This tutorial explains how to enter a payment to an employee on termination of employment.
Note: For further information and to cross-check the termination payment, refer to the ATO website.
Before you begin
The Australian Taxation Office (ATO) distinguishes between different types of termination payments. Before you enter the payment in Attaché, you need to determine whether the termination qualifies as an Employment Termination Payment (ETP) or not. We recommend that you refer to the ATO website for information on Employment Termination Payments (ETP).
Please note that payments of unused annual leave or unused long service leave are not treated as ETPs. To determine whether any part of the unused annual leave or unused long service leave has to be entered as lump sum payments, we recommended that you refer to the ATO website.
Entering a termination payment
To enter a termination payment:
- Choose Transactions | Payroll | Time Sheets | Create or Modify.
- Enter the Employee Code.
- In Function, select Add new pay – start with Empty pay. This will generate a separate pay advice for the termination pay.
Note: You can enter a termination pay with the employee's normal pay for the period or you can generate two separate pays. If you want the termination pay included with the employee's normal pay, choose Add a new pay - start with Standard pay.
- Set the Payment Required and 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.
Note: If you need to accrue leave on normal hours in the timesheet, you will need to process the final amount of accrued leave in a separate adjustment pay, otherwise the accrued leave will not zero out correctly. See the section below Paying out unused leave.
- 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. Then enter the ETP amounts and/or any lump sum amounts that are applicable.
The ETP Payment Date on the Termination Pay screen cannot be edited. This field is automatically generated from the details entered in the Date Paid field when the pays are 'checked'.
Tip: If you make an error in selecting Termination Pay, choose Accept (F9) on the termination pay screen and set the Termination Pay field to No.
Paying out unused leave
For any unused leave that does not meet the lump sum criteria, enter the unused leave in a separate adjustment pay as if the employee was taking the leave.
To pay out unused leave:
- Choose Transactions | Payroll | Adjustments | Create or Modify.
- Enter the Employee Code.
- In Function, select Add new pay – start with Empty pay.
- Set the Payment Required check box to Yes.
- Set the Accrue leave and the Termination Pay check boxes to No.
- To check the outstanding entitlements for leave, choose Leave (F8).
Enter a line for each leave type you are paying out.
Note: If the amount of leave you are paying out covers more than one normal tax period, you will need to adjust the number of Tax Periods on the first screen of the Time Sheet/Adjustment Pay. This is to ensure that tax is calculated correctly. The Accrue Leave check box should be unchecked, so that the employee's leave balances on the masterfile will be reduced by the leave that is paid out in the time sheet.
Entering superannuation on an ETP
To enter superannuation on an ETP:
- Manually calculate the super amount.
- Enter an employer contribution line with an employer contribution code that has a type = value.
- When satisfied with all the details, choose Finish (Esc) and accept the payment.
REF: S0016 210116 3.2 SF 4073, 3711, 3186, 3667