Salary Recovery Processes for School-Purchased Labour

Version Number

3.6

Implementation Date

6/04/2016

Scope

All state schools

Purpose

Salary recovery processes provide a framework for on-costs related to school-purchased labour. The framework provides schools with budget certainty related to school-purchased labour and assists with meeting their statutory obligations.​​​

Overview

​Salary recovery processes for school-purchased labour sets a framework for the provisioning of on-costs related to school-purchased labour. The procedure aims to provide schools with budget certainty related to school-purchased labour and assist them in meeting their statutory obligations.

The direct-debit recovery regime works by seeing the rate of pay applicable to school-purchased-labour inclusive of potential liabilities that schools have in the past, been required to individually calculate and provision for, when the costs have actually been incurred.

The direct-debit recovery regime assists schools in meeting almost all of their statutory obligations related to school-purchased labour that have not previously been recouped through the on-cost recovery processes. Statutory costs associated with WorkCover, superannuation and long service leave levy have been added to the existing on-cost recovery regime to ensure that the department is compliant with the collection and remittance of these obligations.

There are two rates of recovery applicable to school-purchased labour (direct-debit recovery). One rate will be applicable to casual employees only and the other will be applicable to temporary and permanent employees (refer to On-Cost Recovery Table). These rates mirror the true cost of labour used in the development of the internal State budget. 

The rates cover costs of employee entitlements such as superannuation, leave loading, annual leave, sick leave, maternity leave, parental leave and payroll tax.

When a school-based employee takes a period of paid leave, the school will not be debited for the salary related to the leave component, but instead the leave component will be drawn from the 'pooled' fund. The fact that paid leave will be drawn from the 'pooled' fund also allows schools to replace their school-purchased employee if the school wishes. 

Not all issues related to school-purchased labour can be recouped through fixed-rate direct debit recoveries. Whilst the regime takes account of the salary matters for school-purchased labour, a number of issues will still need to be considered by schools in their budget planning.  These include retrospective Enterprise Bargaining increases, increment progression, back pay issues and allowances.

The rate applicable to the on-cost recovery regime will be subject to annual review based on the internal budgeted on-cost rates and the sufficiency of the pooled funds to meet the liabilities.  Principals' and Business Services Managers’ associations will be consulted as part of the annual review process.

Existing direct debit recovery processes will be used to recover on-costs under this regime. The on-cost of 12.3640% for casual staff will be attributable to SAP Cost Centre 2000151 and 29.6857% for temporary/permanent officers will be attributable to 2000152. 

In an effort to reduce the length of the direct-debit reporting provided to schools, the systems that generate the direct debit notes have been altered to represent a single line of on-cost recovery, rather than the various individual amounts for each recovery item.

Responsibilities

Principals:
Principals are responsible for ensuring that on-costs associated with school-purchased labour are correctly incorporated ​into their school-level budget.

Process

Application of on-costs for school purchased salaries

Principals and Business Services Managers:
  • ​familiarise themselves with the on-cost recovery regime to take effect for all school-purchased labour and how it relates to school budgeting for purchased salaries
  • familiarise themselves with the rates of recovery applicable to school-purchased labour which include rates for casual, temporary and permanent employees. The total cost for either casual or temporary employees can be calculated using the Calculator (DET employees only) 
  • ensure they are informed about issues relating to school-purchased labour that cannot be recouped through fixed rate debit recovery 
  • ensure issues not covered through fixed rate debit recover are considered in budget planning 
  • judiciously review the absenteeism of their school-purchased workforce.

Online Resources

Review Date

30/11/2015
Attribution CC BY

Direct-debit recovery regime
The direct-debit recovery regime is a system that allows schools to pay fortnightly into a pooled fund for on-costs related to school purchased labour such as leave, superannuation, and Workers' Compensation.

On-cost recovery rates
The direct-debit regime has two different rates of recovery in relation to the costs associated with the different modes of employment.

One rate is applicable to casual employees and the other is applicable to temporary and permanent officers. The rates mirror the internal state budget process for true or actual cost of labour.

These labour rates are inclusive of the following elements:

  • ​annual leave 
  • leave loading 
  • long service leave levy
  • sick leave/emergent/parental 
  • superannuation 
  • workers’ compensation 

On-cost recovery rates are fixed annually for the duration of the school year, unless a change is required from 1 July.

Please note that from 1 July 2014 Government Departments are no longer liable for payroll tax. As a consequence payroll tax has been removed from the list of on-costs to be recovered.

School-purchased labour 
Additional staff employed by a school and whose salaries are paid for through school funds are classed as school-purchased labour. The labour groups purchased by school funds may include relieving teachers, schools officers-grounds, casual AO2 AAEP, teacher aides etc.