Since Attaché Single Touch Payroll Phase 2 (STP2) was implemented, ALL employees need to be terminated through a termination pay. This article covers off the scenarios below:
Entering a payment and/or pay out leave on termination to an employee on termination of employment in Australia.
Terminating a full time, part time or casual employee.
Entering a termination reason in a termination pay
Entering a Gratuity, Ex-Gratia or Golden Handshake termination payment.
Entering a redundancy payment.
Before you enter a termination payment in Attaché
The Australian Taxation Office (ATO) specifies the handling of a number of different types of termination payments.
You need to determine whether the termination qualifies as an Employment Termination Payment (ETP) or not. Attaché recommends that you refer to Employment Termination Payments and What is an ETP? on the ATO website.
Also refer to Schedule 7 – Tax table for unused leave payments on termination of employment on the ATO website for further information.
Establish whether you will need to pay out unused leave balances on your termination pay. If so, you can perform a leave balance estimation to the employee termination date and use those calculations to pay out unused leave balances so that after the termination pay has been processed, all leave balances for the terminated employee are zeroed out. See: Estimate leave balances from the Employee Masterfile.
There are specific Income Type Codes that will need to be set up for paying out unused leave in Single Touch payroll 2 prior to creating your termination payment. See: Setups to pay out unused Leave on termination with Single Touch Payroll Phase 2.
Confirm it the employee receive payment in the termination pay
In some instances, you may need to terminate an employee that does NOT need to be paid i.e. a casual employee that does not accrue leave and has nothing to be paid and has no notice period to be paid for.
Follow the steps below to enter a termination pay to terminate an employee. The steps include instructions for a termination pay with AND without a payment being made to the terminated employee.
Entering a termination payment
To enter a termination payment:
Choose Payroll, Transactions, Time Sheets, Create or Modify.
Enter the Employee Code.
Select the function required for the pay from the Function drop-down box.
If the employee DOES NOT require a payment to be made and just needs to be terminated, select Add new pay – start with Empty pay.
If an employee is DOES need to be paid on termination (other than an ETP amount), you can select Add a new pay - start with Standard pay or Start with Empty Pay, depending on what will make the data entry easier.
If the employee is due a payment with termination but also needs to be paid their normal pay as well, select Add a new pay - start with Standard pay.
Set the Payment Required (which means you can generate a pay advice).
Set the Termination Pay check-box to Yes.
The Accrue Leave check box becomes available. If the employee is not required to accrue leave on this pay, set the check box to No. If you are including normal hours in the timesheet that should accrue leave, leave the check box set to Yes.
Choose Accept (F9).
📌Note: If the Termination Pay check box has been selected then the Termination Pay screen is displayed. (Otherwise, to display the Termination Pay screen choose Term Pay (F5)).
On the Termination Pay screen, enter the exact Termination Date. This date automatically updates the Employee Masterfile when the pay is processed.
Enter the ETP amounts and/or any lump sum amounts that are applicable.
Select the required reason code value from the Termination Reason drop down box.
Select Accept (F9) to accept the details in the Term Pay screen, then Accept (F9) again to enter into the timesheet entry (2nd) screen.
In the timesheet entry (2nd) screen:
If the employee DOES NOT need to be paid anything, you can leave this screen blank and click Finish (Esc) and confirm Yes to the Accept this pay? message.
If the employee DOES need to be paid, enter the required amounts as per normal timesheet entry.
If you set the Accrue Leave check box to Yes, enter each required leave balance payout as a separate line in the timesheet as per the leave estimates you performed in the Before you enter a termination payment in Attaché section above, and as per the required setups in Setups to pay out unused Leave on termination with Single Touch Payroll Phase 2.
If superannuation needs to be entered in the timesheet, see: Enter superannuation on an ETP.
Click Finish and then click Yes to Accept this pay to complete the data entry.
Process the time sheet as normal as per the The Payroll Process Pays Workflow.
Finalise the employee in Single Touch Payroll after you terminate them. See: Finalise a batch in Single Touch Payroll.