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The Fair Work Ombudsman and the ATO have announced late changes relating to the payslip and Single Touch Payroll (STP) reporting requirements for Paid Family and Domestic Violence Leave (PFDVL) that take effect as of 04/02/2023. This page has been updated in line with the revised requirements. A transition period has been granted until 04/06/2023 for employers who have already put in place processes to cater for reporting PFDVL as Paid Leave - Other on payslips and in Single Touch Payroll (STP) reporting and require time to change to the new requirements. |
Paid Family and Domestic Violence Leave (PFDVL) has now been legislated as part of the Fair Work Amendment (Paid Family and Domestic Violence Leave) Bill 2022 bill. It allows employees to take ten days of paid leave if they are experiencing family and domestic violence.
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it becomes effective on 1 February 2023 for businesses with 15 or more employees and 1 August 2023 for businesses with fewer than 15 employees
it applies to full-time, part-time and casual employees
the entitlement is for ten days, up-front paid leave per service year (not pro-rated for part-time and casual employees)
the unused balance of entitlement does not carry over from one service year to the next
when taken, it is paid at the same rate that the employee would have been paid had they worked on that day (or part day if part day leave is taken)
if an employee experience an episode of family or domestic violence while on personal/carer’s leave or while on annual leave, PFDVL will take precedence over the other form of paid leave
the entitlement balance cannot be displayed on payslips
when the leave is taken and paid, the payslip cannot identify that the payee has been paid for PFDVL
the balance of unused entitlement cannot be paid out during service or on termination of employment
when taken, it must be reported as paid leave type Other Paid Leave (O) in Single Touch Payroll (STP) reporting.
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The requirement to report payments of the leave as Other Paid Leave (O) means that the payments will show as such on a payee’s income statement, if the payee is classed as an Individual Non Business payee. FastTrack are aware of representations currently being made to the ATO that seek to change this requirement so that payments can be reported as un-disaggregated gross earnings instead. This is due to concerns that showing a disaggregated payment on the income statement could make it conspicuous that a payee has taken PFDVL, especially if they are a casual employee who is not eligible for other types of paid leave. The guidance provided below is based on the current requirement as communicated by the ATO. However, given the representations being made to the ATO, there is a possibility that the requirement could change prior to when the leave comes into effect. |
What can you do to prepare?
To prepare for the introduction of PFDVL, it is recommended that you do the following:
a payee’s payslip must not show the balance of the leave and must not show any indication that a payment corresponds to PFDVL (for more information, see
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Create a leave type for PFDVL (for more information, see Leave type configuration)
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Add the absence type for PFDVL to the applicable employment types (for more information, see Employment type configuration).
Absence type configuration
Because payments of PFDVL must be reported in STP as paid leave, a leave type must be configured in FastTrack360 so that the payment can be mapped to the correct leave payment category in STP reporting.
A leave type must be linked to an absence type, which is what is selected on a timesheet to identify a period of absence during what would otherwise be working hours. Therefore, before a leave type can be created for PFDVL, an absence type must be created specifically for PFDVL.
To create an absence type, follow the procedure below:
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How to create an absence type
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FastTrack360, in the module menu on the left-hand side of the screen, click Maintenance.
The Maintenance screen opens.
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In the Global section of the screen, click Absence/Attend.
The Attendance/Absence screen opens.
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At the top of the Absence section in the second half of the screen, click Add .
The Add Absence screen opens.
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4.
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In the Name field, key a unique name for the absence type (see note below) and click Save.
The Add Absence screen closes and the new absence type is created.
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Timesheet initiators will be able to select the absence type on timesheets and therefore timesheet approvers, which may include client approvers outside of your organisation, will be able to see the absence type name on a timesheet. For reasons of privacy and discretion, it is recommended that the name you give the absence type does not directly identify that the absence type corresponds to PFDVL. For example, it is recommended that you use a generic name such as ‘Discretionary Paid Absence’ or similar. |
Leave type configuration
Because payment for PFDVL taken must be reported through STP reporting as a disaggregated leave payment separate to other gross payments, you must create a dedicated leave type under Leave > Maintenance > Leave Type that is mapped to Other Paid Leave (O) category.
