Employment Conditions

Some employment condition information is already captured through STP report, such as your employee’s commencement and cessation date, and other information through your employee's Tax File Number (TFN) declaration.

The extra information employers that will provide means there will no longer be a need to send TFN declarations to the ATO however employers should still keep them on their employee records.

This information includes the following:

Cessation date and reason - reporting employees cessation date and the reason will reduce need to give a separation certificates. There are many reasons why employees leave — for example whether it was voluntary, a redundancy or due to illness.

Note: If employers make another payment to employee (for example an ETP), they do not need to update the cessation date.

If employee is re-hired using the same payroll identifier, again employers do not need to report their cessation date again, even when the re-hire them is under a different ABN or branch within the same group.

2. Employment basis - is now a mandatory field where employers will need to reports whether employee is:

Full time (F) – a person who is engaged for the full ordinary hours of work as agreed between the payer and the payee and/or set by an award, registered agreement or other engagement arrangement. A full-time payee has an expectation of continuity of the employment or engagement on either an ongoing or fixed term basis.
Part time (P) – a person who is engaged for less than the full ordinary hours of work, as agreed between the payer and the payee and/or set by an award, registered agreement or other engagement arrangement. A part time payee has an expectation of continuity of the employment or engagement on either an ongoing or fixed term basis.
Casual (C) – a person who does not have a firm commitment in advance from a payer about how long they will be employed or engaged, or for the days or hours they will work. A casual payee also does not commit to all work a payer may offer. A casual payee has no expectation of continuity of the employment or engagement.
Labour hire (L) – a contractor who has been engaged by a payer to work for their client. Income for contractors only, does not include employees.
Voluntary agreement (V) – a contractor with their own ABN who has entered into a voluntary agreement with a business to bring work payments into the PAYG withholding system. To do this a contractor would normally complete a Voluntary Agreement for PAYG Withholding form.
Death beneficiary (D) – the recipient of an employment termination payment (ETP) death beneficiary payment who is either a dependant, non-dependant or trustee of the estate of the deceased payee.
Non-employee (N) – a payee, such as a contractor, who is not in scope of STP for payments but may be included in STP for voluntary reporting of superannuation liabilities only.

3. Tax Treatment - there are many factors that help employers to correctly calculate the amount to withhold from employees. These are based on information from employee TFN declarations and information known about them. By reporting some extra information each payday, employers will help the ATO identify the factors that influenced how pay as you go withholding was calculated.

Such information as whether employee is:

claiming the tax-free threshold
has a medicare levy exemption
has notified you that they have a Study and Training Support Loan.

Reporting this information through your STP report will mean employer will no longer need to send their TFN declarations to the ATO allowing the ATO to notify employees directly if they gave employers incorrect information which may lead to them getting a tax bill at the end of the year.

4. Tax Offset - Where employee is has given a Withholding declaration which claims an offset amount to reduce the amount withhold from their pay. Employers will need to report the amount claimed in STP Phase 2 reporting.

The annual tax offset amount only applies to regular employees who have claimed the tax-free threshold (meaning only reported for employees that report a tax treatment code beginning in RT).