1. Australia / New Zealand Payroll Implementation Guide
  2. Understanding RDO

Understanding RDO

In some Australian companies, employee agreements for hourly workers include Rostered Day Off (RDO) leave. Each pay period, a percentage of the hours that an employee works is banked, or stored to be used as leave at a later date. The employee does not receive payment for these banked hours at the time they are worked. Instead, the employee receives a paid day off, or Rostered Day Off, after a full workday worth of leave time has been accumulated.

Typically, five percent of an employee's hours are banked for RDO purposes. For example, if an employee works a 40-hour workweek, they would accrue two hours of RDO leave and receive pay for 38 hours of work. This enables an employee who regularly works 40 hours each week to receive a paid day off, using RDO leave, every four weeks.

The system calculates RDO time using an accrual PDBA. Typically, the accrual calculates a specified percentage of the employee's hours worked. The system then converts that amount to a negative amount, which is used to create a timecard. That timecard is not included in autopay calculations; therefore, the employee does not receive payment for the number of hours that are included in the RDO calculation. This example illustrates a typical RDO calculation for a single pay period:

  • The employee works 40 hours of regular time.

  • The RDO accrual is calculated as 5 percent of the 40-hour week, or 2 hours.

  • The accrual amount is converted to a negative amount, or –2 hours.

  • A timecard is created for that amount, using the pay type associated with the RDO accrual code in UDC 75/RD.

    This timecard, for –2 hours, is not included in autopay.

  • The employee is paid for 38 hours of regular time (40 hours of regular time less 2 hours of RDO time).

  • The employee banks 2 hours of RDO time using the RDO accrual.

    After four pay periods, the employee, having accrued 2 hours of RDO leave time during each pay period, will have banked enough RDO time to take one day of paid RDO leave.

    Note: RDO leave time is taxed at the time it is taken, not at the time it is accrued. Also, to calculate superannuation correctly, the negative portion of RDO must be taken into account. Therefore you should set up a negative DBA that is based on the negative pay type that is generated through the RDO calculation. This DBA should be set up so that it does not have any effect on the general ledger.