The table below is how FastTrack recommend that the leave type for PFDVL should be configured. Note that any fields not specifically mentioned below should remain blank or, where applicable, set to their default value.
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Leave Type Header
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Field
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Recommended Setting/Value
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Comments
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Country
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Must be set to Australia.
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Name
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As required.
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For reasons of privacy and discretion, it is recommended that the leave type name does not directly identify that the leave type corresponds to PFDVL. For example, it is recommended that you use a generic name such as ‘Discretionary Paid Leave’ or similar.
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Absence Type
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Must be the absence type that has been created specifically for PFDVL.
For more information, see Absence type configuration
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Paid Leave Type
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Must be set to Other Paid Leave (O).
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This is required to meet the ATO requirement for reporting payments of the leave type in STP reporting.
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Show On Payslip
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Must be unticked
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Legislation for PFDVL forbids the entitlement balance of the leave from being shown on payslips therefore it is important that this option is toggled off.
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Set Accrual
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Must be ticked
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Accrual Type
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Must be set to Fixed
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Apply To Type
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Must be set to Days
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Leave Set
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Validity Start Date
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Must be set to 01/02/2023
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Leave Set > Accrual Rule
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Calculate At
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Service
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Since the entitlement to the leave is 10 days per year of service up front, this rule will accrue 10 days of leave if the leave is yet to be accrued during the current service year.
The accrual will be triggered via the Leave Service, which runs daily, so the accrual will happen regardless of whether a payee has been paid in a pay batch.
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Fixed Value
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Must be set to 10
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Accrual Type
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Must be set to Leave Accrual
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Rule Not Applied Before Condition
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Period Type must be set to Service Year
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Transfer Rule
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Transfer Type
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Must be set to Increase
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Since entitlement to the leave is upfront, this rule will transfer the balance of accrued leave into entitlement immediately.
The accrual will be triggered via the Leave Service, which runs daily, so the transfer will happen regardless of whether a payee is paid in a pay batch since last their last accrual.
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Calculate At
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Must be set to Service
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Transfer Immediately
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Must be ticked.
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Reset Rule
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Apply To
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Must be set to Entitlement
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This rule will reset any accrued entitlement balance at the end of each service year to zero, because the leave entitlement balance must not carry over from one service year to another.
The reset of the entitlement balance will be triggered via the Leave Service, which runs daily, so the reset will happen regardless of whether a payee has been paid in a pay batch at the end of a service year.
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Rest At
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Must be set to Service
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Reset On Condition
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Must be set to Service Year End
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Deduction Rule
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Deduction Rule For
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Must be set to Leave Taken
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Since this leave type can only be paid when taken and cannot be cashed out during service or at termination of employment, the deduction rule must be for Leave Taken.
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Payment Leave Day Rounding Rule
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Must be set to Hours
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Entitlement Leave Day Rounding Rule
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Must be set to Hours
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Pay Code
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Must be set to the pay code that is to be used to pay the leave.
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Note that the name of the pay code will be printed on payslips. Legislation for PFDVL forbids payment of the leave from being distinguishable from other earnings on a payslip so the name of the pay code that is selected must not identify the payment as being related to an absence for PFDVL.
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Leave Rate Type
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It is recommended to set this to Agreement Rate.
For more information, see Payment rate for leave taken.
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Payment rate for leave taken
When a payee takes PFDVL each day or part day of absence must be paid at the equivalent to what they would have been paid had they worked. The payment must be inclusive of the base pay rate and any loadings, overtime, and any other additional payments that the payee would have been paid for the time they were rostered to work.
The entitlement to PFDVL is defined as ten ‘days’ per service year but the relevant legislation does not define how many hours the ten-day entitlement equates to. This is problematic, especially regarding casual and temporary workers who are generally paid on an hourly basis, have varying patterns of work, and could be placed on multiple assignments, which each have different pay rates, at any given time.
