Managing Termination Payments

This chapter provides an overview of termination processing and discusses how to:

Terminate employees.
Create termination reports.

Note. The PeopleSoft system delivers a query that you can run to view the names of all delivered elements designed for Malaysia. Instructions for running the query are provided in the PeopleSoft Enterprise Global Payroll 9.0 PeopleBook.

Understanding Termination Processing

Termination processing is a two-step process. Complete each process to ensure that the system updates the payee records correctly. To complete the termination process:

Update job data.
Process the termination.

Updating Job Data

When payees are terminated, made redundant, or retired, you update their job data by using the Work Location page. The PeopleSoft termination process uses the termination date that you enter to calculate termination pay. The effective date of a termination is the day that the payee no longer works for the company, that is, the day after the payee’s last day of work.

Processing the Termination

PeopleSoft Global Payroll for Malaysia delivers a set of rules for termination processing that takes into account all statutory requirements. When you terminate a payee’s employment, regardless of the reason, the employer is obliged to make certain payments to the employee depending on the circumstances of the termination. The termination process involves:

Payment of unused leave balances.

General Ledger calculations must be performed on termination, even if the event occurs before the last period of the month. The system generates an earning that is equal to the total value of the outstanding leave balance. By using the General Ledger Interface, this earning closes out the total amount of accrued annual leave.
Payment of prorated earnings and deductions.

The system can prorate earnings and deductions that depend on active status, removes the maximum limits for deduction calculations, and pays allowances that are normally paid only in the last period of the month.
Reconciliation of taxes, Employee Provident fund (EPF), Social Security Organization (SOCSO), and Festive Advance recovery.

Normal deduction limits do not apply to these calculations.
Calculation of short notification periods.

The payroll system also enables you to make payments or take deductions because of a shortened notification period.
Freezing net payments for the Inland Revenue Board.

You can freeze the payment of net pay that is awaiting tax reconciliation.

Payments and Deductions in Lieu of Notice

When a payee's employment is terminated, either by the employee or the payee, the period between the date that the notification occurs and the effective date of the termination determines if the system calculates payments or deductions in lieu of notice. The law prescribes a minimum period length for notice; it is the same for both employers and payees.

In the absence of written terms to the contrary, the minimum period of notice is:

Four weeks if employed for less than two years.
Six weeks if employed for two years or more, but less than five years.
Eight weeks if employed for five years or more.

If the notice period is less than the minimum period prescribed by law, the system will calculate either a deduction, if the notice is given by the payee, or a payment, if the notice is given by the employer. In either case, you should verify these results and modify or override them as necessary because the payment or deduction may be waived for various reasons. For example, if the notice is given by the payee, the employer may waive the deduction, and if the notice is given by the employer, reasons may exist, such as dismissal for misconduct, that permit a shorter notice.

The calculation rule for the payment or deduction in lieu of notice is:

(minimum calendar days of notice – actual calendar days of notice) * monthly salary / calendar days in the month of termination

Freezing Net Pay Payment

If a payee terminates employment due to retirement or if the employee plans to leave Malaysia after termination, the IRB requires that the payments of the last allowances be frozen until the IRB completes an actual yearly tax calculation. When the IRB completes the final tax reconciliation calculation, the employer is given a value that it must deduct or add to the frozen amount.

Delivered Termination Elements

The system provides sections for processing termination of employment. These sections ensure that all legal obligations are met, and that you can make changes to suit your business practices.

Note. In addition to the listed sections, the delivered formula element, TER FM NOTIFIC, calculates the notification payments or deductions.

