Hi maripher
Thanks for your post. The name given to the payroll category is personal choice, it just needs to be clear in both business reports and employee payslips what the payment is for. We're not permitted to advise on the ATO reporting category you should assign, you will need to check with the ATO or your accountant.
I'd also check with Fairwork on the laws around deducting money for notice not worked. Typically, you're not allowed to deduct money from accumulated leave, regardless of any agreements: Fairwork - My employee left without giving notice
Please let me know if you need further help.
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