Parental Leave

When an employee takes time off for parental leave, you may have to account for either 'paid parental leave' or 'unpaid parental leave'. You can cater for both of these within the payroll system. 

Paid parental leave

Employees are entitled to paid parental leave paid for by the Department of Human services as long as they meet the following criteria:

  • be the primary carer of a newborn or newly adopted child;
  • have individually met the income test foundherein the last financial year;
  • not be working during your Parental Leave Pay period;
  • have met the work test in the 13 months before the child’s birth or entry into care.

Parental Leave Pay is currently $812.45 per week before tax (22/23 financial year). This is based on the weekly rate of the national minimum wage. More information about parental leave pay can be foundhere.

In order to automate paid parental leave you'll need to follow the below instructions:

Creating the pay category

  1. Go to 'Payroll settings' > 'Pay categories' and create a new pay category. Seeherefor instructions. 
  2. Change the unit field to 'fixed' because this is paid on a weekly (not hourly) basis. 
  3. There is no requirement to pay superannuation on paid parental leave, but if you wish to, you can leave the SG rate at the system default.
  4. This payment is payroll tax exempt, so be sure to tick the 'payroll tax exempt' box
  5. Leave does not accrue, so do not tick the 'accrues leave' box
  6. Click 'Save'

Applying the settings to an employee

  1. Go to the employee file via the 'Employees' tab
  2. Go to the 'Pay rates' page
  3. If the employee is paid a set amount of hours each pay, the 'show in pay run' box will be ticked against their default pay category. You'll need to untick this box
  4. Navigate to the employee's Pay Run Inclusions screen
  5. See 'Additional earnings lines'. You are going to use this feature as it will allow you to have payments automatically added to a pay run until the parental leave payment limit has been reached
  6. Click 'Add' to create an additional earnings line, and select the previous parental leave pay category that you created earlier
  7. You can set a location for the payment as the default option will be 'All'
  8. The 'units' field represents the number of weeks being paid in the pay run (e.g. 1 for weekly pay run, and 4.33 for monthly pay runs)
  9. Set the rate, which is the current weekly amount that has been set for paid parental leave ($812.45for the 22/23 financial year)
  10. Typically you would leave the super rate at 0% but you can override it if you wish
  11. Enter a note if you wish (e.g. parental leave)
  12. In the final field, select the 'all pay runs until the maximum amount has been reached' option. Here, enter the weekly PPL amount multiplied by 18 (the number of entitlement weeks). In the case of$812.45per week, the maximum entitlement is $14,624.10
  13. Click 'Save'


As each payment is processed within a pay run, you'll be able to go back here and view how much as already been paid, and how much is remaining to be paid:

How it works in a pay run

Create a new pay run (seeherefor help) and click on the employee's name and you'll be able to view the details. You should see an earnings line for the parental leave, but because it is a 'fixed' pay category, you'll notice that there are 0 hours. That is fine, as the gross earnings will still be correct. 


For the last pay run, you'll probably find a pro-rata'd amount that the system will work out so that it doesn't overpay the employee. 

Unpaid parental leave

In order to process unpaid parental leave, there are a few options.

Option 1 - Recording the leave

If you want to record the leave taken, you can create a new leave category called 'unpaid parental leave' by following the instructions in thisarticle. When creating the leave category, select for it to be 'not tracked', as this will tell the system that it doesn't need to keep track of how much leave an employee is entitled to. 



Once the leave category is created, if you create a leave request for the length of time that the employee will be away, you'll be able to apply this leave to each pay run.   

Note: You may need to enable the leave type so that the employee can apply for it. You can do this via the 'Employee file' > 'Leave allowances' page. If they are on a leave allowance template, you'll need to either take them off the template, or go to 'Payroll settings' > 'Leave allowance templates' and add it to the template (which will also apply for all employees attached to the same template).



Once the above is sorted, you can go ahead a create a pay run as usual. Once the pay run has been created, you can then click the 'Leave requests' tab in order to apply to the leave. If you hover over the leave request you can select 'Apply':




You'll then be prompted to select the number of hours that you want to apply to the pay run. Once you enter the required hours, it will add that leave request into the pay run details under the 'Leave taken' section. Repeat this process for each pay run that the employee is on leave. 

If the employee comes back on a different date than expected, you can close off the rest of the request by clicking the 'Mark as applied manually' option in the next pay run. This will prevent it from showing in any future pay runs. 

Option 2 - Excluding the employee from pay runs

If you don't want to show leave as being taken for the employee, and have them included in any pay runs whilst they are gone, you can stop them from automatically being picked up when a pay run is created. This way, they are still in the system, but are not being included in any pay runs. 

To do this, you'll need to set up a new pay schedule. Call it 'unpaid leave' or something so that you know it's primary use is to separate those employees not needing to be paid. Set the 'included employees' field to 'employees with this pay schedule as their default'. 

Once that has been created, go to the 'Employee file' > 'Pay run defaults' page and change their pay schedule to the newly created one. You'll never actually create a pay run using this pay schedule and so it's a handy way of keeping employees separate until they get back. 


If you have any questions or feedback please let us know via

Was this article helpful?
0 out of 0 found this helpful



Article is closed for comments.