Deferred salary scheme
Direction and guidance on the eligibility requirements and conditions of the Deferred salary scheme to allow staff to make an informed decision about whether to apply.
Audience
All permanent employees (not casual or temporary employees, or contractors) who have met relevant probationary requirements and are covered by the following awards:
- Crown Employees (Teachers in Schools and Related Employees) Salaries and Conditions Award
- Crown Employees (Chief Education Officers – Department of Education and Training) Salaries and Conditions Award.
| Version | Date | Description of changes | Approved by |
|---|---|---|---|
| V01.0.0 | 06/09/2024 | Under the 2023 Policy and procedure review program, new policy document consolidating existing instructions and improving clarity and readability. |
Chief People Officer |
| Ongoing union consultation is occurring and amendments may be made from time to time. |
About the policy
Under the Employee benefits and entitlements policy, the department is committed to providing attractive benefits and entitlements for all employees by:
- providing comprehensive paid and unpaid leave entitlements according to the current legislation, awards and determinations
- enabling permanent teachers to defer part of their salary for 4 years and take a paid year away from their position for professional development and renewal experiences, such as participation in return-to-industry schemes, other industry experiences, post graduate study, working in overseas education systems, or other activities.
| Term | Definition |
|---|---|
Endorsing officer |
Manager endorsing the application. In schools:
In education support offices:
|
Deferred salary |
The deduction equivalent to 20% of a member’s net salary (gross, less tax), which is set aside each year for payment in the deferred salary leave year. |
Deferred salary leave year |
The year in which participants take leave and are paid their deferred salary. |
Deferred salary scheme |
The department’s 5-year scheme where participants defer part of their salary for the first 4 years and are paid the deferred salary in the fifth year (the deferred salary leave year). |
GSE Act |
Government Sector Employment Act 2013. |
Participant |
A permanent employee applying or participating in the deferred salary scheme. Includes:
Refer to the relevant Crown Award to determine eligibility. |
Superable salary |
Annual base salary plus allowances that are generally paid to an employee while on annual leave or extended leave, plus loading for shift work. |
Participants in the deferred salary scheme:
- must read and understand the requirements to participate in this scheme
- apply for membership in the Deferred salary scheme
- inform their endorsing officer when they will take their leave year, ensuring it is not before the fourth year of salary deduction
- return to duty after the leave period has ended.
Endorsing officers:
- review applications and determine if participants’ absence will impact operations
- endorse applications and send to Human Resources (HR)
- assess and approve participants’ leave year in accordance with leave guidelines
- maintain a record of all applications and any correspondence relating to the application
- provide applicants with a copy of their completed applications
- store the completed applications on employees’ personnel files.
Shared Services Human Resources:
- create an account with the Commonwealth Bank in the participant’s name for the salary deduction deposits
- activate salary deduction at beginning of school year, day 1 Term 1
- schedule first payment of deferred salary at the beginning of the deferred salary year
- inform participant of any lump sum payments
- monitor and evaluate the uptake and usage of the scheme and provide an annual report on the scheme to the Executive Director, Human Resources.
What needs to be done
The deferred salary scheme allows participants to take one year away from their position while receiving 80% of their normal net salary.
The scheme runs for 5 years. Participants defer 20% of their net salary for the first 4 years and are paid the deferred salary in the fifth year (the deferred salary leave year), effectively giving participants 80% of their normal net salary for the 5 years of the scheme.
The payment made to the participant in the deferred salary leave year equals the amount set aside in the first 4 years.
1. Understand the scheme’s requirements and conditions
It’s important to understand how the scheme works before committing to it. The information in these procedures covers the following conditions: scheme, leave, employment, as well as entitlement and superannuation.
The department encourages applicants to seek independent legal advice before applying to join the scheme.
1.1 Eligibility to join the scheme
Permanent employees under the:
- Crown Employees (Teachers in Schools and Related Employees) Salaries and Conditions Award 2022
- Crown Employees (Chief Education Officers – Department of Education) Salaries and Conditions Award 2021
Permanent employees who accept a temporary appointment or an acting arrangement in another position within the department (for example, a permanent teacher) may join the scheme when temporarily appointed to a non-school-based teaching service position.
Retired or separated teachers who are reemployed are eligible to join the scheme in their second year if their principal has completed a report attesting to their efficiency in their first year of reemployment.
1.2 Scheme conditions
Participants must complete 4 years on the scheme before starting the deferred salary leave year.
