Some employees may be paid holiday pay at the rate of 8% of their gross earnings with their regular pay instead of being provided with 4 weeks’ annual holidays each year. This option is called Pay as you go (8%).
This can only be done if:
- the employee is employed on a genuine fixed-term agreement of less than 12 months, or
- the employee works so intermittently or irregularly that it is impractical for the employer to provide them with 4 weeks’ annual holidays, and
- the employee must also agree to it in their employment agreement.
How to set up up PAYG 8%
Below are the instructions on how to apply Pay as you go (8%) automatically in each pay run for the employee.
- Go to the employee's profile > Pay Run Defaults page, at the bottom of the page, tick on the 'Irregular employment?' checkbox.
- Click Save.
- Then, go to the employee's profile > Finance & Payroll, and select Tax Code Declaration. Make sure that the Employment type is set to Casual.
- For those employees who are set up with Irregular employment ticked but they aren’t a casual employee, please check their Pay rates screen and ensure the PAYG 8% is not ticked and remove any units for that pay category.
- Click Save.
- Then from the employee's profile > Leave Allowances page, select the 'Irregular Employment' template from the leave allowances template drop down.
- Click Save.
The above settings will ensure that the standard leave category default settings of Annual holidays of 4 weeks, Sick Leave of 5 days and Domestic Violence leave of 10 days are not applied for the employee.
Instead, the "Pay as you go (8%)" will automatically apply. "Pay as you go (8%)" pay rate will automatically kick in when the 'Irregular Employment' checkbox, 'Irregular Employment' leave allowance template AND Casual employment type is set for the employee.
PAYG 8% in Practice
- Go to Pay Runs.
- Navigate to the Pay run you wish to look at and the relevant employee.
- In the pay run, the employee's pay as you go (8%) will be automatically included as an earnings line and will calculate the 8% of the employee's gross pay.
- If you click on the 'i' icon next to the Pay as you go (8%) 'Rate' input field, it will provide the calculation details under 'PAYG 8%'. You may add additional notes if you wish, which will appear in the pay slip (if you have the pay slip notes ticked within the pay slip settings).
- Check to ensure the pay run is correct and if so, then finalise pay run.
- The Pay as you go (8%) will display as a separate line item in the employee's pay slip.
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