What are employment conditions in STP?¶

When you report a pay through Single Touch Payroll (STP), the report carries more than just money. It also carries facts about the working relationship between you and each employee. These are the employment conditions.

They tell the Australian Taxation Office (the ATO) how the person is engaged, when they started, and — if the relationship has ended — when and why it ended.

In one line

STP reports the employment basis, the commencement date, and — when employment ends — a cessation date and cessation type for each employee.

Why this matters¶

The ATO and Services Australia use these details to understand each working relationship. The ATO explains that reporting the cessation reason helps reduce the need for you to issue a separate employment separation certificate. Reporting the right basis and dates keeps this information accurate.

What you will learn¶

The employment conditions reported for each employee
What the employment basis values mean
When a cessation date and cessation type are reported

Understanding the concept¶

The ATO describes these employment details:

Employment basis — the work pattern or basis of the relationship. The ATO lists these values: F (Full time), P (Part time), C (Casual) and L (Labour Hire). Full time is a person engaged for the full ordinary hours of work; part time is engaged for less than the full ordinary hours; casual has no firm commitment in advance and no expectation of continuity; labour hire is a contractor engaged to work for the payer's client. The ATO notes the employment basis must be reported in every submit and update action.
Commencement date — the start of the employment or engagement relationship. The ATO says it must reflect the earliest recognised start date for the continuous period of service with the payer.
Cessation date — the end of the relationship. The ATO says it must be reported once the employee has ceased their employment or engagement, and must reflect the end date for the final period with the payer.
Cessation type — the category of reason the relationship ended. The ATO says that if a cessation date is reported, the cessation type code must also be reported (for pay/update dates after 30/06/2020). Examples from the ATO include V (Voluntary Cessation) — such as resignation or retirement — and C (Contract Cessation) — such as the natural end of a limited engagement.

Alongside these, each employee's pay carries a tax treatment. This is set from the answers on the employee's tax declaration and tells the ATO how tax is worked out for that person.

For accountants & bookkeepers

Under the STP rules, the employment basis must be reflected as at the pay/update date for submit and current-FY update actions, and as at the run date/time stamp for prior-FY update actions. For concurrent employment with mixed bases, report in priority of full time, then part time, then casual; if another basis such as labour hire is present, report that. If a payee is rehired using the same Payroll ID, the cessation date should be removed in subsequent reports; the rehire commencement date should be reported (with documented exceptions for same-period rehires).

Example¶

Jordan hires Alex as a part-time employee starting 3 February. In STP, Alex's employment basis is reported as part time, with a commencement date of 3 February. Months later Alex resigns. Jordan reports Alex's cessation date and a cessation type showing a voluntary cessation. The ATO and Services Australia now have the dates and the reason, without Jordan issuing a separate separation certificate.

Common mistakes¶

Leaving the employment basis unset — the ATO says it must be reported in every submit and update action.
Reporting a cessation date but forgetting the cessation type — the ATO requires both together.
Guessing a commencement date — it should reflect the earliest recognised start date for the continuous period of service.

How this works in myaccountant¶

In the app — the employment basis, commencement date, and (when employment ends) the cessation date and cessation type come from the employee's details. Each employee's income type is set on their tax and employment details, and the tax treatment code is derived automatically from the answers on their tax declaration — you choose options rather than type a code. myaccountant builds the pay event from your pay run, so these details flow through without a manual file.

Key points¶

STP reports the employment basis, commencement date, and cessation date and type.
Employment basis values include full time, part time, casual and labour hire.
The commencement date is the start of the relationship; it should reflect the earliest recognised start of continuous service.
A cessation date is reported when the relationship ends.
If a cessation date is reported, a cessation type must be reported too.
Each employee's pay also carries a tax treatment set from their tax declaration.

Learn next¶

General information only — not tax, super or financial advice.

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