FileVault Doesnt Ask For Password At Startup

I have been previously using Mountain Lion and just got a new Mac with Yosemite.

On Mountain Lion, when I turned my system on, I was presented a grey password screen to decrypt my hard drive. With Yosemite, when I turn my system on, I am given the login screen immediately.

Does this indicate that the hard drive is not encrypted and therefore not decrypting? The FileVault option in Preferences shows that FileVault is on.

The immediate login screen is part of the process of FileVault. Once you type your password into your user account it takes that extra bit of time to show a progress bar. That is it "decrypting" / reading the drive.

If you mean the giant padlock screen with a password, that is actually part of the Firmware Password, which you would enable by booting into recovery and clicking on the Utilities menu bar option.