How do I set up All Purpose Allowances?

Many Awards include allowances that factor up a Payee's Rate Per Hour (Loaded Rate) and are paid for all purposes, such as when calculating payments for leave or overtime. When a payee is on leave, you replace the base rate with the absence while reporting the separately itemised components of the Industry Allowance and Tool Allowance, as the payee is still entitled to these amounts. You may have historically set up your payroll using a single rate that includes the Payees’ Rate Per Hour and all-purpose allowances. However, it is now essential in STP2 that those allowances be identified because they are treated differently in different situations, and being unable to identify them may disadvantage your Payee. For example, the ATO treats allowances in a tax return differently from how Services Australia defines those allowances when assessing a benefit claim.

In STP Phase 2, you must separately report all-purpose allowances against the relevant allowance type unless;

1. The allowance forms part of an amount you need to report as overtime.

2. You're paying the employee amounts, which are cash out of leave in service (paid leave type C) or unused leave on termination (paid leave type U).

First, confirm within your Award or Agreement if 

1. An All Purpose Allowance is applicable.

2. Casual Payees are paid the all Purpose Allowance on their Casual Ordinary Hourly Rate. For example, under the;

   1. Building and Construction General On-site Award [MA000020]. Clause 12.5 states that where the relevant penalty rate is 150%, the employee must be paid 175% of the ordinary hourly rate prescribed for the employee’s classification, and where the relevant penalty rate is 200%, the employee must be paid 225% of the ordinary hourly rate prescribed for the employee’s classification. This means the Casual Loading Component is added to the Ordinary (Full-Time) Hourly Rate AFTER the Overtime calculation is performed.

   2. Food, Beverage and Tobacco Manufacturing Award [MA000073]. Clause 10.4 states that where this award refers to a penalty rate, overtime rate or shift loading as being calculated as a percentage of the ordinary hourly rate, that reference will (for a casual employee) instead be taken to be a reference to the casual ordinary hourly rate if the entitlement applies to a casual employee. This means the Casual Loading Component must be added to the Ordinary (Full-Time) Hourly Rate BEFORE the Overtime calculation is performed, thus entitling them to the Casual Ordinary Hourly Rate.

3. Next, create Pay Types to cater for these requirements.

   1. Add the relevant Loaded Rate Pay Rates.

   2. Add the relevant All Purpose Allowances.

4. Assign the relevant Pay Types to the required Payees;

   1. Add the relevant Allowances in All Purpose Allowance.

   2. Add the relevant Pay Rates in Pay Template.