Managing Termination

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

• Set up termination processing.

• Extend termination processing.

Understanding Termination Processing of Global Payroll for Thailand

PeopleSoft Enterprise Global Payroll for Thailand provides different types of termination incomes and processing methods for the following types of terminated payees:

• Terminated payees with a length of service (LOS ) of five years or more.

• Terminated payees with a length of service less than five years.

Termination can be processed by normal cycle or off cycle processing. However, if payees receive termination income after their final regular pay period, the termination can only be processed by off cycle processing.

The termination calculation is processed in the same process list as the normal cycle payroll process.

PeopleSoft Enterprise Global Payroll for Thailand supports two options for annual income projection by setting the variable TAX VR PROJ. A value of E for the variable means that the system requires the projection for the remaining periods of this tax year. However, if the value of the variable is T, then the projection for the remaining periods is zero.

Managing Termination Taxes

Global Payroll for Thailand supports the following termination tax types:

• Withholding.

• Gross up one cycle.

• Gross up all cycles.

You can specify the tax type for each termination income through positive input.

Global Payroll for Thailand also enables you to track the termination tax calculation easily using the Termination Tax Log functionality. The termination tax log is similar to the tax log reporting used for normal payroll processing. To enable the termination tax log functionality, you can use the Supporting Elements Overrides page to change the value of the TAX VR LOG FLAG variable to Y.

Termination for Payees with LOS of Five Years or More

If the LOS of a terminated payee is greater than or equal to five years, PeopleSoft Global Payroll for Thailand provides the following termination incomes for processing:

• Government pension (TER ER GP).

• Provident fund/government pension fund (TER ER PF).

• Severance pay (TER ER SP).

• One time payment (TER ER LC).

Payees can receive termination incomes multiple times within a single tax year.

You can use Positive Input to enter the amount of the termination income.

When the terminated payee's LOS is five years or more, the system supports the following termination tax types:

• Withholding.

• Gross up one cycle.

• Gross up all cycles.

Termination for Payees with LOS Less Than Five Years

If the LOS of a terminated payee is less than five years, Global Payroll for Thailand processes the termination income as normal irregular income. The total amount of the termination income is entered in TER IR EARN through Positive Input, and the tax calculation method should be specified on the Positive Input page.

Only the ITF reports can be generated for the termination calculation processing in this situation, the system does not support generating the PIT91 Attachment reports.

When the terminated payee's LOS is less than five years, the system supports the following termination tax types:

• Withholding.

• Gross up one cycle.

• Gross up all cycles.

Global Payroll for Thailand provides ITF reports and the PIT91 attachment report for termination.

Delivered Elements for Termination Calculations

Global Payroll for Thailand delivers the following primary elements for termination processing:

PeopleSoft Enterprise Global Payroll for Thailand delivers the following supporting elements for termination processing:

Processing Order of Termination Income

The order of processing of termination income is determined by the variable TAX VR CAL TER ORD. The default value is:

1. TER ER GP

2. TER ER PF

3. TER ER SP

4. TER ER LC

You can override the default value according to your business needs by accessing the payroll earnings elements Supporting Elements Overrides page (Set Up HRMS, Product Related, Global Payroll & Absence Mgmt, Elements, Payroll Elements, Earnings, Supporting Element Overrides).

View Delivered Elements

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

See Also

Viewing Delivered Elements

Setting Up Termination Processing

The logic of handling terminations depends on the LOS. If the LOS is less than 5 years, the termination income and tax calculation is handled as normal irregular income. If the LOS is greater than 5 years, you should specify the tax method for each termination income through positive input, with the following calculations:

• Calculating taxable income.

  The total taxable income is composed of:

  • Government pension.

  • Provident fund or government pension fund (Kor Bor Kor).

  • Severance pay.

  • One time payments.

  Total Assessable Income = Government Pension + Provident Fund or Government Pension Fund (Kor Bor Kor) + Severance Pay.

• Calculating exempted income.

  Total Exempted Income = First part of expenses + Second part of expenses.

  • First part of expenses = Termination Yearly Expense * LOS.

    Note. The TAX VR YEARLY EXP element is used for storing the Termination Yearly Expense value. The valid values are 7000, the default, or 3500.
    
    This value can be overridden.

  • Second part of expenses = ((Min (One time payments, Min (Salary of last month, Average salary of last 12 months * (1+10%)) * LOS) + Total Assessable Income) - First part of expenses) * 50%

• Calculating the termination tax.