Participants cannot condense the deferred salary leave year into a period of fewer than 12 months.
Participants will retain right of return to their previous substantive position.
The deferred salary leave year:
- cannot begin until the fifth year of participation
- must take place over 12 months.
School-based employees
The deferred salary leave year must be a whole school year and will normally commence at the beginning of the school year – day 1, Term 1.
This applies to teachers, principals and executive employees other than principals.
Non-school-based teaching service employees and related employees in state offices
The deferred salary leave year will normally be a whole year commencing from 1 January.
Non-school-based teaching service employees who commenced participation in the scheme while based at a school may commence their deferred salary leave year from the beginning of the school year, subject to staffing availability and work requirements of the area in which they are working.
Participants:
- may withdraw from the scheme at any time
- will forfeit their entitlement to the deferred salary leave year if they withdraw
- may not temporarily suspend or defer participation in the scheme to resume later.
If participants decide they want to return to their normal pay, they must withdraw from the scheme.
Shared Services HR will enter a withdrawal date on the payroll system and an amount equal to the participant’s accrued deferred salary. This payment will include accrued interest (if applicable), less government statutory charges and will be paid in one lump sum.
Participants should discuss the postponement with their endorsing officer and seek approval.
Participants must apply in writing to Shared Services HR outlining the reason for the postponement.
Shared Services HR must have postponement applications by August in year 4. This is before the scheduled start of the deferred salary leave year.
Refer to Postponement of the deferred salary leave year for further information.
Within the department
Participants temporarily appointed to or acting in another position within the department will be considered to have continuity of service to meet the required 4 years of participation in the scheme. The salary deduction during the temporary appointment is 20% of the net salary of the temporary appointment.
Outside the department
Temporary appointments to other agencies or secondments to positions outside the department will generally not be recognised as service under the scheme. Special consideration may be given to those secondments that are part of a collaborative arrangement between the department and another agency or organisation.
A Commonwealth Bank account will be created in the participant’s name, and the deferred salary will be deposited into it.
The Commonwealth Bank will issue a regular statement of earnings detailing interest credited, and charges debited to each participant. Each participant must declare the interest in their annual return to the Australian Taxation Office.
Unless a participant withdraws from the scheme, they will not be able to access the deferred salary until the deferred salary leave year is taken.
1.3 Leave conditions
Participants may apply for any form of paid leave for which they are eligible during the working years before the deferred salary leave year. Periods of paid leave are recognised as service under the scheme. The 20% deduction from net salary (gross less tax) will continue during periods of paid leave.
The following periods of unpaid leave will not be recognised as service under the scheme:
- leave without pay (full time and part time)
- unpaid maternity/adoption/parental leave
- unpaid study leave
- other forms of unpaid leave for example, return to industry not funded by the department.
No contribution can be made to a participant’s deferred salary when taking unpaid leave.
Before the participant can begin the deferred salary leave year, Shared Services HR will calculate the total number of leave days that are not recognised as service for the scheme’s purposes. The days of leave are calculated over the scheme’s 4 years.
Participants who have taken up to 4 weeks of leave not recognised as service:
- will not have their deferred salary leave year postponed
- will have their deferred salary reduced to less than the 80% of their normal net salary due to unpaid leave.
Participants who have taken more than 4 weeks of leave not recognised as service:
- will have their deferred salary leave year postponed until the following year
- when they reach their leave eligibility date (which may be any time during the fifth year of participation), will revert to normal pay until their deferred salary leave year begins
- will have their deferred salary leave year begin on the relevant commencement date (as stated in section 1.2 Scheme condition - Start dates for the deferred salary leave year) following the leave eligibility date, other than in exceptional circumstances.
