How to record the first 10 days of WorkCover Leave which the employer is responsible for.

Diane W

I have an employee who has taken 5 days off for post treatment recovery, and this is the first injury related leave she has taken. The first 10 days of Workcover leave is paid by the employer. I am still using Reckon Accounts Premier Edition 2022 and need to correct how I have recorded it. I recorded it as Sick Leave.

Acctd4

Hi Diane

Create a new Payroll Item for this.

Have you upgraded to the new 2023 version & run the STP Migration Assistant ? If so, link this Payroll Item to the new STP2 category Leave - Workers Compensation (W)

Diane W

Hi Shaz,

I am still using Reckon Accounts Premier Edition 2022. I haven't finalised the 2023 payroll reconciliation yet so won't be upgrading to the new 2023 version until that is completed.

I have already set up a new payroll item, but should I tick the PAYG Tax option, or keep it unticked? I understand now, that workcover leave taken isn't a payroll item so I am assuming the PAYG Tax option shouldn't be ticked.

Should WorkCover leave even be processed through the payroll system?

Also, I have not ticked the inclusions option - Include in "Every hour worked" leave accruals - as I don't want to set up a new accrual as this isn't an accruing leave like sick leave, annual leave, or long service leave. Am I correct in doing so?

I am having difficulty finding a sample process for implementing WorkCover leave, both within the first 10 days leave (being the employers responsibility), and beyond if the injured worker requires more than 10 days (over the duration of the injury). Can you recommend a processing source for me to review and adapt to our needs?

Thanks Shaz.

Acctd4

Hi Diane

The gross amount does still need to be reported via a Payroll Item in payroll with PAYG withheld & the recovery amount from the insurer will also need to be recorded.

Entitlements can vary depending on which state you are in eg Here in WA, Annual Leave still accrues on accepted Workers Comp claims.

You should be able to find info online if you search for specifics eg “Workcover 10 days leave” etc ☺️

Diane W

Hi Shaz,

I am more confused now.

I've done quite a bit of research online on Workcover 10 days leave, and I've read that PAYG isn't withheld as it's a business expense and not a payroll expense.

I appreciate your assistance with this Shaz, but is there any resource that you know of within this forum, or another, that clearly sets out the process on how to handle a Workcover/payroll situation in Victoria, within Reckon Desktop 2022 Version, as I am getting conflicting info and I'm just getting more confused?

Regards

Di

Acctd4

Hi Di

I think you're confusing PAYG with Payroll Tax. Workers Comp payments (NOT the topup amounts the employer pays) are excluded from Payroll Tax (This is what is meant by "not taxable" / exempt in the references you're referring to)

Any payments made to an employee form part of their taxable income - When they do their tax return, these payments will be included, meaning there will be a tax shortfall if you've not withheld PAYG.

For PAYG, the Payroll Item you set up for your Workers Comp topup payment should be exactly the same configuration as their normal (eg Hourly) Payroll Item. Super generally doesn't apply if the employee is not working but you should check your specific Award to determine this as some Awards have specific clauses that differ.

Diane W

Thanks Shaz,

This is my first time ever dealing with WorkCover payments, and it's really confusing.

Your persistence and patience with me has been appreciated! LOL

Regards,

Di

Acctd4

No problem @Diane W 😊