Managing employee terminations is now simpler and more automated!
Our enhanced Employee Termination Process ensures accurate leave payouts, termination payments, and compliance during payroll processing—reducing manual work and improving efficiency.
How Does the Termination Process Work?
The termination workflow automatically handles:
Unused Annual Leave Payout
Unused Long Service Leave Payout
ETP Payments (Employee Termination Payments)
It ensures accuracy by checking the termination date and reason, and automating payouts when applicable.
Important Points to Note:
Unused annual leave and long service leave are taxed at the Schedule 7 tax table to ensure ATO compliance.
Unused leave payouts are reported based on termination type:
Termination Type U for normal terminations.
Lump Sum Type R for redundancy terminations.
Steps to Process a Normal Termination
1. Terminate the Employee
You can terminate an employee by giving the termination date and the reason in one of two ways:
From the Employee Profile section.
Directly within the Pay Run.
2. Check the Termination Date
The system validates if the termination date falls within the pay run period:
If it matches:
Unused annual leave (normal termination) and unused long service leave (normal termination) are automatically added under Earnings' pay run.
If it doesn’t match:
Leave balances are not added automatically.
You can manually include them by clicking the “+” button under Earnings.
3. Add ETP Payments (if applicable)
ETP-O (Other) payments can be included manually by selecting the “+” button under Earnings.
4. Set Leave Balances to Zero
Once unused annual leave and long service leave are added:
The system sets leave balances to zero.
No additional leave accrues for the hours paid out.
5. Complete and File the Pay Run
Review the employee's payslip, including:
Outstanding wages for hours worked
Unused leave pay outs
Tax on unused leave included in the final pay
Any ETP payment amounts
Tax on an ETP (if applicable)
Steps to Process a Redundancy Termination
1. Terminate the Employee
You can terminate an employee by giving the termination date and the reason as Redundancy in one of two ways:
From the Employee Profile section.
Directly within the Pay Run.
2. Check the Termination Date
The system validates if the termination date falls within the pay run period:
If it matches:
Unused annual leave (Redundancy termination) and unused long service leave (Redundancy termination) are automatically added under Earnings' pay run.
If it doesn’t match:
Leave balances are not added automatically.
You can manually include them by clicking the “+” button under Earnings.
3. Add ETP Payments (if applicable)
ETP-R (Redundancy) payments can be included manually by selecting the “+” button under Earnings.
4. Set Leave Balances to Zero
Once unused annual leave and long service leave are added:
The system sets leave balances to zero.
No additional leave accrues for the hours paid out.
5. Complete and File the Pay Run
Review the employee's payslip, including:
Outstanding wages for hours worked
Unused leave payouts
Tax on unused leave included in the final pay
Any ETP payments
If you have any questions or feedback, please email us at support@payroo.com.au