Table 1 - Leave type and conditions during the deferred salary year
| Leave type | Conditions |
|---|---|
Sick leave, extended leave (long service leave) or recreation leave |
Participants are not entitled to apply for these types of leave. |
Recreation leave for participants permanently appointed to non-school-based teaching service (NSBTS) positions |
NSBTS whose conditions of employment include an entitlement to recreation leave, may take recreation leave immediately preceding or following the deferred salary leave year, subject to the approval of their director, director, educational leadership, or Executive Director, School Operations, as applicable. |
Maternity, adoption, parental or military leave |
Where the participant elects not to postpone the deferred salary leave year, they are entitled to payment of their deferred leave salary while on maternity, adoption or parental leave, or military leave. As a consequence, a participant who chooses not to postpone the deferred salary leave year, and who takes paid maternity, adoption, parental or military leave, is entitled to receive both the deferred salary (which has been put aside during the preceding 4 years), and their normal salary for any period of paid maternity, adoption, parental or military leave taken during the deferred salary leave year. Where the participant elects not to postpone the deferred salary leave year, maternity, adoption, parental or military leave (whether paid or unpaid) will not have the effect of extending the deferred salary leave year. |
Any recreation leave accrued with another employer during the deferred salary leave year must be taken before resuming duty with the department. However, if the employment is in another NSW public sector agency, the assignment to role provisions in sections 38 and 46 of the Government Sector Employment Act 2013, and the temporary assignment provisions (GSE Rule 11), will apply.
Employees are entitled to annual leave loading of 17.5% of the monetary value of annual or recreation leave accrued in the previous year. The amount will vary depending on when the participant starts their deferred salary leave year:
- School year start – participants will normally be entitled to pro-rata leave loading calculated on approximately 2 months’ leave entitlement, to day 1, Term 1 of the following year
- January 1 – participants will normally be entitled to pro-rata leave loading calculated on approximately one month’s annual or recreation leave entitlement
- Second semester – pro-rata annual leave loading payable will be calculated on approximately 7 months’ leave entitlement.
1.4 Employment conditions
Permanent full-time employees who participate in the scheme must not:
- undertake secondary employment in the department (including casual teaching in schools or contract work)
- work in the private, Catholic or independent school systems during the deferred salary leave year.
Permanent full-time employees seeking to undertake private employment (paid work outside of the department) during the deferred salary leave year must obtain prior approval from their manager.
During their deferred salary leave year, permanent part-time employees participating in the scheme may undertake part-time or casual employment within the department on the days in the week that they are not normally required to work.
For further information, refer to the Private and secondary employment procedure.
Employees will not be able to begin a new position during the deferred salary leave year.
School-based employees
Teachers and school executive employees will not be eligible to apply for promotion or transfer during Term 1 of the deferred salary leave year.
Participants can apply for promotion or transfer during Terms 2, 3 and 4 of the deferred salary leave year in accordance with current transfer and promotion procedures and, if successful, will normally take up the position on day 1 Term 1 of the year following the deferred salary leave year.
Non-school-based teaching service and education support employees
Non-school-based teaching service employees (including chief education officers and education support employees) are not eligible for promotion or transfer during the deferred salary leave year.
1.5 Entitlement and superannuation conditions
The deferred salary leave year will count as service for superannuation purposes in the defined benefit schemes.
The deferred salary leave year will count as service for accruing the following entitlements:
- extended leave (long service leave)
- sick leave
- transfer points (for teachers in schools)
- salary increments
- paid maternity/adoption/parental leave.
Participants are covered by the department's workers compensation provisions during the first 4 years of the scheme.
However, they are not covered by the department's workers compensation provisions during the deferred salary leave year (when they are not at work).
The scheme may impact a participant’s superannuation. Therefore, they should seek independent advice.
The scheme's superannuation (staff only) provides further information about superannuation for potential participants.
During the deferred salary leave year
Participants who contribute to a government-funded superannuation scheme and who undertake private employment with a NSW Government agency during the deferred salary leave year, must continue to contribute to their existing superannuation scheme while in private employment.
The scheme's salary packaging (staff only) provides information for potential participants who are salary packaging or intend to salary package and participate in the scheme.
Participants who intend to return to their school, college, campus or regional office position after the deferred salary leave year can continue to occupy the premises during the deferred salary leave year. If so, they will not receive any rental subsidy during the deferred salary leave year and will be responsible for the full (100%) THA rent.
Participants have 3 options if they do not continue to occupy the premises. The participant:
- can relinquish the THA premises with no guarantee that they will be offered premises at the end of the deferred salary leave year
- can sublet the THA premises to another department teacher as a subtenant. As the principal tenant, the participant on deferred salary leave is responsible for making rental payments to the THA and for other obligations under the residential tenancy agreement. The subtenant will pay the participant on deferred salary leave the full (100%) THA rent. The subtenant may be eligible for a rental subsidy from the department
- if unable to sublet the THA premises to another department teacher, can sublet the premises to another person, with prior approval from the THA. As the principal tenant, the participant is responsible for making payments to the THA and for other obligations under the residential tenancy agreement. No subsidy will apply to this option.
