Employment Termination Payments (ETP)

Employment Termination Payments (ETP)

Employment Termination Payments are generated from the Pay page in foundU, but separately from an employee's normal pay.

There are various reasons that you will use an ETP, such as:

    • Payment for unused sick leave or RDOs
    • Payment for unused TOIL
    • Payment in lieu of notice
    • A gratuity or 'golden handshake'
    • An employee's invalidity payment (for permanent disability, other than compensation for personal injury)
    • Compensation for loss of a job or wrongful dismissal
    • Genuine redundancy payments
    • Early retirement scheme payments that exceed the tax-free limit

In this article, we will cover:

    • Key actions to do before you start
    • Creating an ETP for an employee
    • Deleting an ETP if you have made an error
    • ETP Reporting

  For more guidance on making ETP payments and what the different ETP codes mean, please use this ATO Guide.

  For guidance on calculating redundancy payments, you can refer to and use this online tool

Before you start

Before you begin creating your ETP for an employee, you may first want to consider:

  • Ensure the employee is terminated on their profile with a future archive date set.

      Please note: As Archived employees cannot be paid, select a future archive date to allow enough time for all your pays for this employee (including ETPs) to be processed.
  • Process a final pay for the employee and ensure the remaining leave is paid out (if necessary).
  • Determine your type of ETP and corresponding ETP Code.
  • Determine the taxable component of the Relevant ETP.

To terminate the employee's profile, you should refer to our termination article to set the employee's termination and archive date. This will also support you in paying out any paid leave entitlements for full-time or part-time permanent employees as part of the termination process.

To facilitate an Employment Termination Payment for lump sum payments you will need to:

    1. Payout any remaining leave.  For standard terminations follow this process.
    2. Make an ETP payment. e.g. Lump sum A/ Lump sum D.

  Please note: Any unused TOIL cannot be paid on a normal payslip. In this case, you must pay out any unused TOIL via an Employment Termination Payment (ETP). Please keep reading below for steps on how to create an ETP.

Creating an ETP

Once you have paid out the employee's remaining leave, you are ready to create the ETP.

Creating an ETP

To create a new ETP:

  1. Navigate to the Pay page. Select the down arrow next to the Add Payslip button and select + ETP to go to the Employment Termination Payment page.

  2. Under the Employee details tab:
    • Enter the Employee's name
    • Payment date
    • Select the box to indicate if Subject to Payroll tax. If so, select the relevant Payroll tax state
    • Select the box to indicate if Included in WorkCover Premium. If so, select the applicable WorkCover rate

  3. Next, fill in the details Termination payment tab, starting with the Payment Label (this is optional and will display on the ETP payslip as the payment item name).
  4. Select the Benefit type, choose from:
    • Life Benefit (Code R, Code O, Code S, Code P)
    • Death Benefit (Code D, Code N, Code B, Code T)
      • Click on each code to receive more information about each benefit code. Our foundU Support team cannot advise on which code to use. For more information on selecting Life Benefit or Death Benefit, read this helpful ATO document on ETP reporting. 
  5. Input the values for the termination including:
  6. If you need to add another payment to this ETP select the + Add another payment option before continuing.

  7. Once the correct values have been added, select Next to Preview the PDF of the payslip. This will calculate the total payment. Here you will see the payment label next to the payslip description.

  8. If you need to make changes, select Go Back. Or, after reviewing, if you are happy to proceed, press Finalise Payment. 
  9. In the confirmation payment pop-up, you can enter any comments for auditing purposes. If your platform uses batching.
    • Select Add to Batch
    • Or, Add to New Batch
  10. Confirm and save once complete. This will return you back to the main ETP page where you can view any outstanding ETPs you may have.
  11. In Pay > ABA History You're now able to access the ABA History for this payment.

Viewing an ETP in the Employee App

  1. This will create a pdf of the ETP and be available for the employee to download in their Employee Portal via View Payslips. Click on the date to view the payslip.

Deleting an ETP

If you have made an error, you must delete the existing ETP and create a new one.

To delete an ETP:

  1. Navigate to the Pay page. Select the down arrow next to the Add Payslip button and select + ETP to go to the Employment Termination Payment page.
  2. Use the filters to locate the ETP.

  3. Select the delete icon. Review your choice in the confirmation modal.

      Please note:
    Deleting an ETP is permanent the ETP will not be able to be recovered. Deleting the ETP will also delete the associated ABA file. 
  4. Once acknowledged your ETP is deleted.
ETP Report

If you would like to run a report on all ETP for a specific payment date, office code, financial year or for a specific employee you can do so using the ETP Report.

  Please note: This report excludes standard termination payments.

To generate the ETP report: 

    1. In the quick menu navigate to Reports > Financial Report Centre and in the Payroll Reports section select ETP Report.
    2. Select the Payment Date From and Payment Date To Dates or Financial Year or Filter by Specific Employee or Cost Code.
    3. Click Submit. You're also able to Export PDF or Export CSV.