Parental leave loophole for self-employed

Self-employed women expecting a baby can use a legal loophole to get paid parental leave worth $5000.

The ploy - which Women's Affairs Minister Ruth Dyson accepts is legitimate - involves foresight and some fancy legal footwork.

The solution has surfaced as the prospect of delays in extending paid leave becomes a possibility.

Ruth Dyson conceded this week that implementing the system by next July - the Government's declared date - might not be possible.

To get the entitlement, a self-employed mother-to-be needs to set up a limited liability company at least six months before the birth.

One new mother who followed this approach told the Weekend Herald that she simply wrote a contract for herself, including a job description, and signed it as both the director and the "employee".

She provided a letter to her company advising it of her intention to take maternity leave and had her application accepted by the Department of Labour.

Under the department's guidelines paid parental leave can still be applied for if the child is under one-year-old and the parent has not returned to work.

Ruth Dyson said if people were legitimately setting themselves up in a different status, then it was not cheating the system.

But she suggested the cost of setting up a limited liability company simply to get paid parental leave could be prohibitive.

However, one tax specialist, David Whitehead of Tax Rat Limited, said a limited liability company could be formed for as little as $250.

Ruth Dyson said the Government was aiming to have legislation implemented by next July, but delays were possible. She said the deadline was an intention, not a promise.

However, Prime Minister Helen Clark told a CTU conference in October "self-employed mothers will be eligible from next July".

Ruth Dyson said the Government would be "seeking all sorts of co-operation to meet that deadline".

Green MP Sue Bradford said there was no reason the Government could not meet the deadline. She said it was obliged to make the bill its top priority because there would be couples who decided to have a baby based on what was promised before the election.

"There are no other bills which have a biological clock ticking," Sue Bradford said.