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Re: JobKeeper - Annual leave termination payment

Newbie

Views 8352

Replies 9

Annual leave payment on Termination - in addition to JobKeeper or inluded in Gross calculations for JobKeeper top ups?

 

We are a business that has continued to operate and no employees are stood down.

An employee who is entitled to Jobkeeper has resigned. (Annual leave on termination is classified as Gross Wages in our software). 

 

I calculated final hours worked and annual leave on termination. This was less than $ 1,500 Gross for the fortnight.  I then topped up with JobKeeper up to $ 1,500 Gross.  The employee has said she rang the ATO and Fairwork and was advised that annual leave on termination cannot be included as JobKeeper, and must be paid IN ADDITON to JobKeeper.

On checking the ATO Jobkeeper guide - under Income Types = Gross salary and wages are eligible for JobKeeper reimbursement.  Payments NOT elibile for reimbursment include: Employment Termination Payments.  I have taken this description as being specificially ETP's. (Such as payment in lieu of notice, unused TOIL).  

Does the ATO description for Employment Termination Payments include ALL termination payments. Annual Leave & ETP's??

1 ACCEPTED SOLUTION

Accepted Solutions

Most helpful response

Former Community Support

Replies 1

Hi @SCHPLUS 

Depending on who ended the employment will depend on what you need to do.

Under the Fair Work Act, if an employer is ending the employment, their employee may be entitled to notice and redundancy pay and any other entitlements owed like annual leave. If an employee is ending the employment, they may need to give their employer notice of termination. They’ll also be owed entitlements like accrued annual leave.

Amounts that are included or excluded from ETPs can be found on our website. You are correct in your understanding about what makes up JobKeeper payments .

Hope this information helps.

9 REPLIES 9

Devotee

Replies 0

I'm pretty sure JobKeeper only tops up wages if the total gross is under $1500. This includes all allowances, leave, etc etc.

 

If your employee did actually receive this advice, I'm sure they can provide you with evidence of it...

Most helpful response

Former Community Support

Replies 1

Hi @SCHPLUS 

Depending on who ended the employment will depend on what you need to do.

Under the Fair Work Act, if an employer is ending the employment, their employee may be entitled to notice and redundancy pay and any other entitlements owed like annual leave. If an employee is ending the employment, they may need to give their employer notice of termination. They’ll also be owed entitlements like accrued annual leave.

Amounts that are included or excluded from ETPs can be found on our website. You are correct in your understanding about what makes up JobKeeper payments .

Hope this information helps.

Newbie

Replies 0

I have looked at the link ' What makes up JobKeeper payments', it does not mention payment of unused annual leave. Under normal termination (resignation), unused annual leave are reported as Gross Payment. Is that mean it will be considered as salary and wages, therefore it count towards the $1,500 JobKeeper payment?

ATO Community Support

Replies 5

Hi @NAndhini

 

If the leave does not fall within one of the lump sum payments and isn't an ETP payment then it would be included in salary and wages if it is annual leave or long service leave payments due to normal termination (including voluntary resignation) accumulated post 17 August 1993. You can view this information under the relevant tax table for these payment types.

 

Hope this helps

 

Thanks, Ari

Initiate Registered Tax Practitioner

Replies 4

Hi,

I have a similar question; employee has resigned while on JobKeeper. The only Termination payments due to this employee are Annual Leave and Annual Leave Loading to be paid out. I'm quite confused with the conflicting information, but I believe that this is not considered an ETP and therefore will be considered an eligible payment for the purposes of JobKeeper. I would be most grateful if someone could either confirm or otherwise this assumption.

Thank you.

ATO Community Support

Replies 3

Hi @SCHPLUS & @BarbFisch

 

I found this FAQ that addresses your questions. This should help. It will also assist with the understanding of payment types.

 

My employee has resigned/been terminated and I am paying them out for unused annual leave. Can I claim JobKeeper payment for the unused annual leave period that has been paid out e.g. two weeks?

 

Amounts of unused leave paid to an employee do not count towards meeting the JobKeeper wage condition.

An employer will be eligible to claim JobKeeper payment for a fortnight, if:

  • the employee was employed during that fortnight (at least one day), and

  • you paid your employee (and met the wage condition) during that fortnight.

In this situation, you cannot claim JobKeeper payments unless you have paid your employee at least $1,500 (before tax) in the fortnight they wish to claim (for example, the last fortnight the individual was employed for at least one day). This is in addition to any payout of unused leave. The employer cannot claim for a fortnight after the employer resigned/was terminated because they were not employed in that fortnight.

Initiate Registered Tax Practitioner

Replies 0

Thank you Mark,

It helps me understand better. I really don't want to get this wrong Smiley Happy.

Thanks again.

Initiate

Replies 1

Hi Mark

In the event that the employee's final working day is Tuesday 5th January 2021 and we pay weekly on Wednesday (6th January), she will be entitled to 1 weeks pay plus the payout of her Annual Leave and LSL. Her weekly pay is $900.00 gross per week and she is entitled to the Tier 1 payment.  

 

As she has worked one day in Jobkeeper Fortnight 21, can the payout of her Annual Leave be included in the JobKeeper payment amount, to meet the JobKeeper requirements, or do I need to pay her leave entitlements plus $1000.00 to remain eligible to claim for JobKeeper reimbursement.

Thanks in anticipation.

 

Lauren

ATO Community Support

Replies 0

Hi @Lauren20

 

Payments of unused annual leave and long service leave are recorded as Employer lump sum A

 

Lump sums are excluded payment types for JobKeeper therefore they cannot be counted sorry.

 

Ari