4.3.3.06 Employment period
Introduction
This topic covers:
- summary
- determining an employment period
- employment periods for multiple employers
- employment periods for multiple amounts from the same employer
- employment periods for amounts paid not in respect of a particular period
- employment periods for amounts paid in advance, and
- employment periods for pensioners paid a set amount each month.
Summary
Employment income is paid in respect of a particular period, even if in some situations this period is unclear. The period that employment income relates to is known as the 'employment period'
For wages and salaries, the employment period is typically the length of the employer's pay cycle or an income support payment entitlement period, whichever is longer. For other types of income, such as commissions or bonuses, the employment period will be the total period of time over which the amount was earned.
Example 1: Sue's employer pays her once every 2 weeks. Each instalment of Sue's employment income has an employment period of 2 weeks.
Example 2: Anita's employer pays her once a month. Each instalment of Anita's employment income has an employment period of the number of days in the month for which the income is paid.
Example 3: Mike is paid a commission from his employer for sales made over the previous 3 weeks. Mike's commission employment income has an employment period of 3 weeks.
In most cases employment income will be assessed over the same length of time as the associated employment period. The exception to this is an employment period of one week, or where income is attributed to a part of a fortnight, in which case the income will then be assessed over the full fortnight (4.3.3.07). Employment income is attributed evenly across the number of days in the assessment period for the purposes of assessment. This ensures the consistent assessment of income and prevents people from being advantaged or disadvantaged as a result of how their employer pays them.
Policy reference: SS Guide 4.3.3.07 Assessment periods for employment income
Determining an employment period
The employment period for wages and salaries is the period for which employees are paid. Where employment is ongoing, in most cases the employment period will be the employer's regular pay cycle. Each instalment of employment income can have a different length employment period if the length of the employer's pay cycle is irregular.
Where employment income is paid irregularly the employment period is usually the interval since the previous instalment of employment income. Where employment is one-off in nature (i.e. non-ongoing) the employment period is the total length of the period over which the work was or will be undertaken.
Note: The employment period is different to the number of days worked. An individual paid fortnightly who works for a single day within that fortnight will have an employment period of 2 weeks.
Example 1: Chris' employer pays him every 15 days for a single day of work. The employment period for each instalment of Chris' employment income is 15 days.
Example 2: Sam's employer runs his payroll irregularly so the period he is paid for changes each payday. On this occasion Sam's employer pays him on the 20th of the month, and his previous payday was the 2nd of the same month. The employment period for this instalment of Sam's employment income is 18 days.
Example 3: Amy works 3 shifts over a 6-day period for a temporary employer. Amy's temporary employer pays her for the 3 shifts 2 weeks later, however the employment period for Amy's employment income is 6 days- the total period for which she worked for the employer (noting that income attributed to part of a fortnight will be assessed over the full entitlement period).
Act reference: SSAct section 1073A(1) Attribution of employment income paid in respect of a particular period or periods
Employment periods for multiple employers
Where a person is paid employment income by multiple employers, each amount has its own employment period. This includes where amounts are paid by different employers or are paid for previous periods or future periods, or a combination of the 2. Multiple amounts of employment income can have separate but identical employment periods.
Example: Olivia has 2 employers and is paid by both on the same day. Employer 1 pays Olivia weekly and Employer 2 pays her fortnightly. Olivia's income from Employer 1 has an employment period of one week, and the income from Employer 2 has an employment period of 2 weeks.
Act reference: SSAct section 1073A(1) Attribution of employment income paid in respect of a particular period or periods
Employment periods for multiple amounts from the same employer
Where multiple amounts of employment income are paid from the same employer in a single entitlement period the employment periods for each income type are added together to determine the assessment period, with overlapping days only counted once. Where the employment income paid from one employer in a single instalment includes multiple employment income types, such as a combination of wages and commissions, each employment income type will have its own assessment period.
Where multiple amounts of employment income have overlapping or simultaneous assessment periods attribution still commences on the first day of the entitlement period in which each amount is paid, including in situations where a new instalment of employment income is paid while the assessment of a previous amount is ongoing. Where the attribution of multiple amounts of employment income overlap the sum of the employment income assigned to each employment period is used for the purposes of income testing.
Note: Multiple amounts of employment income from the same employer paid in a single entitlement period each have their own employment period, however the number of days in these employment periods are added together to determine the assessment period for the total amount of employment income paid by the employer in that entitlement period.
Example 1: Catherine is paid 2 amounts on the same day in January by the NSW Board of Education. The first amount is $600 for 3 weeks of exam supervision in November and the second amount is $200 for a week of exam supervision in December. The employment periods are added together and the total amount of $800 is assessed across 4 weeks from the beginning of the entitlement period in which it was paid.
