"She's getting paid based on years of working experience and those 16 months can't count towards it of course."

This is basically an arbitrary choice, you're still paying their salary so why not continue everything else? Similarly a male engineer might want to take 16 months paternity leave.

Allowing 16 month long full-paid leave for new parents would be an amazing policy though. This also seems like an issue with this example as IME there are very, very few companies this generous.