TERMINATION Section

The following table describes elements within the TERMINATION section:

Element Type	Elements Used for Termination	Description
Formula	TER FM PAYFREEZE	This formula references the Payee Termination page to verify whether you have asked for the net payment to be frozen. It then verifies whether the net pay is greater than zero. If yes, it forwards the net pay value to the TER VR FREEZEAMT variable and the tax deduction value to TER VR TAXFREEZE. It also verifies the status of the Inland Revenue Board Balance group box on the Payee Termination page and decides whether the payee owes the IRB or is entitled to a refund from the IRB.
Earnings	UNFREEZE PYM	The calculation rule for this earning is amount, where the amount is variable, TER VR UNFREEZE, which receives its value from the TER FMPAYFREEZE formula.
Deduction	UNFREEZE TAX	The calculation rule for this deduction is amount, where the amount is variable, TER VR TAXUNFREEZE, which receives its value from the TER FMPAYFREEZE formula.
Earnings	PAYMT IRB	The calculation rule for this earning is amount, where the amount is variable, TER VR AMTREIRB, which receives its value from the TER FMPAYFREEZE formula.
Deduction	DEDUCT IRB	The calculation rule for this deduction is amount, where the amount is variable, TER VR AMTPYIRB, which receives its value from the TER FMPAYFREEZE formula.
Earnings	FREEZE TAX	The calculation rule for this earning is amount, where the amount is variable, TER VR TAXFREEZE, which receives its value from the TER FMPAYFREEZE formula.
Deduction	FREEZE PYMTS	The calculation rule for this deduction is amount, where the amount is variable, TER VR FREEZEAMT, which receives its value from the TER FMPAYFREEZE formula.

EARNINGS - OTHER Section

The following table describes elements within the EARNINGS - OTHER section:

Earnings	LIEU NOTICE	The calculation rule for this earning is amount, where the amount is the TER VR NOTIFER variable.
Deduction	SHORT NOTICE	The calculation rule for this deduction is amount, where the amount is the TER VR NOTIFEE variable.

ABS PAY ELEM Section

The following table describes elements within the ABS PAY ELEM section:

Formula	LVE FM ENTPROTER	This formula checks for a termination date. If there is a date and the LVE ENTPROB accumulator is greater than zero, it moves the value from the accumulator into the LVE VR ENTPROTER variable for payment.
Formula	ANN FM UNUSEDENT	This formula calculates the unused entitlement and moves it to the ANN VR UNUSED variable. (This is not used for termination processing but for forfeiting of unused leave)
Formula	ANN FM PAYUNUSED	This formula decides whether the unused entitlement should be paid, if so the system sends the value to ANN VR UNUSEDPD, or it is to be forfeited and sent to ANN VR UNUSEDFO. (This is not used for termination processing but for forfeiting of unused leave)
Earnings	ANNLVEUNUSED	The calculation rule for this earning is unit x rate. The unit is ANN VR UNUSEDPD and the rate is the LVE FM PAYRATE formula. This formula retrieves the monthly rate and divides it by the work days. (This is not used for termination processing but for forfeiting of unused leave)
Earnings	ANN LVE LIEU	The calculation rule for this earning is unit x rate. The unit is accumulator ANN LVE ENT_BAL and the rate is the LVE FM PAYRATE formula. This formula retrieves the monthly rate and divides it by the work days. This earnings pays the outstanding balance on termination.

Terminating Employees

This section discusses the page you use to update and maintain termination data for Malaysia.

Page Used to Terminate Employees

Page Name	Object Name	Navigation	Usage
Payee Terminations	GPMY_TER_PYE	Global Payroll & Absence Mgmt, Payee Data, Terminations, Maintain Termination Data MYS, Payee Terminations	Enter specific Malaysian termination details, such as who initiated the termination, notification date. Select options to freeze net pay, withhold notification period, deduct payments for the Inland Revenue Board (IRB), or grant an IRB refund.

Terminating Employees

Access the Payee Terminations page.

Effective Date

Enter the employee's termination date. This needs to be the same termination date that is on the employee's job record. that is the job effective date minus 1.

Notification Date

Enter the date that termination notification is given.

Notification Origin

Indicate whether the payee or the employer initiates the termination.

