Background <p>Children with disabilities and special healthcare needs can considerably affect parental employment and family financial stability. This study aims to investigate the effects of children’s disabilities, special healthcare needs, and their coexistence on parental employment in Australia.</p> Methods <p>This study utilised data from the nationally representative Baby (B) and Kindergarten (K) cohorts, spanning Waves 1 to 8 of the Longitudinal Study of Australian Children (LSAC). Fixed-effects logistic regression was employed to examine the relationship between children’s disability, special healthcare needs, and parental (for both mothers and fathers) employment status.</p> Results <p>The findings show that within the same family, children’s disability (adjusted odds ratio [aOR] = 0.81, 95% confidence interval [CI]: 0.70–0.94, <i>p</i> = 0.006) and having a child with special healthcare needs (aOR = 0.87, 95% CI: 0.76–0.99, <i>p</i> = 0.038) reduces the likelihood of a mother being employed. Furthermore, the results indicate that the interaction between disability and special healthcare needs (aOR = 0.69, 95% CI: 0.56–0.87, <i>p</i> = 0.001) significantly reduces the likelihood of mothers’ participation in employment. Similarly, the findings show that within the same family, having a child with a disability (aOR = 0.60, 95% CI: 0.45–0.78, <i>p</i> &lt; 0.001) results in a 40% decrease in the odds of paternal employment.</p> Conclusion <p>Children with disabilities and special healthcare needs significantly reduce maternal employment participation within the same family, while only disabilities are associated with reduced employment for fathers. These findings offer vital evidence for policymakers to improve support systems for families with children who have disabilities and special healthcare needs. Such support may include access to essential services and resources, leading to improved parental employment outcomes and enhanced overall family well-being.</p>