  Calculate the termination tax according to the tax rate table on the Brackets - Data page (Set Up HRMS, Product Related, Global Payroll & Absence Mgmt, Elements, Supporting Elements, Brackets, Data).

Tax Calculation in a Normal Cycle for the Termination Period

Generally, a payee is terminated some time within the current period. There are two options for calculating the tax in the current period:

• Based on the payee's annual income using normal periods.

• Based on the payee's income for the current period, or the period in which the payee is terminated.

For example, assume a payee is terminated on July 7, 2007. The payee's basic salary is 80,000 THB. So the payee's prorated salary is 80000 * 6 / 31 = 15483.87. In July, when processing the tax, the annual income can be 480,000 +15,483.87+ 80,000 * 0, or 480,000 +15,483.87+ 80,000 * 5. The key point is that the projection for the remaining periods could be 80000 * 0, or it can be 80000 * 5.

Global Payroll for Thailand supports either option by enabling you to set the TAX VR PROJ variable. If the value of the variable is E, then the projection for the remaining periods is required, if the value of the variable is T, then the projection for the remaining periods is zero.

When a payee is terminated within a period, the system only calculates the salary from the beginning date of the period to the termination date. If you want the payee be paid for the entire period, you need to delete the delivered trigger definition.

Pages Used to Set Up Trigger Definitions

Setting Up Trigger Definitions

Access the Trigger Definitions page (Set Up HRMS, Product Related, Global Payroll & Absence Mgmt, Triggers, Trigger Definitions, Trigger Definitions).

To add period segmentation for termination with pay, you need to define the trigger. The action TERMINATION is added to the THA trigger definitions so that is a payee is terminated within a period, the trigger occurs.

For example: If a payee with a basic salary of 95,000 THB is terminated on April 10, the payee will receive a salary amount calculated as follows: 9/30 * 95,000 = 28,500. The payroll process does not handle the remainder of the period from April 10 through April 30.

If you do not want the trigger to occur, you can delete the definition from the trigger definitions. You may also need to delete any generated triggers on the Review Triggers - Segmentation page (Global Payroll & Absence Mgmt, Absence and Payroll Processing, Prepare Payroll, Review Triggers).

Extending Termination Processing

This section discusses overriding the length of service and the average salary for a payee.

You may want to override these values because there is no payroll result for the entire previous year in the system. Or, you may want to override the values calculated by the system.

Overriding the Length of Service and the Average Salary for a Payee

To override the average salary of a payee:

1. On the Create Overrides/Supporting Elements page, override the following two variables:

   • TER VR LOS

   • TER VR LAST OR AVG

2. On the Positive Input page, add the TER ER TRM3 element.

To override the LOS, override the following variables on the Create Overrides/Supporting Elements page:

• TER DT LOS FROM

• TER DT LOS END

Example

Mr. A, a retired employee has the following employment information:

• Hire date: March 1, 1993.

• Retirement date: July 1, 2004.

• Basic salary from June 2003 to December 2003: 48,000 THB.

• Basic salary from January 2004 to June 2004: 50,000 THB.

If your Global Payroll system was not active until January 1, 2004, then there were no completed payroll results for all of 2003. Use the following steps to override the average salary in the system for Mr. A:

1. Manually calculate Mr. A's average salary before calculating the termination tax.

   Use the formula: Average salary of last 12 months * 110%.

   In this case, the values in the formula are: (48,000 * 6 + 50,000 * 6)/12 * 1.1 = 5,390 THB.

2. Create overrides for the TER VR LOS and TER VR LAST OR AVG variable elements.

   If the basic salary for the last month is smaller than the average salary of the last 12 months * 110%, change the value of TER VR LAST OR AVG to L

   If the basic salary for the last month is larger than the average salary of last 12 months * 110%, change the value of TER VR LAST OR AVG to A.

   In this example, the basic salary of Mr. A's last month is smaller than the average salary of the last 12 months * 110%, so the basic salary for the last month is used for the termination tax calculation. You should change the value of TER VR LAST OR AVG to L.

3. Use positive input to enter the value for TER ER TRM3.

   Mr. A's basic salary for the last month is smaller than the calculated average salary, so you should enter 50,000 into TER ER TRM3.

If you want to override the LOS for the current payee, override the values for the TER DT LOS FROM and TER DT LOS END date elements.

• TER DT LOS FROM is the hiring date. In this example, March 1, 1993.

• TER DT LOS END is the termination date. In this example, July 1 2004.