An update on employer-funded paid parental leave: Baby Priya’s Law

*Content warning: The content of this email discusses pregnancy loss and may be distressing for some readers.

Last month, the Australian Parliament passed the Fair Work Amendment (Baby Priya’s Law) Bill 2025, implementing the government’s election commitment to protect the leave entitlements of grieving parents.

For the first time, employer-funded paid parental leave is now a recognised workplace right in the Fair Work Act and protected in the event of a stillbirth or the death of a child.

What’s Changed?

Previously, nothing in the Fair Work Act prevented an employer from cancelling paid parental leave in the event of a newborn’s stillbirth or death. Grieving parents could have their leave revoked, forcing them to return to work immediately or rely on annual leave. This amendment changes that.

Under Baby Priya’s Law, unless an employer and employee have explicitly agreed otherwise, paid parental leave cannot be revoked following the death or stillbirth of a newborn. This brings employer-funded leave into line with existing protections under government-funded paid and unpaid parental leave schemes.

This protection applies where an infant is stillborn or dies on or after 7 November 2025.

Employers who breach this protection could face civil penalties and adverse action general protections claims.

There are limited exceptions where the protection does not apply:

1. Right to Cancel Under Existing Terms

The protection does not apply if an employer is already entitled under an employee’s existing terms and conditions of employment (such as a contract or enterprise agreement) to refuse or cancel employer-funded paid parental leave in the event of a stillbirth or the death of a child.

However, this exception does not apply if those terms and conditions are varied by the employer after 7 November 2025 to allow cancellation.

2. No Entitlement Under Existing Terms

The protection does not apply if an employee is not entitled to employer-funded paid parental leave under their existing terms and conditions of employment.

Again, this exception does not apply if those terms and conditions are varied by the employer after 7 November 2025 to remove entitlement.

3. Other Leave expressly available

An employer is allowed to refuse or cancel employer-funded paid parental leave if, under the terms and conditions of the employee’s employment, the employee is entitled to other leave that is expressly available in the event of stillbirth or the death of an employee’s child.

This is intended to avoid interfering with arrangements agreed in good faith between employers and employees where the parties have already and clearly turned their minds to this situation.

However, the availability of unpaid parental leave or government funded parental leave is not “other leave” that would permit the employer to refuse or cancel the employer funded leave in this situation.

Illustrative example:[1]

Ameer is employed in a banking role. His employment terms and conditions are set out in a contract of employment, with several workplace policies incorporated.

Ameer informs his employer that his wife is pregnant and that he plans to take parental leave as a secondary carer after the birth of their child.

 Leave entitlements

Under his terms and conditions of employment, Ameer is entitled to:

• 11 weeks of employer-funded paid parental leave, and
• 2 days of compassionate leave (the same quantum as of compassionate leave set out in the NES).

Circumstances

Ameer begins his parental leave period 2 days before the expected birth of his child. He plans to be away from work for 6 months (using a combination of employer-funded paid parental leave, unpaid parental leave and government-funded parental leave pay).

After the Bill commences, Ameer’s employer changes one of the incorporated workplace policies to state that employer-funded paid parental leave is no longer payable if a pregnancy ends in stillbirth. Tragically, Ameer’s child Hala is stillborn.

Effect of proposed amendments

Under amendments to the law, Ameer would remain entitled to 11 weeks of employer-funded paid parental leave. New subsection 333X(4) prevents Ameer’s employer from relying on the exception in subsection 333X(3) where it has unilaterally varied his terms and conditions of employment to extinguish his entitlement. Ameer would also be entitled to 2 days of compassionate leave.

Ameer’s entitlement was already established in his employment contract and policies before the commencement of the new provisions and Hala was stillborn after commencement. His employer cannot cancel his leave on the basis of a policy that it has unilaterally amended after commencement to permit cancellation.

The petition that changed parental leave

Priya’s Law is named in honour of baby Priya, who tragically died at just 42 days old. In the wake of her loss, Priya’s mother was told by her employer that her paid parental leave had been cancelled and she was directed to return to work, while her husband was allowed to take his full leave entitlement.

The injustice spurred the couple into action, and they launched a petition which quickly gained over 30,000 signatures. The groundswell of support brought the issue to federal ministers and was the catalyst for the legislative reform.[2]

What should employers do now?

The new laws are not retrospective and apply from 7 November 2025.

Employers are prohibited from changing existing policies or terms and conditions of employment to provide them an ability to refuse or cancel paid parental leave in the event of stillbirth or death.

However, employers are not prevented from bargaining in good faith to establish new terms and conditions on this issue. Employers should review and carefully consider their position on this important policy issue. Employers should have regard to organisational gender equality and psychosocial health and wellbeing objectives and their broader due diligence obligations in deciding whether and how to support parents with employer funded leave in the event of stillbirth or infant loss.

[1] This illustrative example is drawn from the example set out in the Explanatory Memorandum to the Bill.

[2] Ministers of the Employment and Workplace Relations Portfolio, ‘Baby Priya Bill Press Conference’ (Media Release) 3 November 2025.