Participants must discuss and seek approval from the THA to undertake any of the above 3 options.
Participants who do not intend to return to their current school, college, campus or regional office position must relinquish tenancy of the THA premises.
Participants receiving a rental subsidy for privately rented premises, because they were eligible for but unable to obtain THA accommodation, will not receive any rental subsidy during the deferred salary leave year. They will be responsible for the full (100%) of the rent if they choose to retain occupation of the premises.
2. Apply for the scheme
The department encourages applicants to seek independent legal advice before applying.
Participants:
- discuss the scheme with their manager before making an application
- apply for membership in the deferred salary scheme and acknowledge they have read and understood the requirements to participate – refer to the Deferred salary scheme application form (staff only (PDF 320 KB)
- send the form to their endorsing officer and inform them when they intend to take their leave year, ensuring it is not before the fourth year of salary deduction.
Endorsing officers:
- review applications and determine if the participant’s absence will impact operations
- endorse the application and send it to HR
- assess and approve the participant’s leave year in accordance with leave guidelines
- maintain a record of all applications and any correspondence relating to the application
- provide the applicant with a copy of their completed application
- store the completed application in the employee’s personnel file.
Table 2 Deferred salary scheme application process
| Responsibility | Process stage | Description |
|---|---|---|
HR |
Call for applications |
June/July each year |
Applicant |
Complete application forms |
Applicants must read and understand the procedure and complete the application form |
Endorsing officer |
Applicant endorsement |
To be completed and forwarded to HR by 30 September |
The endorsing officer should discuss with the applicant the reason why their application was declined. They can discuss alternative approaches, such as delaying entering the scheme or deferring the leave year.
3. Participate in the scheme – years 1 to 4
Shared services HR must:
- create an account for the deferred salary with the Commonwealth Bank in the participant’s name
- start the salary deduction at the beginning of the school year, day 1 Term 1.
In year 4 or before the deferred leave year begins:
- the participant must inform the endorsing officer when their deferred salary leave year will begin
- the endorsing officer must approve the deferred salary leave year. They must explain their reasons to the applicant if they do not approve the request.
3.1 Salary deductions
Participants will continue to earn 100% of their normal salary for the first 4 years, with a deduction equivalent to 20% of net salary (after tax) set aside for payment in the deferred salary leave year. Salary earned during the 4-year period will be subject to full taxation.
The 20% salary deduction will start from the first pay period after the scheme’s commencement.
4. Payment during the deferred salary leave year
Shared Services HR begins the payment process in the deferred salary leave year and will inform the participant of any lump sum payments.
During the deferred salary leave year, participants will be paid the deferred salary plus any interest they have accrued over the previous 4 years. The deferred salary will be paid to the participant in a lump sum or at regular intervals (such as fortnightly or 6-monthly).
Participants should know:
- 6-monthly or lump sum payments may be subject to payment delays, generally around 2 weeks while account reconciliations are completed. During this period, interest will not accrue on the deferred salary amount
- regular payments, such as fortnightly payments, will have interest accrued during the fifth year, if any, at the end of the deferred salary leave year.
5. Return to work after the deferred year
Participants should contact their substantive manager to arrange returning to work and discuss any changes in work practices before they recommence duty.
Record-keeping requirements
Classification GA28 15.1.1 – Records relating to the provision of advice and assistance to employees about considerations such as employment conditions, career, personal matters, trauma, finances, salaries, and superannuation. Includes orientation advice for new employees and rehabilitation or return to work assistance unrelated to a compensation case. Records include items such as notes and reports. Retain for a minimum of 7 years after action completed, then destroy.
Mandatory tools and templates
Supporting tools, resources and related information
Policy contact
School-based teaching staff (North)
EDConnect, Shared Services HR
EDConnect.newcastle.forms@det.nsw.edu.au
1300 32 32 32, select options 3, 1, 1
School-based teaching staff (South)
EDConnect, Shared Services HR
EDConnect.wollongong.forms@det.nsw.edu.au
1300 32 32 32, select options 3, 1, 1
Non-school-based teaching service staff
EDConnect, Shared Services HR
EDConnect.corporatepayroll.forms@det.nsw.edu.au
1300 32 32 32, select options 3, 1, 3
The Executive Director, Employee Relations monitors the implementation of this procedure, regularly reviews its contents to ensure relevance and accuracy, and updates it as needed.