Parental Leave
      Back to home
      1. Help Centre
      2. Everything Leave
      3. Parental Leave

      Managing Payroll for the Employee Returning from Parental Leave

      When the employee returns from parental leave, their workweek could look different to before they left. Here is how to keep your payroll updated and annual leave compliant as things settle.

      Updated: November 2024

      In this article:

      Follow these links to find out more about:

      Changing Work Patterns or Hours Upon Return to Work after Parental Leave

      Often when an employee returns, they return to fewer hours or days per week.

      • Update the Employee Profile to the new work pattern before you load their first pay on their return to work from parental leave. Remember to update both the 'Standard Pay' tab and the 'Leave' tab with the new information and SAVE.

      • Do not change start dates, sick leave balances, or anniversary dates.

      Info - Blue Block (1)

       

      		 Please contact our Customer Team to update the allocated leave balance (if any) to reflect the work pattern change. This is needed as a workweek now looks different for this employee and allocation is based on a workweek according to the Holidays Act.

      Calculating Annual Leave

      Info - Blue Block (1)

       

      Annual leave allocated during parental leave or in the 12 months after the parental leave period has ended, is calculated at the AWE rate for the 12 months immediately before the end of the last pay period before the leave is taken.

      *This leave does not revert to the greater of OWP/AWE calculation, ever.
      • The employee is still entitled to their 4-week annual leave allocation, but this allocation will be calculated according to their new work pattern.

      For example:
      If the employee used to work 5 days a week, their allocation on their previous anniversary date was 20 days.
      (5-day workweek x 4 weeks leave = 20 days)

      When they return to work after parental leave and now only work a 3-day workweek, their entitlement to 4 weeks of annual leave is calculated based on their new work pattern.
      They will receive (3 days x 4 weeks) 12 days of allocated annual leave on that anniversary date.
      • The payment calculation changes when the employee takes annual leave that was allocated during parental leave or in the 12 months following the parental leave period. The payment amount is determined by calculating only the employee's average weekly earnings (AWE) for the 12 months immediately before the end of the last pay period before the annual holiday is taken. This is even if the leave allocated during this period is taken or paid out years later.
        • This means that if an employee takes annual leave soon after coming back from parental leave the payment will be lower than if they took their leave after months have passed since their parental leave period has ended.
        • If the employer provides additional annual leave (an extra 5th week above the 4-week Holidays Act entitlement) this leave is by agreement and calculated according to the employment agreement. 
      • Allocated leave before the parental leave period, and after 12 months since the employee's return to work is unaffected by this calculation change. This leave would continue to be calculated at the greater of OWP or AWE. 

      Info - Blue Block (1)Annual leave is always calculated at the time the employee takes their leave. Please contact the Customer Team if you are unsure about how to set the calculation rate at AWE for annual leave in a timesheet.

      Resources and Further Information