Example 2: Pat's employer normally pays him every fortnight. Due to a natural disaster, Pat's employer is not able to pay him for 3 fortnights. Pat is eventually paid 3 instalments of employment income at once. Pat's employment income for this pay period has an employment period of 6 weeks.
Example 3: Leslie is paid an amount by her employer that includes her regular wages and the sales commissions she has earned over the previous 7 weeks. Leslie's employer pays her wages every 2 weeks, so the employment period for her wages is 2 weeks. Leslie's commission employment income relates to a period of 7 weeks, so the associated employment period is 7 weeks.
Example 4: Shania's employer normally pays her every fortnight. Due to a family emergency Shania's employer misses a pay cycle, and instead pays her for 2 pay cycles the next fortnight. Included in that instalment of employment income is also 5 weeks worth of sales commissions. In the fortnight that Shania receives no income, her rate of income support payment will reflect no employment income paid. In the fortnight that Shania receives 2 catch-up pay cycles, Shania's wages have an employment period of 4 weeks, and her commission has an employment period of 5 weeks (which overlaps with her employment income). Her employment income is attributed across 4 of the same 5 weeks as her commission. In the next fortnight while Shania's 'catch-up' pay continues to be attributed across a total of 4 weeks, Shania will receive another of her usual fortnightly pays and this will also be attributed across the fortnight.
Act reference: SSAct section 1073A(1) Attribution of employment income paid in respect of a particular period or periods
Employment periods for amounts paid not in respect of a particular period
Some employment income types are paid not in respect of a particular period or for periods that are unclear. Employment income types paid not in respect of a particular period or for an uncertain period, may include bonuses and allowances.
In situations where amounts are paid not in respect of a period the Secretary will determine an appropriate period. The period can be up to a maximum of 52 weeks.
The nature of the individual's employment, the employment income type, the financial interests of the individual, potential hardship caused to the individual and whether the income was earned before the individual was in receipt of an income support payment may be considered when determining the period.
Example 1: Peter has been working for his employer for 3 years and is paid a $2,000 bonus from his employer in recognition of his good performance at work. Peter's bonus is not paid in respect of a period so the associated employment period is determined to be 52 weeks. This period is determined to be appropriate as it is considered to be an annual bonus taking into account the nature of Peter's employment and the employment income type.
Example 2: Alex is paid $50 in addition to her regular fortnightly wages by her employer in recognition of the inconvenience caused when she was paid late the previous month. Alex's $50 is not paid in respect of a period so the associated employment period is determined to be 2 weeks. This period is determined to be appropriate considering the employment income type and why the $50 was paid.
Example 3: Dan worked on a lobster trawler 3 months ago, and other previous intermittent trips for the same employer during the year. He was paid for these periods of work in a lump sum. Records do not indicate a particular employment period for the income paid. Dan was not on income support at the time he earned his pay and has recently been granted JSP. The fact that Dan was not on income support at the time he earned his employment income is taken into consideration and the income is attributed across 52 weeks.
Act reference: SSAct section 1073BA Attribution of employment income paid not in respect of a particular period
Employment periods for amounts paid in advance
Where employment income is paid in advance, the employment period is still the period to which the amount relates.
For wages and salaries paid in advance where employment is ongoing, the employment period is the length of the pay cycle to which the amount relates.
For employment income types where the associated period is unclear, such as a sign-on bonus, a delegate of the Secretary may determine an appropriate employment period.
Example 1: In the lead-up to the Christmas holidays Mal's employer pays him his wages for the next pay cycle in advance, in addition to his regular income for that payday. Mal's employer normally pays him fortnightly so the instalment of employment income which includes the pay in advance has an employment period of 4 weeks (the previous fortnight and the coming fortnight combined).
Example 2: Katie works intermittently for an employer. Katie's employer pays her in advance for work she will complete over the next 16 days. Katie's employment income has an employment period of 16 days.
Act reference: SSAct section 1073A(1) Attribution of employment income paid in respect of a particular period or periods, section 1073BA Attribution of employment income paid not in respect of a particular period
Employment periods for pensioners paid a set amount each month
In some situations, recipients of pension payments who are paid a set amount each calendar month may have their income assessed on an ongoing basis (4.3.3.08). This applies to recipients who can demonstrate they are paid the same amount of income on a set day of each month and are likely to continue to be paid in this way. In this situation the employment period does not determine the length of assessment. For these recipients, they do not need to report their income each fortnight and only report when they have a change in their income such as a wage increase or ceasing employment.