Although it is possible to configure pay agreements to pay a daily equivalent rate of what a payee would have otherwise been paid had they worked instead of taking an absence, the complexity of configuration that would be required and the potential number of agreements and rates that would need to be updated would offset any benefits given that the volume PFDVL that will be paid is expected to be low.
Therefore, FastTrack recommend the following:
The Leave Rate Type that is selected on the leave deduction rule should be set Agreement Rate to pay the leave taken at an hourly equivalent rate of what the payee would have been paid had they worked.
If a payee has taken PFDVL, the relevant absence type should be selected on their timesheet for the corresponding days of absence and the quantity taken should be keyed in terms of days (or part days) rather than hours. For example, if the payee has taken 8 hours leave on a given day, and that equates to the entire day the payee was scheduled to work on the corresponding date, a value of 1 should be keyed as opposed to 8 hours.
When the timesheet is paid in a pay batch, the system will pay the hourly agreement rate multiplied by a unit of days (e.g. quantity = 1, rate = $34.95 per hour). At the Leave Payments pay batch stage, the payment rate will need to be manually adjusted to reflect the total amount that would have otherwise been paid had the payee worked. For example, if the payee would have worked 8 hours that day at an agreement rate of $34.95 per hour, the payment rate must be adjusted to $279.60 (i.e. 8 x $34.95 per hour).
Employment type configuration
To identify which payees are entitled to take PFDVL, the absence type that you created for PFDVL and have linked a leave type must be added to each employment type that applies to entitled payees.
For more information about adding an absence type to an employment type, see Employment Type Maintenance.
More information
Payslip & Reporting Requirements below).
Payslip & Reporting Requirements
Payslips must not show the outstanding balance of PFDVL or can they identify that a payment corresponded to PFDVL having been taken.
New requirements that take effect as of 04/02/2023 require payslips to resemble, as closely as possible, what a payee’s payslip would have shown had the payee not been absent from work. For example, if a payee was absent for the duration of a shift where the payee was scheduled to work 8 hours ordinary time and 2 hours of overtime, the payslip should show that the payee was paid 8 hours ordinary time and 2 hours overtime at the rates that would have normally applied respectively.
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An employer can show PFDVL as another type of paid leave on the payslip (for example: Paid Leave - Other) if a payee requests it. However, this is not practical since it would require the leave to be managed differently for individual payees. |
In STP reporting, payments for PFDVL taken must likewise be reported as if the payee had worked. Therefore, using the example above, the payment would be required to be reported in STP as 8 hours gross and 2 hours overtime.
FastTrack Recommendations for Managing PFDVL
FastTrack recommend that the process that should be followed when a payee takes PFDVL is:
The payee’s timesheet for each day or part day of leave taken should be keyed as if the payee had worked the time that was taken as a paid absence. Therefore, when the timesheet is paid, as per the legislated requirements the following will apply:
the payee will be paid as if they had worked
the payee’s payslip will give the appearance that the payee worked the entire duration of the paid absence
STP reporting will reflect the payments actually processed through payroll, which will be as if the payee had worked, and therefore the payee’s income statement will not show any indication that the payee took a paid absence.
If a payee does take PFDVL, the number of days or part days taken should be manually recorded to ensure that the payee does not exceed the 10 paid days in a single service year.
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Given that timesheets may require approval by one or more client contacts, it is important to consider a process whereby you will manage instances where a payee is absent on PFDVL but their timesheet indicates otherwise, noting the discretion is required regarding the reason for the payee’s absence. |
Further Information
You can find more information about PFDVL by following the links below:
New paid family and domestic violence leave - Fair Work Ombudsman
Fair Work Amendment (Paid Family and Domestic Violence Leave) Bill 2022
Fair Work Amendment (Paid Family and Domestic Violence Leave) Bill 2022 - Explanatory Memorandum
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