Self-employed applicants for paid parental leave - information for chartered accountants

Self-employed parents are eligible for 14 weeks paid parental leave under amendments to the Parental Leave and Employment Protection Act 1987.

What is the role of a Chartered Accountant?

The role of a Chartered Accountant is to verify:

• The applicant is a self-employed person and meets one or more of the definitions of being self-employed,
• Their total net income for the six or 12 months prior to the expected date of delivery or adoption; and
• Their average weekly earnings for the six or 12 months prior to the expected date of delivery or adoption.

This verification is provided in the form of a statement as prescribed in Form 5 of the Parental Leave and Employment Protection Amendment Regulations 2006.
This statement is incorporated into the application form IR888 [external link] “Paid parental leave for self-employed persons”. The applicant will provide you with this form.

A Chartered Accountant may be asked to witness an application for paid parental leave from a self-employed: birth mother; adoptive primary care-giver; or a spouse or partner who is having all or part of paid parental leave transferred to them.

Who is a self-employed person?

The Act defines a self-employed person as someone who is working, other than as an employee, in one or more of the following roles:

• Providing goods or services for hire or reward under a contract for services,
• Carrying on a business (including a profession, trade, manufacture, or undertaking carried on for pecuniary profit), including in partnership with another person, or
• Working for a trust in a business carried on by the trust.

Consecutive and Concurrent self-employment

Where a self-employed person participates in different types of work one after the other  consecutively) during a six or 12 month period, this is treated as one period of self-employment, as long as any breaks between this work are no greater than 30 days.

Where a self-employed person is engaged in more than one type of self-employed work - for example, bee-keeping and gardening - at the same time (concurrently) during a six or 12 month period, this is treated as one period of self-employment. This enables the applicant to group different types of work into one period of self-employment may help them meet eligibility criteria around the number of hours worked.

In both cases, the self-employed person will have to stop working while receiving parental leave payments, but will be able to maintain a level of oversight of their business, or undertake occasional administrative duties.

How much is the payment?

Payments will equal an applicant’s average weekly income, up to the maximum of $429.74 per week before tax to be paid to employees and self-employed persons on paid parental leave. Those who make a loss or earn less than the minimum wage for at least 10 hours work a week will be entitled to payments for 10 hours a week at the minimum adult wage (currently $125.00 per week before tax).

How are average weekly earnings calculated?

Under the Act, the calculation of average weekly earnings for a self-employed person is:

• The total net income for the immediately preceding six months before the expected date of delivery or adoption, divided by 26, for a person who meets the six month eligibility criteria; or
• The total net income for the immediately preceding twelve months before the expected date of delivery or adoption, divided by 52, for a person who meets the 12 month eligibility criteria.

However, the number of weeks used to divide the net income should be reduced by the number of complete weeks where an applicant has taken time off work because they:

• Have received weekly compensation under the Injury Prevention, Rehabilitation, and Compensation Act 2001 (ACC), or
• Have been on parental leave before the expected date of delivery, or
• Were unable to work for any other reason that a Labour Inspector deems would not disrupt the normal pattern of the person’s self-employment.

What is the application process?

The self-employed person applying for payments will need to fill in the applicable Inland Revenue form.

• The application must be accompanied by either—
• A statement and declaration by a Chartered Accountant in respect of the mother; or
• A declaration made by the mother, in accordance with the Oaths and Declarations Act 1957.

The self-employed person must then attach the following documents to their application:

1. A certificate, or a copy of a certificate, from a medical practitioner or a midwife stating that the mother is pregnant and the expected date of delivery; or
2. In the case of adoption,—
   • A letter from a Social Worker (as defined in section 2 of the Adoption Act 1955) stating that the self-employed person is keeping or will be keeping a child in the self-employed person’s home with a view to adoption;
   • A certified copy of an interim order of a court under section 6(1)(b) of the Adoption Act 1955; or
   • A copy of a statutory declaration to the effect that the self-employed person has assumed the care of a child with a view to adoption by the self-employed person, or by the self-employed person and his or her spouse or partner jointly.

However, the Chartered Accountant does not need to sight these documents.

Further information and guidance
The Department of Labour has developed a web-based calculator to help you calculate your entitlements. It is customised to provide clear advice to birth mothers and their partners, and employers. You can access it, or get further information on parental leave and payments by visiting our FAQ Knowledgebase, or phoning the Department of Labour on 0800 20 90 20 during business hours.

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This page was last updated on: 12-Oct-2009 and is current. .