Termination and Final Payments depend on a number of factors.
For standard final payments, any unused Annual leave, Leave Loading and Long Service Leave (LSL) needs to be paid as Unused Leave and taxed at the Marginal Rate.
Lump Sum A and B are used only if the employee’s entitlements apply to pre-1993 and pre 1978 or if there is a redundancy portion. If this is the case, you should get advice from your accountant on which fields and also what tax rate the amounts need to be shown on the PAYG. The Default tax rate is 32% for Lump sum A but in some cases this may need to be overridden.
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
Navigate to Payrun then select the Manage button.
Adding a Termination
- 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.
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.