Working with Payee Records (Payroll AU)

The concept of a payee is used to represent an instance of a candidate who is employed by a pay company belonging to an agency. The pay company is the legal entity that employs the payee and an agency may own multiple pay companies. The same candidate may work for multiple pay companies, in which case the candidate is linked to multiple payees.
A front office consultant cannot submit a job order to timesheet unless the candidate filled on the job order is linked to a payee record that belongs to the same pay company and is valid for the duration of the job order.
A payee is deemed unique when one or more of the following components differs to existing payee records for the same candidate:

pay company
tax type
payee type
employment start date
employment end date
supplier

The tax type defines the type of taxation that is applicable to the payee and can be one of the following:

PAYG – applies to all payees who are employed as individual employees and have tax withheld under the PAYG system
Company – applies to all payees who are classed as company contractors for tax purposes and work under a company Australian Business Number (ABN) of an interposed entity (such as a partnership or trust).

According to ATO requirements, payees who are sole traders (contractors who work under their own ABN as opposed to a company ABN) and work for a labour hire firm must have tax withheld from their earnings and should therefore be classified under the PAYG tax type. Such payees are also referred to as sole traders.

The payee type is used to further distinguish the income type of a payee who is subject to PAYG withholding. This can be either:

Individual Non Business if the payee is an employee and not a contractor working under their own or a company ABN
Labour Hire the payee is a contractor who works under their own ABN as opposed to a company ABN. Such a payee is also referred to as a sole trader.

If a payee is a contractor with a tax type of Company (contractor working under a company ABN), their payee type is always Company. Such payees are also referred to as incorporated contractors.

The employment start and end dates define the period of employment with the pay company. A candidate cannot be linked to multiple payees who are employed by the same pay company and have the same tax type and payee type and supplier if the employment start and end dates of the payee records overlap. The diagram below shows an example of this.

The following rules apply to creating payees:

multiple payee records can exist for each candidate
each payee record must have a unique payee number
for a given candidate, multiple payee records cannot exist with the same pay company/tax type/payee type/supplier combination for the same period of employment
for a given candidate, multiple payee records cannot exist with a tax type of PAYG for the same pay company, for the same period of employment.

The period of employment is determined by the payee's employment start and end dates, as defined on the payee record. Two payee records are considered to exist within the same period of employment if there is full or partial overlap between their respective employment start and end dates.

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