Accrued Leave
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Payroll Terminology & Definitions Glossary
Payroll Glossary
Accrued Leave is the amount of leave an employee currently has available to them at a given point in time.
Allowances
Allowances are amounts paid that cover anticipated costs or as compensation for conditions of employment. For example, you may provide your employee who travels to customers a Fuel Allowance of $50 a week.
Award / Classification
Awards are legal documents that outline the minimum rates of pay and conditions of employment on top of the National Employment Standards (NES) for more than 120 industries and/or occupations in Australia. Within each industry award are a series of classifications according to skill level and/or qualifications which are applied to each employee. Each classification is allocated a minimum award rate.
Branch Number
A GST branch is formed with a business entity separately registers Its branch to suit the structural, management and accounting arrangements of the organisation. This allows the branch to report their GST separately from their parent entity.
Business Activity Statement
If you are either registered for GST or withhold taxes from an employees wage, then you will need to submit and remit payment of your Business Activity Statement (BAS). A BAS is a statement that is lodged to the ATO containing information such as GST collected and paid , PAYG withholding from employee wages, Voluntary withholdings, No ABN payment, PAYG Income tax instalments amongst others. A business activity statement is usually completed and submitted on a quarterly basis but some organisations may need to complete more frequently.
Casual employment
A person is a casual employee if they accept an offer for a job from an employer knowing that there is no firm advance commitment to ongoing work with an agreed pattern of work.
Casual Loading
Staff employed on a casual basis receive a loading in lieu of entitlements to leave, typically around 15-25% of the hourly rate paid to permanent employees.
Closely Held entities
A closely held payee or employee, is someone who is directly related to the business that they are paid by, or not 'at arms length'. Examples of closely held entities are family members of a family business, trust beneficiaries, or directors of a company. Closely held entities are required to be Single Touch Payroll compliant.
Compassionate Leave
Compassionate Leave is taken when a member of an employee's immediate family or household passes away or is critically ill. Employees are entitled to two days each time they meet the criteria and is available to Full time and Part-time employees. Payment is at the base rate for the ordinary hours they would have worked during the leave.
Deduction
A deduction is a payment taken out of an employee's wage on their behalf, prior to the payment of wages. An employer can only deduct money if it is allowed under certain conditions. Deductions can be withheld either before tax or after tax (dependent on the type of deduction) - for more information see Fair Work
Employment Contract/Employment Agreement
An employment contract is an agreement between an employer and employee that sets out terms and conditions of employment. A contract can be in writing or verbal and must contain the National Employment Standards at a minimum.
Employment Type
Refers to the employment status of an employee. This is typically either Full Time, Part time or casual. Employees will receive different entitlements based on their type of employment. For more information see Fair Work.
ETP
An employment termination payment (ETP) is a lump sum payment received as a result of employee's termination of employment.
Expenses
These are out-of-pocket work related expenses employees have incurred and need to be reimbursed. As expense reimbursements are not considered to be earnings, they are not be included in net or gross amounts calculated in pay runs, nor will they be subject to PAYG withholding, superannuation or included in income statements generated at the end of the financial year.
Fair Work
The Office of the Fair Work Ombudsman is an independent statutory agency created by the Fair Work Act 2009 (FW Act). The Fair Work Ombudsman (FWO) is supported by staff who assist with the performance of workplace compliance and advisory functions set out in the Fair Work Act.
Family & domestic violence leave
All employees (including part-time and casual employees) are entitled to 5 days unpaid family and domestic violence leave each year. This leave is typically unpaid but may be paid leave depending on the industry, award, enterprise or agreement. Staff are entitled to the full 5 days from commencement of work. This renews each 12 months but doesn't accumulate from year to year if unused.
Finalisation Event
A Finalisation event is an STP event which notifies the ATO that this is the final payroll report for the payroll year. Much like an update event it sends the year to date information to the ATO.
Full Time employment
Full time employees are usually employed on a permanent basis or on a fixed term contract. They typically work 38 hours per week.
Gross Pay
This is the amount earned by employees before any income taxes, benefits, or deductions are taken out. Typically gross pay would be calculated by taking hourly rate x hours worked in the pay cycle, or taking annual salary and dividing by the number of pay cycles to get to a gross pay figure, per payroll period. It may also include allowances.
Group Certificates
Group Certificates is a legacy term for what is now known as an Income Statement. It is a report provided to the employee at the end of the financial year to provide the yearly totals for wages, tax and superannuation.
Immediate family member or household member
An immediate family member is a: spouse or former spouse, de facto partner or former de facto partner, child, parent, grandparent, grandchild, sibling, or child, parent, grandparent, grandchild or sibling of the employee's spouse or de facto partner (or former spouse or de facto partner).
This definition includes step-relations (for example, step-parents and step-children) as well as adoptive relations.
A household member is any person who lives with the employee.
Income Statements
An Income Statement is a report provided to the employee at the end of the financial year to provide the yearly totals for wages, tax and superannuation.
