Termination Pays calculate payments for Annual Leave, Leave Loading and Long Service Leave entitlements on termination of an employee. They can also be used to calculate Redundancy or Retirement payments.
Please Note: prior to recording an employee Termination Pay, it is important to record the last “Normal Pay” first.
There are two ways to start a Termination Pay:
1. When terminating an employee, you will be asked if you want to process a Termination Pay. Click [Yes] to do so, or
2. Select the employee from the Employee List. Click on the Tools menu, then Termination Pays and then Record New Pay.
Termination Pays use a wizard: a step-by-step guide to make it easier to
The first step is to enter the Date of Termination Pay (the date of payment).
Click on the drop-down arrow to choose the date from the calendar, or type in the box. The date must fall in the current financial year, and must be after the employee’s start date.
Next, choose the Type of Termination from either Normal Termination or Redundancy...’
The Average Weekly Gross Pay defaults to the Hours per Week multiplied by the Hourly Rate in the Employee’s Details. If the gross pay often differs from the norm in the Employee’s Details you may need to calculate the average weekly gross pay as it is important for calculating the correct tax withholding on the termination pay.
The current Hourly Rate, Annual Leave Balance, Annual Leave Owing (based on hours multiplied by the hourly rate) and Leave Loading Owing are also displayed.
Click on the [Next] button.
The next page provides boxes to enter the termination pay amounts owing for Long Service Leave Entitlements, Annual Leave and Annual Leave Loading and these in turn need to be dissected into amounts that relate to the specified date periods.
(Annual Leave Loading would normally be 17.5% of the relevant Annual Leave amount.)
Click the [Calculate] button.
If Redundancy... is the Type of Termination, there will be two more boxes at the bottom to record a Bona Fide Redundancy or Early Retirement Payment amount.
Record the payment amount and the number of completed years of service. Then click on the [Calculate] button. The program will check the maximum tax-free amount (according to the ATO) based on the amount and the number of completed years recorded.
If the amount exceeds the tax-free portion, a message will display with the amount to be included in an Employment Termination Payment (ETP). Please make a note of the ETP amount, as the termination pay will then only include the tax-free portion of the redundancy payment.
Please Note: Wages Manager does not process Employment Termination Payments (formerly called Eligible Termination Payments). If you pay an employment termination payment to an employee you will need to process this manually and report it separately to the Taxation Office.
The portion of the Bona Fide Redundancy or Early Retirement Payment not
classified as ETP will be saved as Lump Sum D amounts and printed on the PAYG Payment Summary.
When you are satisfied with the details of the termination pay, click the [Save] button to record it.
You will be asked if you wish to close, but click [No] if you want to print the Pay Summary now.
You can record more than one Termination Pay per employee, providing the date is unique to any other Termination Pay record for that employee.