Action andReason Code

This section displays termination information from the Job Data page.

Departing Malaysia

Select when the terminated employee is leaving Malaysia.

Cessation Reported to IRB

When an employee is leaving Malaysia, select this check box to indicate that details about the departure are to be sent to the IRB.

Withhold Notification Period

Clear this field to ignore the notification dates for deductions and payments in lieu of notice.

Freeze Net Pay

Select to freeze net payments on termination.

To freeze the net pay on termination, enter an instance with an effective date that is equal to the termination date (one day before the termination action). When the IRB sends the clearance notification to unfreeze net pay and the IRB balance amounts, enter a new effective-dated instance indicating when the unfreeze occurs.

Refund

Select to indicate that the amount that is listed is a refund from the IRB. If this check box is not selected, the employee owes the amount.

Amount

Enter the amount that is owed to or reimbursed by the IRB.

Creating Termination Reports

This section lists the pages that are used to create termination reports.

Pages Used to View, Update, and Print Termination Reports

Page Name	Object Name	Navigation	Usage
Create CP21 Data	GPMY_CREATE_CP21	Global Payroll & Absence Management, Termination Processing, Create CP21 Data MYS, Create CP21 Data	Notifies the IRB of an employee’s intention to depart from Malaysia for a period of three months or more.
View CP21 Details - Personal Data	GPMY_CP21_DTLS	Global Payroll & Absence Management, Termination Processing, View CP21 Details MYS, Personal Data	View and finalize the details for the CP21 report before printing the report.
View CP21 Details - Salary Details	GPMY_CP21_EDIT	Global Payroll & Absence Management, Termination Processing, View CP21 Details MYS, Salary Details	View and modify (if required) the calculated values retrieved from the results table before printing the report.
Print CP21 Forms	GPMY_RC_GPMYTX01	Global Payroll & Absence Management, Termination Processing, Print CP21 Forms MYS, Print CP21 Forms	Print the CP21 form for the Inland Revenue Board.
Create CP22A Data	GPMY_CREATE_CP21	Global Payroll & Absence Management, Termination Processing, Create CP22A Data MYS, Create CP22A Data	Extract data for the CP22A report from the results tables.
View CP22A Details - Personal Data	GPMY_CP22A_PERS	Global Payroll & Absence Management, Termination Processing, View CP22A Data MYS, Personal Data	View the data created for the CP22A report.
View CP22A Details - Salary Details	GPMY_CP22A_SAL	Global Payroll & Absence Management, Termination Processing, View CP22A Data MYS, Salary Details	View and modify the salary data calculation results for the CP22A report.
Print CP22A Forms	GPMY_RC_GPMYTX03	Global Payroll, Termination Processing, Print CP22A Forms MYS, Print CP22A Forms	Print the CP22A form for the IRB.

Effective Date	Enter the employee's termination date. This needs to be the same termination date that is on the employee's job record. that is the job effective date minus 1.
Notification Date	Enter the date that termination notification is given.
Notification Origin	Indicate whether the payee or the employer initiates the termination.
Action andReason Code	This section displays termination information from the Job Data page.
Departing Malaysia	Select when the terminated employee is leaving Malaysia.
Cessation Reported to IRB	When an employee is leaving Malaysia, select this check box to indicate that details about the departure are to be sent to the IRB.
Withhold Notification Period	Clear this field to ignore the notification dates for deductions and payments in lieu of notice.
Freeze Net Pay	Select to freeze net payments on termination. To freeze the net pay on termination, enter an instance with an effective date that is equal to the termination date (one day before the termination action). When the IRB sends the clearance notification to unfreeze net pay and the IRB balance amounts, enter a new effective-dated instance indicating when the unfreeze occurs.
Refund	Select to indicate that the amount that is listed is a refund from the IRB. If this check box is not selected, the employee owes the amount.
Amount	Enter the amount that is owed to or reimbursed by the IRB.