Articles Blog

Paid Parental Leave Scheme - What is it? How do I set-up my software for it?

Details

Published on Thursday, 10 January 2013 11:33

The new Paid Parental Leave scheme became compulsory on 1 July 2011. For full more general info about it and where to get links to rates, go to our administration & bookkeeping website: What to Know and Compulsory July 2011 at accountkeepingplus.wordpress.com.

What to do -

Create an ac count to track Parental Leave.

The steps below describe how to create a Liability account to track your Parental Leave. Depending on your Parental Leave reporting obligations, you may want to create an Expense account to track this Leave instead of a Liability account. Speak to your accountant or the ATO for the appropriate solution based on your circumstances.

1. Go to the Accounts command centre and click Accounts List.
2. Click the Liability tab.
3. Click New.
4. Enter an Account Number and Account Name as shown in the following example.
5. Click OK.

Create a new wages category

1. Go to the Payroll command centre and click Payroll Categories.
2. Click New to create a new payroll category.
3. Change the Wages Name field to Paid Parental Leave.
4. For the Type of Wages, select the Salary option.
5. Select the option to Override the Employees' Wage Expense Account.
6. In the Override Account field specify the account that you created earlier. This will allow you to balance the account to zero at the end of the period.
7. Click Employee to select the relevant employees
8. Click OK.

Exempt Paid Parental Leave from calculating superannuation

1. Go to the Payroll command centre and click Payroll Categories.
2. Click the Superannuation tab.
3. Click the zoom arrow next to your superannuation category.
4. Click Exempt.
5. Select the Paid Parental Leave category to exempt from the superannuation calculation.
6. Click OK.

Exempt the Paid Parental Leave from accruing entitlements

Hourly Employees For hourly employees the entitlement will not accrue as there are no hours to calculate the percentage. This seems contradictory, but normally hourly employees will accrue leave as a percentage of hours worked. While they are on Paid Parental Leave, they are being paid via a Salary Wage category, rather than an Hourly Wage category. Therefore having no hours on the paycheque means that no leave will accrue.

Salary Employees

Salary employees will need to have the Entitlement(s) deselected in their card. This is because generally these employees will be set to accrue a flat amount of hours per Pay Period/Month/Year, and unless the entiltement is deselected in their card, the entitlement will continue accruing throughout the period of their Paid Parental Leave.

To deselect the Entitlement(s):

1. Go to the Card File command centre and click Cards List.
2. Click the Employee tab.
3. Click the zoom arrow next to the relevant employee.
4. Click the Payroll Details tab and choose Entitlements.
5. Deselect any entitlements that should not be calculated during the Paid Parental Leave period. Note: When the employee finishes the Paid Parental Leave you will need to select these entitlements again so that the leave entitlements will accrue.

What do we do when my employee is on paid parental leave? Go to the Card File command centre and click Cards List.

1. Click the zoom arrow next to the applicable employee.
2. Click the Payroll Details tab.
3. Click the Standard Pay option from the left-hand side.
4. Set all wage category amounts (except the Paid Parental Leave category) to zero.
5. Set the Paid Parental Leave category to the amount that is to be paid each pay period.
6. Click OK.
7. Repeat steps 2-7 for all other employees for whom parental leave is applicable.

Now we are ready to process Paid Parental Leave payments for your employees. When you have finished paying the Paid Parental Leave payments, you can use the Reset to Original Amounts button on the Payroll Details tab of the employees card (as shown above) to restore the values back to the standard hours.

Receiving the payment from the government

When the employer receives Parental Leave payment from the government, it is recorded as a Receive Money transaction into the Liability account just created.

1. Go to the Banking command centre and click Receive Money. The Receive Money window is displayed.
2. Specify the Amount Received.
3. On the first line, specify the applicable Liability account in the Acct # field. In our example this is 2-1560 Parental Leave.
4. Click Record.

Paid Parental Leave and Payment Summaries

If you include the paid parental leave amount in the Gross Wages on your Payment Summary, you will need to account for this if you attempt to reconcile the total from the Payment Summaries with the total in your Wages & Salaries expense account. The paid parental leave amount is not shown as an expense, and therefore it is expected that the Payment Summary total will be higher than the total of the Wages & Salaries expense account. For more information on Payment Summaries, see MYOB support note Preparing and Printing Payment Summaries.

Removing Paid Parental Leave

When an employee returns to work after Parental Leave, their card needs to be updated as follows:

1. Go to the Card File command centre and click Cards List.
2. Click the zoom arrow next to the applicable employee.
3. Click the Payroll Details tab.
4. Click the Standard Pay option from the left-hand side.
5. Click Reset to Original Amounts. The Paid Parental Leave payment will be removed from the employee's standard pay, and their normal Base Salary will be reinstated.
6. Click OK.

For screen shots and all the details, see the MYOB support note – Paid Parental Leave

• < Prev