Leave and termination payments paid by an employer 108-07010100

If a customer has advised of income expected to be received in the future and:

• they are a statement reporter, tell them to include the paid leave in the relevant reporting period
• they are a notification reporter, tell them to contact within 14 days of the leave payment being paid

If the customer or their partner are in receipt of FTB or CCS, review the family income estimate and update if necessary. See Helping families provide a reasonable annual income estimate for family assistance payments.

If the customer or their partner receive CCS, also review their Activity Test Details (ATD) and update if necessary.

The assessment and recording of leave and termination payments depends on the type received.

Note: an employee may stop working but remain as an employee while continuing to get payments of any accrued leave, until leave entitlements are exhausted. While the customer is getting ongoing payments, the relationship with the employer is considered current. Leave payments received are considered to be for an absence from employment and are treated as employment income.

• Leave payments for a temporary absence from employment (where the employer/employee relationship still exists), go to Step 2
• Leave payments where the employee does not take a leave of absence but is paid out some accrued leave entitlements, go to Step 3
• Stand down payments for non-teaching support staff employed by the NSW Department of Education, go to Step 4
• Purchased leave payments, go to Step 5
• Rostered days off/flex time (which does not change regular wage), go to Step 6
• Leave payments received on termination of employment, go to Step 7

Temporary absence from employment can be indicated by the fact no separation certificate has been issued, leave continues to be paid periodically, or the employee intends to return to same employer immediately afterwards.

Leave payments (including any leave loading representative of the leave period) received for a temporary absence from employment are employment income.

Verification:

For new claims, see Documents required for Centrelink new claims.

For customers who are currently in receipt of a payment of benefit, no verification is required unless the customer cannot provide full details. Payslips outlining the leave payment may be requested as supporting documents if needed.

Coding:

• The customer must advise the amount of income paid for time off in each entitlement period as well as for work done; there is no need to separate these amounts of income when recording the gross income for the entitlement period
• Record both leave and work on the Employment Income Paid Details (EAPP) screen using one entry per employer, per entitlement period. Use frequency IOP or LOP depending on the pay period as per regular employment income
• If required and applicable, combine and record the number of hours actually worked with the hours of any leave taken within the relevant entitlement period
• See Recording and correcting employment income details for assistance with recording income and hours

Update any assets that change as a result of receiving a leave or termination payment. See Coding income and assets for Centrelink payments and services.

Procedure ends here.

Leave payments where the employee does not go on the leave and is still in employment are remunerative lump sums and are assessed from the Entitlement Period Start Date (EPSD) of the period in which the leave payments are paid. The lump sum is assessed as income for a number of days equal to the period that the payment represents.

No Employment Separation Certificate (SU1) is issued, and any leave paid occurs at the same time as normal wages can indicate this.

In this case, record the employee's actual wages on the Employment Income Paid Details (EAPP) screen as employment income as usual.

Verification:

No verification is required unless the customer cannot provide full details. Payslips outlining the leave payment may be requested as supporting documents if needed.

Coding:

See Treatment of lump sums for coding instructions for remunerative lump sums.

Update any assets that change as a result of receiving a leave or termination payment. See Coding income and assets for Centrelink payments and services.

Procedure ends here.

In New South Wales (NSW), non-teaching support staff (teacher's aides, library assistants or other non-teaching staff), are employees of the NSW Department of Education. As they are unable to work during term breaks, they receive a stand down payment, based on them meeting certain criteria.

Stand down payments have never been considered leave payments for Social Security purposes:

• Before 20 April 2010, stand down payments were assessed as a remunerative lump sum and held for a 52-week period from the date the customer received it. See Recording and correcting employment income details for assistance with recording
• From 20 April 2010, these payments are assessed as ordinary employment income. See Recording and correcting employment income details for assistance with recording

Update any assets that change as a result of receiving a leave or termination payment. See Coding income and assets for Centrelink payments and services.

Procedure ends here.

