Termination Payments

Termination payments in foundU can be done easily in a 2-step process:

  1. Edit the payslip and specify the entitlements to pay out to the employee.
  2. Terminate and archive the Employee Profile. Click here to see the steps on how to terminate and archive an Employee Profile.

Please note: If your termination is Employment Termination Payment (ETP), the process is slightly different, please click here to see the steps on how to create an ETP. 

This article also covers the below key topics that relate to terminating an employee. This includes:

  • Paying out entitlements for an employee (termination)
  • Transitioning existing employees from full-time to casual
  • Termination payment reporting

  If your process is to terminate the Employee Profile before processing their final pay then please refer to our 'Terminate & Offboarding an employee' article here

  To learn more about reporting on Terminations (non-payroll), please read here.

Step 1: Edit or create final payslip

If you are processing your employee's final pay prior to terminating their Employee Profile, you will need to edit their existing payslip or create their final payslip via a manual payslip to pay out their leave entitlements or any owing amounts.

To edit an employee's payslip:

  1. In the quick menu navigate to Payroll > Pay.
  2. Select the relevant filters to locate the desired payslip.
  3. Select the down arrow next to the payslip ID > Edit.

  For more information on editing payslips, please see our help guide article here!

Step 2: Pay out leave entitlements

Once you have edited the employee's payslip or have created a manual payslip, you may pay out an employee’s leave entitlement balance by clicking the drop-down arrow on the relevant leave type and selecting the termination option.

  Please note: Leave terminations are automatically taxed as regular gross. You may wish to calculate a different withholding amount and override the tax on this payslip. Find out more here

To pay out entitlements for a termination: 

    1. In the Edit Payslip screen, select the 'Termination' option under the Method drop-down. 

    2. Upon selecting Termination, you will be prompted to select the appropriate STP reportable label:
      • Lump Sum A Redundancy
      • Lump Sum A Termination
      • Lump Sum B
      • Unused Leave on Termination

        Please note: If you are unsure which label to choose, please refer to the ATO guidelines here.

    3. Upon finalising any further edits, Preview and Update the payslip. You will see under the Entitlements Paid section the entitlement hours along with any relevant loadings paid to the employee. 

  Please note: If you are looking to pay out unused TOIL you will need to pay out any unused TOIL via an Employment Termination Payment (ETP). The process is slightly different, please click here to see the steps on how to create an ETP.

  Looking to cash out leave entitlements (non-termination)? See our help guide article here!

Existing employees moving from full-time to casual & managing their entitlements

If you have an existing full-time employee that is moving to a casual employment type, when you add in the details of the new position, a pop-up will show asking you how you would like to manage their leave entitlements.

There are three options:

  1. Pay Out - The entitlement balance will be paid out on the final payslip for the current position and will be removed from the Employee Profile. Typically Annual Leave. 
  2. Carry Over - Entitlement will remain on the Employee Profile and transfers the current balance to the new position. Typically Long Service Leave.
  3. Delete - Entitlement will be deleted and the balance removed at the conclusion of the current position. Most other leave types (compassionate, personal).

To finalise entitlements for a full-time employee going to casual:

  1. Create the New Position, select Casual, fill in the appropriate details, and move to Continue.
  2. In the Entitlements section you will see the existing entitlements for this employee. 
  3. Use the radio buttons to choose which leave types you'd like to:
    • Pay Out
    • Carry Over
    • Delete 

  Typically Annual Leave would be paid out, Long Service Leave would be carried over and all other leave types deleted.

  Please Note: If you choose to carry over a leave entitlement (e.g. LSL), you will be required to select the casual position that the carried over entitlements will be associated with. 

When you navigate back to the Employee Card > Employment Type and scroll down to the Entitlement Area, you will notice the orange 'Pay Out' pill over the entitlements selected.

From here, if you have made a mistake and need to make changes, you can re-edit the entitlement using the edit icon. This will provide you with another chance to edit the Pay Out, Carry Over or Delete.

  Please note: The pay out process will occur in the payslip for the final period ending before the employee becomes casual. If no draft payslip is created in that period through approving times or leave, a manual payslip will need to be created.

Termination payment reporting

You can report on termination payments easily through the Standard Payroll Activity Report.

To report on termination payments:

  1. Navigate to Reports > Financial > Standard Payroll Activity Report.
  2. Set the required date range > add your groupings (recommended groupings would be Employee ID, Payslip and Period End).
  3. In Extra Filters select 'Payslips with Leave Terminations'.
  4. Select any other search criteria or reporting options you need then Submit.

  You can read more about the Standard Payroll Activity Report here.

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