Termination

Termination payments should be the final payments processed for an employee. Ensure that you first process any hours worked, leave taken, allowances and deductions prior to entering termination details.

In the Payrun Wizard, this screen is used to process any payments which an employee receives as a result of a termination, regardless of the reason for the termination.
Select the Termination node for the relevant employee.

The screen is split into three tabs:

Details which is where you complete information about the termination e.g. Termination Date & Reason. This information should be completed first.
Termination Items which is where you define any payments due as a result of termination, such as outstanding leave entitlements or redundancy payments.
Leave balances are shown as a guide. This should only be completed once the details of the termination have been entered.
E.T.P.'s Only which is where you complete ETP information if an ETP is required to be paid out.

Completing a Termination Pay Entry:

Select the Termination node for the employee.
The Termination screen will open showing the Details tab.
Complete the following information as required:

Field	Explanation
Details
Termination Date	Enter the date this employee will cease employment with this company.
Age	Age at employment termination date is calculated automatically, both as years and months, and as a decimal value. This cannot be changed.
Termination Reason	Select the reason this employee is leaving, or select <<Add New>> to create a new one. This is not an ATO requirement, but is a notation for your records.
YOS	Years of service at employment termination date is calculated automatically, both as years and months, and as a decimal value. This cannot be changed.
Final Payment	Tick this box to advise the ATO this is the final payment for this employee.
Auto-calculate termination pay items (excludes ETP)?	Ticking this option will cause the system to auto-generate the termination pay components (excluding ETP Components) on the Termination Items screen, for any unused Annual Leave
Include Long Service accrual in payout (YOS shown above)?	If Auto-calculate termination pay items has been selected then ticking this option will also generate a payout of the employee’s Long Service Leave (LSL) entitlements in the Termination Items screen. The employee’s Years of Service (YOS) is shown on the screen to assist you in determining if a long service leave payout is appropriate.
BonaFide Redundancy or Approved Early Retirement Scheme	If this is a Bona-fide (or Genuine) Redundancy or Approved Early Retirement Scheme payout, then select this option to activate the next field: Non-discretionary Redundancy Amount. If this is selected then any Lump Sum A (TPA) payments are flagged as R on the employee’s final STP submission.
Non-discretionary Redundancy Amount	This field is only active if the previous option (BonaFide Redundancy) is ticked. If active, you should enter the Non-discretionary Redundancy Amount which is the amount you are obliged to pay under the relevant industrial agreement for this employee. Based on the employee’s Years of Service and the Lump Sum D – Year 1 and Subsequent Years thresholds for the current financial year, the system will calculate the portion of the amount entered here that will be allocated to the Lump Sum D (TPD) component. The portion of the amount in excess of the thresholds will automatically be allocated to the ETP – Post June 1983 Component (ET2) and will be assigned an ETP Code of R.
Standard Earnings The earnings figure selected in this section will determine the tax on the Termination Current (TCU) component. This has two options Use "Standard" weekly earnings” (see employee's default pay settings) and Use "Average" weekly earnings.
Use “Standard” weekly earnings	This is the default setting and is calculated as the employee’s ‘Standard Hours x Standard Rate’ converted to a weekly figure. This amount can be overridden for the purposes of the termination pay tax calculation if required.
Use “Average” weekly earnings	This option may be used if the employee’s wage fluctuates significantly over a number of pay periods. It is calculated as the employee’s YTD taxable income / weeks this year (to date). It cannot be overridden.
E.T.P.'s only ETP tax is calculated using the ETP Cap that is indexed and/or the non-indexed Whole of Income Cap. These values are automatically calculated and the Total ETP Tax represents the sum of these two. Note: if the Auto Tax option for this employee for this pay is turned off, the two ETP tax components can be manually entered / overridden.
ETP Date	If an ETP is being paid for this employee, enter the Date of payment here, this may be a different date to the Termination Date. Click Apply to enable ETP pay items on the Termination Items screen. You will not be able to save an ETP date unless the employee has a birth date recorded so that the system can determine the preservation date.
ETP Tax (Excluded) ETP Tax (Non Excluded)	The system will automatically calculate these values if you pay an ETP item on the termination items screen.
Total ETP Tax	This is the sum of the ETP Tax values, and is calculated automatically.
(a) Subsequent payment for same termination in current income year?	Where this ETP payment is related to a prior ETP you need to select one of these options. The first option is used where the related prior ETP payment was paid in the current income year. The second option is used where the related prior ETP payment was paid in a previous income year, or if this ETP payment is related to a prior ‘Transitional ETP’ payment. Note: the last date for valid ‘Transitional ETP’ payments was June 30, 2012. Depending on the option chosen, the relevant ‘Excluded’ and ‘Non-excluded’ fields will be active. Based on the type of prior ETP payment/s made, you will need to complete the appropriate amounts here.
(b) Subsequent payment for same termination in previous income year?
Prior ETP Amount [Excluded and Non-Excluded]	For prior ETP payments paid under ETP codes ‘R, S, D, B, N or T’, enter the prior ETP values into Excluded. For prior ETP payments paid under ETP codes ‘O or P’, enter the prior ETP values into Non-excluded. Refer to the ATO website for ETP Code Descriptions.
Invalidity ETP Note: An Invalidity ETP can have both ET3 and ET2 components depending on the amount of the Invalidity payment, the number of ‘Employment Days’ and the ‘Days to age 65’. Please refer to ATO documentation for the current formula.
Is this an Invalidity ETP	Select this option to define the ETP as an Invalidity payment. This allows for the ETP – Post June 1994 invalidity (ET3) pay item to be selected in the Termination items window.
Employment Days	This is calculated automatically from the employee’s Hired Date and the Termination Date and cannot be changed.
Days to age 65	This is the number of days between the Termination Date and their 65th birthday, automatically calculated from the employee’s Birth Date. Note: this figure will be zero if the employee is already over 65 years of age.
Death Benefit?	Select if a death benefit is being processed through the payrun. You can then select the payment recipient.

