Navigating maternity leave: employee, independent contractor and employer perspectives

What’s changed and understanding top-up payments

Maternity and parental leave has become one of the most dynamic and, at times, misunderstood areas of workplace relations. With recent changes to government entitlements, increased flexibility expectations, and growing awareness of discrimination risks, employers, independent contractors and employees are navigating a more complex framework than ever before.

Understanding maternity leave from all perspectives is critical to managing risk, maintaining compliance, and supporting positive workplace outcomes.

The employee perspective

Job security and entitlement clarity

For employees, maternity leave is not only about time away from work – it’s about certainty. Under the Fair Work Act 2009, eligible employees are entitled to up to 12 months of unpaid parental leave, with a possible extension to 24 months. This provides job protection, meaning employees are generally entitled to return to the same role or a comparable position.

However, unpaid leave often creates financial pressure, particularly in the early stages of parenthood. As a result, employees increasingly rely on a combination of government entitlements and employer-provided benefits to maintain income continuity.

Government Paid Parental Leave – what’s changed?

The Government Paid Parental Leave (PPL) scheme has undergone significant reform. From 1 July 2026, the scheme provides up to 26 weeks (130 days) of paid leave, the final stage of a phased expansion from 20 weeks in 2023, with increased flexibility in how leave can be taken and shared between parents.

From 1 July 2026, the Australian Taxation Office (ATO) also began paying a 12 per cent superannuation contribution on Government PPL for children born or adopted on or after 1 July 2025, addressing a long-standing gap in retirement savings for parents who take time out of the workforce. Importantly, the changes reflect a shift away from maternity-specific leave toward a more gender-neutral parental leave framework, with a growing share of leave reserved specifically for the second parent on a “use it or lose it” basis.

While these changes are positive, they’ve also created the potential for confusion. Many employees are uncertain about:

• How government payments interact with employer-provided paid leave;
• Whether they can receive both simultaneously; and
• Who administers the payments.

Clear communication from employers based on government guidance is increasingly important to manage expectations.

Flexible work on return

Employees returning from maternity leave often request:

• Part-time hours;
• Modified start and finish times; or
• Alternative rostering arrangements.

Employees with caring responsibilities have a legal right to request flexible working arrangements, but this does not mean the request must be approved. This distinction is often misunderstood and can become a source of conflict if expectations are not managed early.

The independent contractor perspective

No automatic leave entitlements

Independent contractors do not have the same maternity or parental leave entitlements as employees. They are not covered by the National Employment Standards (NES), which means there is no guaranteed paid or unpaid leave or role protection. Any time away from work is governed by the terms of the contract and commercial arrangements with clients.

Many independent contractor agreements are silent on parental leave, but some allow for suspension of services by agreement. Open and early communication with clients/principal is critical. Discuss expected timeframes, handover arrangements, and whether the engagement can be paused, reduced, or transitioned temporarily to another contractor.

 Paid Parental Leave (PPL) scheme for independent contractors

Contractors may be eligible for the Australian Government’s PPL scheme if they meet the work and income tests, even though they are not employees. This can provide a baseline level of income support during the leave period.

Protecting independent status

Any maternity leave arrangement should be clearly documented as a commercial agreement. Avoid employment-style approvals or guarantees of ongoing work, as these can undermine genuine independent contractor status.

With proactive planning, clear contracts, and transparent communication, independent contractors can navigate maternity leave in a way that supports both their family needs and their ongoing business relationships.

The employer perspective

Operational and compliance challenges

From an employer’s perspective, maternity leave can create genuine operational challenges. These include:

• Backfilling roles for extended periods;
• Managing client or patient continuity;
• Training temporary replacements; and
• Reintegrating employees into changed roles or structures upon return.

At the same time, employers must ensure they do not inadvertently expose themselves to claims of discrimination or adverse action. Decisions relating to maternity leave, flexible work, or return-to-work arrangements are closely scrutinised by regulators and tribunals.

What has changed for employers?

Recent years have seen increased focus on:

• Procedural fairness when responding to flexible work requests;
• The need for reasonable business grounds if refusing a request; and
• The importance of consistency across the workforce.

Informal or undocumented arrangements – for example, verbal agreements around part-time work or altered hours – present significant risk. What may start as a practical solution can later be relied upon by an employee as an “entitlement.”

What are top-up payments?

Top-up payments are employer-funded payments designed to supplement the Government PPL so that an employee receives an amount closer to, or equal to, their normal wage for a defined period.

How top-up payments typically work

Common approaches include:

• The employer paying the difference between the Government PPL rate and the employee’s ordinary salary; or
• The employer paying full salary and receiving the Government PPL on behalf of the employee.

Top-up payments are not a legal requirement unless:

• They are mandated by an applicable award or enterprise agreement; or
• They are expressly provided for in an employment contract or company policy.

Employers who offer top-up payments voluntarily should be careful to clearly define the scope and limits of the benefit.

Key risks and considerations

Employers should ensure policies clearly address:

• Eligibility criteria (e.g. minimum service requirements);
• The duration of payments;
• Whether payments apply to primary carers only;
• Whether superannuation is payable on the employer-funded top-up (noting that, separately, the ATO now pays a 12 per cent superannuation contribution on the Government PPL component itself); and
• Any return-to-work or repayment obligations (where lawful).

Without clarity, employers risk creating unintended long-term entitlements or inconsistent application across the workforce.

Managing flexible work requests

A significant area of tension arises when employees return from maternity leave seeking flexible arrangements that cannot be accommodated operationally.

Employers may lawfully refuse a flexible work request where there are reasonable business grounds, such as:

• Inability to reorganise work among existing staff;
• Negative impact on service delivery;
• Increased costs; or
• Insufficient work during the requested hours.

However, refusals must be:

• Genuinely considered;
• Based on evidence;
• Communicated clearly in writing.

A blanket or dismissive refusal significantly increases legal risk.

Practical tips for employers, independent contractors and employees

For employers:

• Maintain clear, up-to-date parental leave policies;
• Document all flexible work and return-to-work arrangements;
• Train managers on handling maternity-related issues consistently; and
• Review top-up payment structures carefully.

For independent contractors:

• Check and clarify the contract early;
• Keep arrangements commercial, not employment-like;
• Communicate proactively with clients; and
• Plan financially and understand government support.

For employees:

• Understand the difference between a right to request and a right to approval;
• Seek clarity on how government and employer payments interact; and
• Confirm any flexible arrangements in writing.

Key takeaways

Maternity leave is no longer a purely administrative process — it is a strategic workplace matter with legal, cultural, and operational implications. As entitlements expand and expectations evolve, employers, independent contractors and employees benefit from clear communication, well-drafted policies, and documented agreements.

Navigating maternity leave successfully requires balancing legal compliance with practical business needs and genuine support for working parents. When managed well, it strengthens engagement, retention, and long-term workplace stability.