Instalment Activity Statement
An Instalment Activity Statement (IAS) is statement that is similar to the BAS but is lodged to the ATO on a monthly basis. It does not contain all the taxes listed on the quarterly BAS and is usually used by those business having to report the PAYG on a monthly basis. Some businesses may opt to also report their GST on a monthly basis. In these instances it will only contain GST and PAYG Withholding information, unlike the BAS which includes a variety of tax reporting.
Leave Request
The process by which employees request to take leave. Leave can be annual leave, personal/carer's leave , compassionate leave just to name a few. The leave request is then approved by the relevant manager so that it can be processed in the pay run.
Long Service Leave
Employees are entitled to long service leave after they reach a certain tenure. This varies drastically depending on the state, industry, award or various agreements (such as AWAs, IR Agreements, Enterprise agreements, etc). You can learn more via Fair Work.
Minimum wage
Is a minimum amount an employer must pay their employee for the work performed. This amount will vary depending on the Award that the employee may be covered under, the employee's age, industry of employment, qualifications etc. You can learn more at Fair Work.
Net Pay
The amount of pay a customer receives (typically in their bank account) after taxes and other deductions have been accounted for.
Part Time employment
Part time employees are usually employed on a permanent basis or on a fixed term contract. They work a fixed number of hours (less than 38 hours per week). Part time employees usually have regularly set hours.
Pay Category
Pay Categories are used to define the rates that employees are paid. Typically this comes in the form of Ordinary Hours, Casual Hours, Overtime and Public Holiday rate.
Pay Event
A Pay Event is a STP report containing the Year to Date (YTD) figures for Gross Wages, Tax Withheld, Allowance, Deductions and Superannuation created after a pay run. It can be created immediately or manually at a later date.
Pay Rate
This is the employee’s usual base rate of pay, excluding loading, or penalties. For example, a casual employee's base rate of pay may be $20 per hour however their hourly rate would be $25 (assuming a 25% casual loading rate).
Pay Schedule
A Pay Schedule is the frequency which you pay yourself or your employees. For example, this could be weekly, fortnightly or monthly.
Pay slip
A statement for an employee showing the amount paid to them, by the business for a given pay period. It is an ATO requirement that payslips show the Employer's name & ABN, the Employee's name, the pay period it covers, date of payment, Gross and Net Pay, any loadings, the employee's pay rate (whether is be hourly or annual salary), the amount of tax withheld, any deductions, any superannuation contributions paid, the name and number of superannuation fund. If the employee is paid on an hourly rate basis it should also show the hourly rate, number of hours at that rate and the total dollar amount of pay for that rate (Ordinary hours and Overtime hours listed separately).
PAYG
Pay As You Go (PAYG) is the amount of tax withheld from an employee's pay and remitted to the ATO on their behalf to help them meet their end of year tax liabilities.
Payment Summaries
Payment Summaries is a legacy term for what is now known as an Income Statement. It is a report provided to the employee at the end of the financial year to provide the yearly totals for wages, tax and superannuation.
Personal/Carer's Leave
Personal/Carer's leave, (also known as Sick and Carer's leave), is a form of leave an employee can take for either their own personal well being or for the well being of an immediate family member or household member. Under the National Employment Standards, a full-time employee is entitled to 10 days of paid leave and pro-rata for part-time employees. Employees are also entitled to 2 days of unpaid carer's leave each time an immediate family member of household member needs care and support due to illness, injury or an unexpected emergency. Full-time and Part time employees can only be paid unpaid Personal/Carer's leave if they don't have any paid entitlements of the same available.
Reportable employer superannuation contributions (RESCs)
RESC are superannuation contributions beyond mandatory employer requirements. For example, this may include Salary Sacrifice Superannuation or additional employer contributions.
Single Touch Payroll (STP)
STP is the method used to report your payroll compliant information (wages, tax withheld and superannuation) to the ATO each time you pay your employees. You can learn more about Single Touch Payroll here.
STP 2.0
The second phase of Single Touch Payroll, launched by the ATO. In place from Jan 2022, this streamlines employer interactions and is also aimed at reducing reporting burden for employers who need to report information about their employees to multiple government agencies.
Superannuation
Money set aside by your employer over your working life for you to live off when you retire from work. As an employer, you're obligated to contribute a specified percentage of your employee's ordinary times earnings to their individual superannuation funds by defined dates during the year or as directed in the employee's relevant award.
Tax free threshold
The tax free threshold is the amount of money that the Government has declared to be tax free. You would only pay tax on amounts earnt over that threshold. This threshold and the amount of tax an employee incurs may vary depending on their age or residential status.
Update Event
An update event is a Single Touch Payroll report used to notify the ATO of changes to employee Year to Date (YTD) pay amounts previously reported to the ATO. Update events are done outside of the normal STP reporting process (which are known as Pay Events).
W1
W1 is the total salary, wages and other payments from which you are usually required to withhold PAYG. Specific inclusions and exclusions can be found on the ATO website.
W2
W2 are the amounts that are have been withheld from the payments included in W1. Specific inclusions can be found on the ATO website.
YTD
Year to Date (YTD) is the term used to cover the period between the start of the payroll year (1 July) and the current date. In terms of YTD amounts - these are figures that reflect the YTD gross wages, taxes, allowances, deduction and superannuation
