Termination and Final Payout depend on a number of factors.
When paying out unused leave, such as annual leave, leave loading, and long service leave (LSL), they should be treated as Unused Leave and taxed at the Marginal Rate.
Lump Sum A and B are applicable if the employee’s entitlements relate to pre-1993 and pre-1978 or include a redundancy component. In such instances, it’s advisable to seek guidance from your accountant regarding which fields to use and the appropriate tax rate for reporting on PAYG. Typically, Lump Sum A defaults to a 32% tax rate, but adjustments may be necessary based on individual circumstances.
Lump Sum D is for Redundancy Payments
Employment Termination Payments that fall outside of the abovementioned need to be entered in the ETP section of the Termination Menu.
Adding a Termination
- Navigate to Payrun, select the Manage button.
- Enter any hours worked and allowances/deductions for the week you are processing.
- If the employee has not worked in the week the final payment is being processed you will need to delete any hours worked and allowances that may have been auto populated.
- For Full time employees you should add 38 Hours of Unpaid leave. This will remove the leave accruals for the week.
- On the Summary screen select the Termination Button.
In the termination window (shown below) enter the values in the relevant fields altering the tax percentage and super settings if applicable. When using the Unused leave Payment MR” field. The system will calculate the earnings for a 12-month period based on current average earnings and will calculate tax payable on the estimated gross income.
If you require an ETP click the + Button and select the correct option from the dropdown menu, enter the amount, super rule and tax percentage. **note there may be multiple types of ETP’s so continue adding if necessary.
Note that you will need to fill out the Cessation Date and reason.
Once all values have been entered click Process and the payment and tax will be updated on the finalise screen.
The system will also zero out any residual leave balances and update the finish date on the employee details screen.
