement for a two-week period is often unrealistic or unaffordable. And, of course, the timing of a new arrival may coincide with the peak period in a business. However, employers recognise that it is important for employees to balance life and work commitments, and have usually facilitated annual leave around the birth of a child. In the wider context of gender equality in the workplace, this recognition of the care of children being the responsibility of both parents is also a positive initiative in supporting the return of women to the workplace."

Shaping the workplace enviroment

Welcoming the publication of the Bill, Valarie Daunt, partner, Human Capital Consulting, Deloitte, described it as a step in the right direction on the diversity agenda.

This Bill facilitates the opportunity to embed and foster a culture of diversity into organisations, and is a starting point in providing firms with an opportunity to reflect this important time for both parents." Says Ms Daunt

"It is very much a step in the right direction on the diversity agenda, and can be supported by other initiatives which firms can implement."

“It will also have a positive impact on employee engagement, as it greater acknowledges the roles that people have in their lives – both inside and outside the workplace. These two elements both feed into the culture of an organisation, which is so important in not only shaping the workplace environment, but ultimately also has a considerable impact on business performance.”

The introduction of the Paternity Leave and Benefit Bill 2016 meets a commitment made in Budget 2016. If enacted, the legislation is expected to be commenced in time for the benefit and leave arrangements to roll out at the end of September.