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cathy_h(Enthusiast)Enthusiast
23 Aug 2022

Payroll in schools - often teachers do not accrue AL as it is not carried from year to year and is paid out in full at the end of the year. Sometimes, instead of paying the full 4 weeks AL in December the teachers just get their normal average salary amount. Will this cause issues for STP2? Does the AL need to be processed so it is in the STP2 file in December or is it ok to pay the averaged salary amount they usually get, that will be flagged as gross in the STP2 file?

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PayrollDeanne(Taxicorn)Taxicorn
23 Aug 2022

Hiya @cathy_h

That's a GREAT question, as it is industry-specific and not addressed in the ATO STP2 Employer Guidance.


I assume you are referring to circumstances defined in MA000077 Educational Services (Teachers) Award 2020 C22 Pro rata payment of salary inclusive of annual leave?


This section talks about the alternative method of payment of the annual leave if the employee has any of these conditions:

  • is not continuing employment the following year (termination)
  • started after the start of the school year
  • took more than 2 weeks LWOP
  • varied their hours per week since the start of the school year

The method results in the payment of an amount that represents salary and annual leave. That is, the components cannot be separated. It is a special circumstance that applies specifically to this group of workers who satisfy the conditions and, in my OPINION, is acceptable to report this pro-rata payment as GROSS. The reason for my opinion is that it is similar in nature to an Annualised Wage Arrangement that includes other components of pay that are not separately itemised.


However, I assume the leave loading will be separately itemised?


I hope that helps - Deanne

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Most helpful reply

PayrollDeanne(Taxicorn)Taxicorn
23 Aug 2022

Hiya @cathy_h

That's a GREAT question, as it is industry-specific and not addressed in the ATO STP2 Employer Guidance.


I assume you are referring to circumstances defined in MA000077 Educational Services (Teachers) Award 2020 C22 Pro rata payment of salary inclusive of annual leave?


This section talks about the alternative method of payment of the annual leave if the employee has any of these conditions:

  • is not continuing employment the following year (termination)
  • started after the start of the school year
  • took more than 2 weeks LWOP
  • varied their hours per week since the start of the school year

The method results in the payment of an amount that represents salary and annual leave. That is, the components cannot be separated. It is a special circumstance that applies specifically to this group of workers who satisfy the conditions and, in my OPINION, is acceptable to report this pro-rata payment as GROSS. The reason for my opinion is that it is similar in nature to an Annualised Wage Arrangement that includes other components of pay that are not separately itemised.


However, I assume the leave loading will be separately itemised?


I hope that helps - Deanne

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