Once this information is complete, click Apply.
The details of the termination will be saved and processed by the system.
Select the Termination Items tab.
The first section of this tab relates to the employee's leave balances, which cannot be edited here. These balances show the following:

Field	Explanation
Annual Leave	Three columns show Hours, Load % and Total. Hours shown include this pay's accrual. Entitled and Pro Rata hours are separated in case loading is paid on one portion only. The third entry on the total column shows any Paidleave taken in this pay enclosed in brackets. The fourth entry is the Loading amount if loading is included The final field is the total which includes any leave loading.
Personal	The employee's current entitled hours (including this pay's accrual) less leave taken in this pay equals the final Personal Leave balance.
R.D.O.	The employee's current entitled hours (including this pay's accrual) less RDO's taken in this pay equals the final RDO Leave balance.
Flextime	Current entitled hours (including this pay's accrual).
Long Service	Entitlement Pre Aug '78 plus Entitlement Aug '78 to '93 plus Entitled Curr plus Pro Rata Curr (including this pay's accrual) less long service leave taken (Paid) in this payrun equals the final Long Service Leave balance Total.
Other Leave Balances	Click this button to see any other leave balances outstanding for this employee. Hours shown include this pay's accrual

Enter the details of any payments which the employee is receiving as a result of the termination, whatever the reason for the termination.
The pay items on this screen have been defined by the ATO, and tax calculations are according to current legislation.

If you are unsure of the correct tax treatment of a termination payment, check with your accountant or other reliable resource.
You can not create any new Termination Pay items as they will not calculate the correct termination tax or report correctly to the ATO.

Complete the following information as required. If you want to add an additional Pay Item, click on the last line then press the down arrow to add a new line.

Field	Explanation
Pay Items	Select the required pay item from the drop-down list. The pay items that are available here depend on the selection you have made in the Details tab. Generally, there are five options available, Term Pay Current and Lump Sums A, B, D & E. Some points to note: To access pay items for an ETP, you must enter an ETP date on the termination E.T.P's Only tab (see previous information). This may then include ET2and/or ET3 in the list of available pay items (depending on the employee’s details and other specifications you have made). Each pay item has specific tax calculations, as required by the ATO. The selections you make depend on the circumstances of the termination and the items which are being paid.
ETP Code	This is only relevant for ETP Lump Sum payments. The codes that are available here depend on the selections you have made on the Details tab. For further information on ETP codes, please refer to the ATO (document NAT70980).
HrsUnit	Enter the number of hours leave to be paid, or the number of units if applicable.
Uom	The unit of measurement for the selected pay item. This cannot be changed.
Rate	The system will automatically enter this employee's standard hourly rate, but this value can be overridden if required.
Factor	The factor is a multiplication which is applied to the termination item to calculate any weighting. This value cannot be edited here.
Amount	The amount is auto-calculated by the system, based on HrsUnit x rate x factor.
Memo	To record any notes relating to this termination item, double click in the memo field. Enter the memo text in the pop-up window. Select Print on Payslip if you want the memo to print on a payslip.
SGC Override	The ATO has changed the rules regarding superannuation on termination payments "In Lieu of Notice". These are now eligible for SGC super. By checking this box you are now able to calculate super on the necessary ET2 and TPD payment item types.
FINYEAR	This field is mandatory if you are paying a Lump Sum E amount for a previous financial year. Click the drop down to select the financial year.
Costing Allocation - Departments	this defaults to the employee's home department and indicates the department to which the payment will be costed. To cost the employee to a different department, select it from the list. Alternatively you can apply a costing split by selecting Multi Costing from the Options button found at the top of the panel. For further information see Costing Allocations.

Complete the details as required.
Once you have added all of the required Pay Items, click Apply.
The Termination items will be included into the pay.

Note: A warning message will be displayed if you are attempting to terminate an employee who is also an Administrator for Employee Self-Service Kiosk. This acts as a reminder to ensure that the role of the Employee Self-Service Kiosk Administrator is assigned to another employee.