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Get up to speed on changes to leave entitlements and plan ahead to meet your obligations.
Leave entitlements during COVID-19 – What you need to know
18 August 2020
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3 minute read
The past couple of months have brought ongoing changes to awards and other aspects of payroll to support businesses and their employees. Staying on top of these can be a challenge, but it is critical that businesses are fully aware of their obligations so that they can do the right thing by their employees and accurately manage their cashflow and forecasting.
Understanding leave entitlements is particularly key. While payments like JobKeeper have helped businesses retain employees and stay afloat, businesses still need to provision for costs like long service leave and redundancy payments.
To help you manage leave entitlements for your own business or for your clients, here are some things you should consider.
Schedule X and pandemic leave
You may already be aware that the Fair Work Commission (FWC) has extended Schedule X which enables some employees to access two weeks of unpaid pandemic leave. Extensions vary by award – with different end dates – so you should review these carefully on the FWC website. Some of the biggest changes have been applied within the Health sector where nine awards have received an extension of Schedule X to 29 October. An extension has been applied to several other awards until 30 September, including the Fast Food Award, Hair and Beauty Award, Retail Award, and Storage Services Award. Most recently, Schedule X has been temporarily inserted into the Building and Construction Award, Joinery Award and Mobile Crane Award. Schedule X will apply for these awards until 30 September 2020.
There’s also been the introduction of a temporary Schedule Y. This provides up to two weeks’ paid pandemic leave for eligible residential aged care employees covered under the Aged Care Award, Nurses Award and Health Services Award. Those eligible can access this leave each time they cannot work because of circumstances related to COVID-19. The rate of pay for full-time employees would be the same as it is for taking normal sick leave. Part-time employees should be paid the higher of either their agreed ordinary hours of work or an average of their ordinary weekly hours over the previous six weeks. The rate of pay for casual workers should also be based on the average weekly pay over six weeks (or as many weeks as they’ve been employed if less than six weeks).
Entitlements for employees on JobKeeper
Many businesses who are participating in the JobKeeper scheme have given employees a stand down direction and either reduced their hours or days of work. It is important for them to understand that these employees will continue to accrue leave as normal and there is no impact to their period of service. In other words, even if employees’ hours are reduced to zero, this period will count as continuous service for the following:
- entitlement to parental leave
- annual leave accrual
- personal leave accrual
- notice of termination
- redundancy pay
In practical terms, this means that leave would accrue based on employees’ usual hours and days of work (rather than the reduced hours they may be working while on JobKeeper). In addition, any redundancy or termination payments would be calculated on usual hours and days of work. Businesses need to factor this into their business and cashflow planning now so that they can meet their obligations in the future.
If you’re looking for a compliant payroll solution for your business, learn more about ADP here. Or, if you’re an accountant seeking a payroll solution to help your clients, get in touch.
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