See the steps below for terminating a New Zealand employee.
⚠️Important: Attaché Software strongly recommends that you seek advice from the appropriate authority (e.g. Inland Revenue or Department of Labour) regarding meeting the requirements of the legislation or contractual obligations with employees. This document is intended to assist Attaché consultants and users in understanding how Attaché Payroll can be set up and how it processes and calculates information, it is in no way intended as a legislative guide.
Print an NZ Termination Pay Report
Go to Reports, Payroll, Leave, NZ Termination Pay for the employee you are terminating, as at the proposed termination date. The report will show the entitled leave, pro-rata leave, and expected termination payment amount.
Note: Leave is calculated (as per legislation) on the payments in the twelve months up to the preceding pay period. Thus, to ensure that the last pay period paid is included, enter a date after the last pay period ending date.
For example, if the last paid to period is 28/06/15, a report dated 28/06/15 would include pay periods from 28/06/14 to 27/06/15, whereas you may want to select pays between 29/06/14 to 28/06/15, as such you would run the report for 29/06/15.
Annual Leave Entitlement
This is calculated as the days or hours entitled multiplied by the higher of the average or ordinary pay rate as displayed on this report.
Termination Payment
This is calculated as the total gross relevant earnings (this will be since the last entitlement date) multiplied by the relevant payment percentage (if the employee is entitled to four weeks annual leave the percentage is 8%) less any relevant leave taken (relevant leave taken is any leave taken in advance, so it is the leave that is taken in excess of the entitled leave). These figures are all displayed on this report and are dependent on how time sheets have been entered for this employee since the last entitlement date.
If any of these figures do not appear to be correct the termination payment will not be correct and an adjustment will be necessary to correct these figures before the termination payment is entered.
Create a Termination Pay
To combine the final hours worked, untaken entitled leave and the termination payment on the “last pay” time sheet, enter a time sheet as per the following:
Check the Termination Pay check box on the time sheet header.
Click on Term Pay (F5) to enter the termination date.
Clear the Accrue Leave check box on the time sheet header to stop the employee’s leave from accruing for this pay. This will also allow the system to reduce the employee’s annual leave entitlement.
Add time sheet lines to pay the standard pay of the employee (e.g. for ordinary time/overtime time worked since last pay).
Below the standard pay lines add a time sheet line to pay the employee their entitled annual leave using the annual leave code set up with Extra Pay tax rate (e.g. Code=HOLEX for the days/hours of annual leave to which the employee is entitled).
📌Note: if the entitled leave is negative, you do not need to enter anything for entitled leave, as the relevant leave taken in the termination pay will account for this.
Below the time sheet lines added above, add a time sheet line of Allowance type selecting the relevant termination code e.g. AL8% (8% AL Termination). This amount will be automatically calculated on the time sheet as the figure shown on the NZ Pay History Report as the Termination Payment (refer to step 1 above).
Below the time sheet lines added above, add a time sheet line of Allowance type and code PAYGOX% (if the employee is entitled to four weeks annual leave X is 8%) to accumulate X% of the lines above as this would normally have formed part of the Gross Relevant Earnings since the last entitlement date.
Ensure that the necessary bank lines are still last line on the time sheet and process the pays as you would normally. However, if the employee is normally auto-pay you will need to ensure that you pay them this time sheet only and not any other auto-pays. The final time sheet should look similar to the one below.
Once the final pay has been processed the system will automatically amend the annual pro-rata leave entitlement for the terminated employee to zero.