Paid Parental Leave

Modified on Wed, 20 Mar at 4:46 AM

How do I set up payroll for paid parental leave.

Step-by-step guide

Where an employee has gone on parental leave, and you have been advised that they are receiving payments from Centrelink, you need to do the following in LawMaster.

Parameters > Set Parameters > Payroll:

1- Payroll Payment and Deduction Codes (PC)

Create an hourly code for paid parental leave, as per screenshot below. Note Normal pay is not ticked as superannuation is not calculated on this.

ℹ️ As Normal Pay, is unticked on the new Paid Parental Leave code, when you calculate Gross and Tax, the tax will be at a

higher rate. It is recommended that you go to the ATO website, and calculate tax manually to get the correct amount of

tax to be deducted.

Tax withheld for individuals calculator

2- Payroll Leave Types

Create an associated leave type, so that the 2 characters match to the Payroll Payment and Deduction Code created.

Modify any leave types, where the classification is set to All and change it to be e.g. F,P. This would generally be the annual leave, sick leave and possibly long service leave where leave is accrued when you audit the pay run.

3- Payroll Classification Codes

Add new classification code for Full Time - Maternity/Parental Leave or Part Time - Maternity/Parental Leave

General Ledger

You may want to create a liability account for the Centrelink Parental Payments so that when you receive funds from Centrelink you can receipt the funds to this GL. This will let you keep a track of what you have received from Centrelink and what is still owing to the employee.

Employee Record

On the employee, modify their classification from e.g. Full Time to the new classification code you created e.g. Full Time - Maternity. By changing this classification, no leave will be accrued when generating the pays.

Modify the general ledger account on the salaries tab to be the new general ledger account that you created for the Centrelink payments. When you pay the employee, their salary will go to this GL rather than the Expense account.

Note: once their parental leave has been paid in full and is completed, remember to change the general ledger account back to the salary expense account. If they come back full time or part, time, you will also need to modify their classification to either F or P so that leave accruals commence again.

Payment of Parental Leave

Generate the pays as you normally would. You will then need to modify the employee's time sheet and change the time sheet so that the Pay Code is HLP; Rate can be either the hourly rate or daily rate as provided by the ATO; Units will be either number of hours being paid or number of days being paid. This will then calculate the gross as required and show on the pay slip.

You can then calculate gross and tax like you normally would and process the rest of the pays like you normally would.