An employee may earn income but choose to defer payment of the money through a purchased leave arrangement. This can be done one of 2 ways. The employee may either:

• take a reduction in salary on the basis they will be entitled to leave at a later date, possibly years later
• 'purchase' additional leave each year by having 'leave without pay' deductions made from each fortnight's salary

When a person is purchasing leave, their gross wage less the deferred amount is assessed as income. When the person then later takes the purchased leave, the gross amount of their employment income, which will include the amount previously deferred, is assessed as income.

See Recording and correcting employment income details for assistance with recording.

Update any assets that change as a result of receiving a leave or termination payment. See Coding income and assets for Centrelink payments and services.

Procedure ends here.

Customers may have a regular rostered day off or work flex time, which enables irregular hours or days off without changing their regular wage.

While they are employed, use the regular wage and frequency. If employment terminates, a payout in respect of time owed is assessed under Income Maintenance Period (IMP) provisions.

See Recording and correcting employment income details for assistance with recording.

Update any assets that change as a result of receiving a leave or termination payment. See Coding income and assets for Centrelink payments and services.

Procedure ends here.

Termination of employment can be indicated by:

• an Employment Separation Certificate (SU1) being issued, or
• leave that should be paid periodically is paid in a lump sum
• cessation details reported by an STP employer

This is only assessable income for customers or partners claiming or receiving an Income Maintenance Period (IMP) affected payment.

• JobSeeker Payment (JSP)
• Parenting Payment Single (PPS) and Parenting Payment Partnered (PPP)
• Youth Allowance (YA)
• Austudy
• Disability Support Pension (DSP) (except customers who are permanently blind)
• Farm Household Allowance (FHA)

If the customer or their partner:

• are in receipt ABSTUDY, go to Step 10
• are Low Income Health Care Card (LIC) only customers, see Low Income Health Care Card (LIC) income test
• are in receipt of an IMP affected payment, go to Step 8
• are both not in receipt of an IMP affected payment, go to Step 9

If the customer/and or their partner are in receipt of an IMP affected payment, see Income Maintenance Period (IMP).

Update any assets that change as a result of receiving a leave or termination payment. See Coding income and assets for Centrelink payments and services.

Note: only redundancy payments received on or after 20 September 2006 are to be included in the IMP.

If the customer or their partner are in receipt of FTB or CCS, review the family income estimate and update if necessary. See Helping families provide a reasonable annual income estimate for family assistance payments.

If the customer or their partner receive CCS, also review their Activity Test Details (ATD) and update if necessary.

Procedure ends here.

If the customer (and partner if applicable), is not receiving an Income Maintenance Period (IMP) affected payment, do not record details of the lump sum leave payment on termination of employment.

Update any assets that change as a result of receiving a leave or termination payment. See Coding income and assets for Centrelink payments and services.

If the customer or their partner are in receipt of FTB or CCS, review the family income estimate and update if necessary. See Helping families provide a reasonable annual income estimate for family assistance payments.

If the customer or their partner receive CCS, also review their Activity Test Details (ATD) and update if necessary.

Procedure ends here.

For ABSTUDY customers who receive lump sum termination payments due to a cessation of employment on or after the date of grant. These amounts are coded on the Other Income (OIN) screen.

In Process Direct:

• Go to the OINS screen
• Select Add New Row
• On Create Other Income, complete:
• Income Type: OTH – OTHER
• Description: Employer's name
• Reference: Employer reference (if known/applicable)
• Start Date: Date the lump sum termination payment was paid
• Frequency: ANN - ANNUAL
• Gross Amount: Amount of the payment. This does need to be broken down into individual components
• Select Save
• Complete the Receipt Date and Channel fields, select Save
• Select Assess and address any errors/warnings
• Select Assess again, then select Finish. Record details of the update
• Select Finalise to complete the transaction

In Customer First:

• Go to the OINS screen
• Type: OTH - Other
• Description: Employers name
• Reference: Employer reference (if applicable)
• Start Date/Event date: Date the lump sum termination payment was paid
• Amount: Amount of the payment. This does need to be broken down into individual components
• Freq: ANN Annual

The system will generate a review to zero the income off 12 months after the event date.

See the Resources page for examples of coding requirements for ABSTUDY customers with a partner on an IMP affected payment.

Update any assets that change as a result of receiving a leave or termination payment. See Coding income and assets for Centrelink payments and services.

Procedure ends here.