Understanding Employee Entitlements using MYOB software copyright © Veechi Curtis www.veechicurtis.com.au © Veechi Curtis Understanding Employee Entitlements using MYOB software 1 Table of Contents UNDERSTANDING LEAVE ENTITLEMENTS .......................................... 2 What kinds of leave are employees entitled to? ........................................................4 How much annual leave are employees entitled to? ...................................................4 How long does an employee have to work before they’re entitled to annual leave? .....................4 How much personal leave are employees entitled to? .................................................. 5 What about long service leave? .......................................................................6 SETTING UP ENTITLEMENTS IN MYOB ............................................. 6 How do I set up MYOB software to track employee leave due? .........................................7 How do I change or delete an entitlement category? ..................................................7 What about leave that was due to an employee before I started with MYOB? ...........................8 CALCULATING LEAVE ENTITLEMENTS ............................................. 8 How do I calculate employee entitlements on a !xed number of hours per pay period? . .9 How do I calculate employee entitlements on a percentage basis? ................................... 10 Do I need to accrue long service leave entitlements? ................................................ 11 PAYING EMPLOYEE LEAVE ....................................................... 12 How do I record payments for annual leave? ......................................................... 12 What happens if an employee receives holiday pay in advance? ...................................... 13 What about leave loading? ......................................................................... 13 What if an employee asks to cash out their annual leave? ............................................ 14 What happens with public holidays? ................................................................ 15 How do I record payments for personal or carer’s leave? ............................................. 15 Can I pay more holiday or personal leave than the employee is due? ................................. 16 How do I record the payment of long service leave? ................................................. 16 CATERING FOR RDOS AND OTHER TYPES OF LEAVE ................................ 16 How do I track entitlements for rostered days o"? ................................................... 16 How do I pay RDOs? ................................................................................ 17 Can MYOB software track time-in-lieu? .............................................................. 18 What about compassionate leave? .................................................................. 18 REPORTING FOR EMPLOYEE ENTITLEMENTS ...................................... 19 How can I see how much holiday or personal leave employees are due? .............................. 19 How can I check whether the leave report is correct? ................................................ 19 How do I !x it if the amount of leave showing for an employee is wrong? ............................. 20 Why doesn’t holiday or personal leave show up on my payslips? ..................................... 21 MAKING PROVISIONS FOR LEAVE ................................................ 21 How do I make provisions for leave in my Balance Sheet? ............................................ 21 Can I make leave provisions on a continual basis? .................................................... 22 2 Understanding Employee Entitlements using MYOB software © Veechi Curtis PARENTAL LEAVE ............................................................... 25 How do I know if an employee is eligible for Parental Leave Pay? ..................................... 25 Do I get reimbursed in full for Parental Leave Pay? ................................................... 25 How do I set up Parental Leave Pay in MYOB? ........................................................ 25 How do I record the payment of parental leave? ..................................................... 26 What about receiving the payments from Centrelink? ................................................ 27 What happens after the 18 weeks have !nished? .................................................... 27 Do I include Parental Leave Pay on payment summaries? ............................................ 27 © Veechi Curtis Understanding Employee Entitlements using MYOB software 3 Understanding Employee Entitlements Tracking employee holiday and personal leave is one of the trickiest aspects of managing payroll. You’ve got to !gure out what kind of leave each employee is entitled to receive, when they should receive it, whether the award includes any quirks or perks and much more besides. You’ll !nd it makes sense to track leave entitlements using MYOB software so that at any time you can see how much leave you owe your employees. You can include this information on employees’ payslips so that at any time you can pull up a complete record of leave taken by each employee. The secret to tracking leave has two simple ingredients. The !rst is to set up your entitlement categories carefully, making sure they !t your business. The second is to keep reports of all leave taken for every employee. Golden rule Always document all annual and personal leave taken, printing a separate report for each employee at the end of each year. With your end-of-year leave reports, always give one copy to the employee and keep a copy for yourself in your employment archives. That way, if an employee ever disputes the amount of leave you owe them, you’re able to pull out a complete record of all leave taken since they commenced employment with you. To make sure you get these reports just right, this document explains the basics step by step. You’ll also !nd out about how to deal with the more tricky types of leave, such as rostered days o", time-in-lieu and long service leave. By the way, this document uses the words entitlements and leave interchangeably (although you’ll !nd that MYOB software mostly uses the word ‘entitlements’). Also, the term personal/carer’s leave is used instead of sick leave in accordance with the latest National Employment Standards. Understanding Leave Entitlements From 1 January 2010, all employers in ACT, New South Wales, Northern Territory, Queensland, Tasmania and Victoria fall under special federal legislation called the National Employment Standards (NES), as do all companies in Western Australia. Sole traders and partnerships in Western Australia still fall under state legislation. To view more information regarding the National Employment Standard, and how the National Employment Standards a"ect leave entitlements for employees, visit to www.workplace.gov. au. What kinds of leave are employees entitled to? Under the National Employment Standards, permanent employees (full-time and part-time) 4 Understanding Employee Entitlements using MYOB software © Veechi Curtis are always entitled to annual leave, personal/carer’s leave and, after a certain period of time, long service leave. (Personal/carer’s leave is the new term for sick leave.) Depending on their award, employees may also be entitled to rostered days o", study leave or time-in-lieu. Casual employees aren’t usually entitled to any leave entitlements at all, although they may be entitled to long service leave if they are employed for 10 years or more. How much annual leave are employees entitled to? The National Employment Standards provide for four weeks (that’s 20 days) of annual leave per year for every full-time employee. However, remember that four weeks per year is the minimum amount of leave employees are entitled to. Employees may be entitled to more than four weeks annual leave in two situations: t Where a full-time employee does shift work where shifts are continuously rostered 24 hours a day for seven days a week, and the employee is regularly rostered to work these shifts. In this situation, the employee is entitled to a minimum !ve weeks leave per year. t If the employee’s award speci!es that the employee is entitled to more than four weeks per year. By the way, you can view a very silly (but educational) video that explains annual leave by visiting http://www.xtranormal.com/watch/7181335/. Tip The National Employment Standards speci!es minimum working conditions for Australian employees. However, individual awards often o"er better conditions than this minimum. For example, an award could say that an employee is entitled to six weeks annual leave per year, or three weeks personal leave per year. You need to meet both the minimum requirements of the National Employment Standards and the award, whichever is the greater in each instance. How long does an employee have to work before they’re entitled to annual leave? Under the National Employment Standards, permanent employees (as opposed to casual employees) start accruing annual leave from the moment they start work. So, if an employee is entitled to four weeks’ leave per year and they want to take annual leave after three months, they can. (After three months, this employee would have accrued one week’s worth of leave.) Some additional comments: t You can’t unreasonably refuse to agree to an employee’s request to take annual leave. t There’s no minimum or maximum