When a trading period commences usually employee contracts are terminated and employees are hired back temporarily from the date of appointment.
In this situation, an employee may accrue annual leave for the trading period and may be paid out the balance of leave accrued during the trading period (i.e. the termination of the employee following the trading period), or where the employee continues to be employed where a business has been sold, the taxation treatment is outlined in the following ATO link:
Employee Leave Accrual Report
You may create a leave accrual statement that calculates the leave accrued during a trading period (post appointment). The report is available from the Employee reports > Employee Leave Accrual.
The accrual is derived from the wages rate and the leave accrual data entered for each employee.
Once you have calculated annual leave accrued during the period you will be ready to make payments. To make the payments:
- Set up the accounts you need
- Use the Pay Wages features
You may process a payment through Pay wages or by directly entering a payment where the transaction lines are allocated to an employee. Using Pay wages will give you the option of producing a payslip.
Setting up the annual leave accounts for STP2
The below shows the set up of an annual leave account:
To enter Pay Wages:
- Navigate to the Transactions menu > Employees > Pay Wage
Ensure the Pay Types Leave is added and the account is set to Leave: Annual Leave (Trading) as pictured.
The Pay Types is shown below:
3. Enter the Annual Leave amount in the Annual Leave column
STP2 - The amount of annual leave will be included in the PAYG and Super calculations.
4. Click Pay wages to process the payment
The payroll batch - Print the Pay Slip
Once you click "Pay Wages" the payroll batch will appear. To print the Pay Slip
- From the batch toolbar, click Reports.
- From the report dialogue select the Pay Slip report.
- View the Payment Summary Listing to see how payroll is categorised
- Annual leave will report on STP2 Payment Summary Report under Leave
There are several factors that determine the PAYG calculation on Annual Leave. By default the mid-range tax calculation is applied to compute the PAYG amount.
Annual leave is added to the gross and tax is calculated at the employee's marginal rates based on the dates entered into the wages period.
Adjusting the way payroll entries report
In the event you need to edit the payments to report differently in STP see the below article on how to change the reporting of a payroll entry: