12 (AUS) Terminating Employees in Australia

This chapter contains the following topics:

12.1 Understanding Employee Termination in Australia

When employees are terminated from an Australian organization, they might receive a payment related to their termination. Depending on the circumstances of the termination, that employee might be eligible to receive an Employee Termination Payment (ETP). To determine whether an employee is eligible for an ETP and to determine the amount of that payment, several pieces of information and several complex calculations are required.

You can enter ETPs using either of these programs:

  • Employee Termination Entry (P75A0008)

  • Employee Termination Payments (P75A0010)

When you enter a termination payment using the P75A0008 program, the system automatically calculates all of the amounts that are associated with the payment. When you enter a termination payment using the P75A0010, you manually calculate and enter all of the amounts for the ETP.

The Australian Tax Office (ATO) mandates tax calculations that are used to create ETPs. These tax calculations can differ depending on these factors:

  • The reason for the termination.

  • The employee's length of service to the organization.

  • The payment method that is used for the ETP.

  • The types of earnings and payments that are included in the ETP.

The Australian Employee Termination Entry program simplifies the termination process by:

  • Automatically retrieving employee leave balances, including annual, sick, long service, and Rostered Day Off (RDO) leave, and if necessary, including those amounts in the ETP calculation.

  • Enabling you to enter Golden Handshake amounts when you create termination scenarios.

  • Automatically calculating the number of pre-1983 and post-1983 service days.

  • Automatically calculating the Post 94 Invalidity amount that is associated with the ETP.

  • Enabling you to enter payee details in the event of the employee's death.

  • Automatically calculating all tax amounts by using employee history information, tax setup information, and the information that you enter during the termination process.

  • Enabling you to override many of the values that are associated with the payment.

  • Enabling you to enter the amount of the payment that the employee wants in cash and the amount that the employee wants to roll into an approved fund.

  • Automatically retrieve foreign leave balances, including annual, sick, long service, and RDO leave, and if necessary, including those amounts in the ETP calculation.

Note:

These amounts are included only if users enter PDBA and tax information for foreign employment, and use those PDBAs to create foreign employment payroll history for employees. See Chapter 6, "(AUS) Setting Up Foreign Employment Information" for additional iformation about creating payroll history for foreign employment.

Along with entering actual termination information, you can also use the Australian Employee Termination Entry program to create model termination scenarios. You can enter model termination information for a given employee, calculate the amounts that are associated with the model termination, and create a worksheet for each scenario. You can then allow employees to review the information on these worksheets.

12.1.1 Determining Whether the Termination Requires an ETP

The ATO mandates that some termination payments be made in the form of Eligible Termination Payments (ETP). For a termination to require an ETP, you must be able to answer yes to either of these questions:

  • Is the termination a Bona Fide Redundancy, as defined by the ATO?

  • Are any of the types of pay that are included in the employee's termination payment considered ETP-eligible, as defined by the ATO?

If the answer to either of these questions is yes, you must complete the ETP process for the employee termination. The ETP process includes these steps:

  • Entering ETP information.

  • Creating ETP worksheets for employee review.

  • Soliciting payment ins tructions from the employee, if necessary.

  • Creating ETP timecards.

  • Creating ETPs during the payroll cycle.

  • Creating ETP payment summaries and submitting them to the ATO.

  • Completing Reasonable Benefit Limit (RBL) forms for all ETPs over a specified amount, and submitting them to the ATO.

  • Storing appropriate records regarding ETPs to comply with ATO regulations.

If the termination does not require an ETP, but you are still distributing a termination payment to the employee, you can use the same process to produce regular termination payments. However, with regard to record keeping and reporting, regular termination payments are not regulated by the ATO.

Important:

Oracle recommends that you use the Australian Employee Termination Entry program (P75A0008) to enter employee terminations that require ETPs. When you use this program to process terminations, the system creates the history records that are necessary to generate ETP payment summaries, which must be submitted to the ATO. If you manually create an ETP, you must manually calculate all tax information, as well as manually create an ETP Payment Summary.

If the termination does not require an ETP, you can enter the payment manually or use the Australian Employee Termination Entry program, because the tax calculations for a regular termination payment are far less complex than for an ETP. However, if you do enter the payment manually, you must calculate the tax amounts, employee leave balances, and payment amounts manually. Also, to ensure that employee history is updated correctly, you must use the appropriate payment, deduction, benefit, or accrual (PDBA) codes when entering manual termination payments.

12.1.2 Is the termination a Bona Fide Redundancy?

All terminations that are considered Bona Fide Redundancies require ETPs. The ATO considers a termination to be a Bona Fide Redundancy if one of these criteria is met:

  • The employee will no longer be employed by the organization in any capacity.

  • The holding of an office is terminated.

If the termination does not meet either of these criteria, the termination is not considered a Bona Fide Redundancy and might not require an ETP. However, if the types of pay that are included in the termination payment are ETP-eligible, you must complete the ETP process.

If you are uncertain about whether the termination is considered a Bona Fide Redundancy, contact the local ATO office for additional information.

12.1.3 Are the types of pay that are included in the employee's termination payment considered eligible ETP items?

If you have determined that the termination is a Bona Fide Redundancy, then you must complete the ETP process. However, if the termination is not considered a Bona Fide Redundancy, you might also need to complete the ETP process, depending on the type of pay that is included in the termination payment.

The ATO considers only certain types of pay eligible for ETP. If any portion of the employee's pay is considered eligible for ETP, regardless of whether the termination is a Bona Fide Redundancy, you must complete the ETP termination process. Types of pay that are typically considered eligible for ETP include, but are not limited to:

  • Unused RDO leave time.

  • Payments that are given to the employee in lieu of notice of termination.

  • Redundancy or bona fide payments.

  • Unused sick leave time.

  • Compensation for wrongful dismissal.

  • Golden Handshake

Employee termination payments might also include pay for items that are not considered eligible for ETP. If all of the payments that are included in the employee's termination payment fall under this category, you need not complete the ETP process. Types of pay that typically are not considered eligible for ETP include, but are not limited to:

  • Unused annual leave time.

  • Unused leave loading amounts.

  • Unused long service leave time.

  • Salary or wages that are owed to the employee for work already completed.

    Note:

    The types of pay that are listed in the previous example are for illustrative purposes only and should not be used as a definitive list of eligible and ineligible ETP items. Contact the ATO for the most current information regarding ETPs to ensure that you calculate termination payments correctly.

12.1.4 Withholding Calculations

The logic that determines tax withholding depends on the category of ETP as defined by the ATO.

Withholding calculations for some types of life benefit ETPs are subject only to the ETP cap. These payments are called Excluded because they are excluded from the Whole of Income cap. These Excluded payments are printed on the payment summary with ETP print code of R.

The Non-Excluded types of ETPs require calculation of both the ETP cap and the Whole of Income cap. For these types, the smaller of the two results is used in the final withholding calculation. These Non-Excluded payments are printed on the payment summary with ETP print code of O.

12.1.5 Employee Payment Instructions

Depending on the amount of the ETP, you might need to solicit payment instructions from the employee whom you are terminating. Payment instructions are used to notify the organization about how the employee wants to receive payment.

If the payment is less than the amount that is specified by the ATO, the organization is not required to solicit payment instructions from the employee. However, the organization can solicit this information and provide employees with an opportunity to decide how they want to receive their payment.

If the payment is over the amount that is specified by the ATO, you must solicit payment instructions from the employee, and you must also provide the employee with an explanation of the components of the ETP calculation. You can use the ETP Calculation Worksheet program (R75A0100) to create an ETP worksheet that the employee can use to review the details of the ETP.

When the employee gives you payment instructions, you might need to update the termination information that you initially entered into the system. Each time that you change an employee's termination information, you can create an updated ETP worksheet for the employee to review.

12.1.6 ATO Filing and Record Keeping Regulations

When you distribute ETPs to employees, you are required to submit information regarding those payments to the ATO. In addition, the ATO also requires that you store detailed records of termination payments.

If you distribute ETPs to employees, you must submit ETP payment summaries to the ATO along with the annual Pay As You Go (PAYG) tax filing information. If the cash portion of an ETP exceeds a certain amount, as specified by the ATO, you must also submit a Reasonable Benefit Limits (RBL) form. RBL forms should be filed monthly with the ATO.

In addition to submitting information to the ATO, the organization is also required to keep detailed records regarding termination payments.

Important:

All of the information regarding ATO regulations for ETP filing and record keeping is believed to be current at the time of publication. However, due to periodic changes in tax regulations, you should contact the ATO for the most current regulatory information for ETP processing. Noncompliance with current tax regulations can result in fines to the organization.

12.2 Creating Termination Payments

This section provides an overview of termination payment creation, lists prerequisites, and discusses how to:

  • Enter termination payment information.

  • Set processing options for Australian Employee Termination Entry (P75A0008).

  • Set processing options for Australian Employee Payments program (P750010).

12.2.1 Understanding Termination Payment Creation

When employees are terminated from an Australian organization, they might receive a termination payment. Depending upon the circumstances of the termination, certain employees might be eligible to receive ETPs. You can create ETP and regular termination payments using either of these programs:

  • Employee Termination Entry (P75A0008)

  • Employee Termination Payments (P75A0010)

When you enter a termination payment using the P75A0008 program, the system automatically calculates all of the amounts that are associated with the payment. When you enter a termination payment using the P75A0010 program, you manually calculate and enter all of the amounts for the ETP.

Using the P75A0008 program, you can process payments for redundancies, early retirement schemes, death, and invalidity scenarios. You can also create ETP worksheets for employees to review, and you can automatically generate timecards that the system uses to create actual termination payments. Alternatively, you can automatically create an interim payment for the termination. You must set the processing options of the P75A0008 program to specify that you want to create interims and you must specify a payroll ID for the interim header record. You can also use a selection from the Form menu during the termination entry process to review the selected employee's leave balances, such as their sick, vacation, and holiday leave.

When you enter termination information, you specify these items, which are used to determine the amount of the payment:

  • The reason for the termination.

  • Whether you will pay the employee for sick leave that has not been taken.

  • Whether you will pay the employee for long service leave that has not been taken.

  • The amount of any Golden Handshake payments that will be offered to the employee.

  • The amount of any payments that will be made in lieu of notice.

  • The amount of any Bona Fide payments that will be made for years of service to the organization.

  • Payee information, in the event of an employee's death.

After you enter all relevant termination information on the Employee Termination Pay form, you can use features of the Australian Employee Termination Entry program to automate these termination procedures:

  • Calculate the leave entitlements, tax amounts, and total payable amount.

  • Print a review worksheet, which includes all termination payment details, for the employee.

  • Create timecards that are used to create actual termination payments.

The Australian Employee Termination Entry program also enables you to create model termination scenarios. Because the tax calculations that are mandated by the ATO differ by termination reason, payment method, length of service, and types of payments that are included in the termination, model termination scenarios can help illustrate the differences in payment amounts for each scenario.

After you enter termination information into the system, whether it is factual or model information, you can create an ETP worksheet, which the employee can review. The employee can use this information to determine the termination related payments to be made to them.

You can create multiple termination scenarios for an employee; however, each termination scenario must have a unique termination date.

For example, you can create a termination scenario for an employee who uses the termination date of May and a termination reason of redundancy. You can create another scenario for the same employee using the same termination date, but the termination reason must be different. Similarly, you can create multiple scenarios using the same termination reason, but with different termination dates.

If you want to review termination payment information for multiple scenarios, all of which use the same termination date and termination reason, you must enter the information for a scenario, print the ETP worksheet for that scenario, and then change the information to reflect a different scenario. You can print the ETP worksheet each time that you change the termination scenario, and then compare the ETP worksheets to determine the differences between the scenarios.

12.2.1.1 Entering a Termination

To create a termination payment, you must first enter termination payment information. You can use either of these programs to enter termination payments:

  • Employee Termination Entry (P75A0008)

  • Employee Termination Payments (P75A0010)

Note:

Oracle recommends using the P75A0008 program to enter termination payments, this program automates the complex calculations that are required to accurately create a termination payment. Oracle recommends using the P75A0010 program to update existing termination payments that were originally entered using the P75A0008 program, or to manually enter termination payments that do not require complicated calculations.

When you enter a termination payment, the system uses the information from the processing options, the termination payment information, tax information that you have set up in the system, and the employee's payment history to calculate leave entitlements, tax amounts, and the final amount of the payment.

12.2.1.2 Processing Option Settings for Employee Termination Entry Program (P75A0008)

The processing option settings for the Australian Employee Termination Entry program (P75A0008) are critical to ensure that employee termination pay is calculated according to ATO regulations. Specifically, you must carefully set up these processing options to ensure that the system correctly calculates termination pay:

Tab Name Processing Option Number Special Considerations
Defaults 1 Enter Y for this option if you want the system to automatically create an interim payment for the termination. If you enter Y for this option, you must also specify a payroll ID in option 10, and specify that you want to create an interim header record in option 11.
Defaults 7 Enter the PDBA code that you created to pay out any tax-free components, such as Lump Sum D. The PDBA that you enter here is used to calculate tax-free amounts for termination payments. If you do not enter the correct PDBA for this processing option, tax-free amounts are not considered when the system calculates termination payments; therefore, the payments might be inaccurate.
Defaults 8 Enter the statutory retirement age, as specified by the ATO. Because tax information periodically changes, you should contact the ATO to verify that this information is current.
Defaults 9 Enter the version of the Time Entry MBF processing Options program (P050002A) that you want to use when creating timecards for termination payments. This program controls many of the processes that the system uses to create and calculate timecard information. You should verify that the processing options that are associated with the version that you enter in this field are set correctly.
Defaults 10 Enter the interim payroll ID that you want the system to use when creating the timecards that are associated with terminations. You must enter an interim payroll ID to process the timecards through the Work With Interims Workbench. Because termination payments typically do not coincide with regularly scheduled payroll cycle processing, you might find that processing termination payments through the Work With Interims Workbench is easier and more convenient. If you enter a value for this processing option, you must also complete processing option 11 on this tab.
Defaults 11 If you enter an interim payroll ID in processing option 10, you must set this processing option to enable the creation of an interim payment record.
Defaults 12 Enter the maximum value of leave entitlement, as specified by the ATO, that can be taxed using a flat tax rate. Because tax information periodically changes, you should contact the ATO to verify that this information is current. If you enter a value in this processing option, you must also enter the associated tax rate in processing option 13 on this tab.
Defaults 13 Enter the flat rate of tax, as specified by the ATO, that the system uses to calculate tax amounts when leave entitlements are less than the maximum amount for flat rate tax, which is also specified by the ATO. For example, to enter a tax rate of 31.5 percent in this field.

Because tax information can change periodically, you should contact the ATO to verify that this information is current.

Balance PDBA's 3 Enter the PDBA that the organization uses to track long service leave that was accrued prior to August 1978. This amount is known as the Band 1 amount. Because tax regulations changed in August of 1978, all long service leave that was accrued prior to that date requires a separate tax calculation to comply with ATO regulations.
Balance PDBA's 4 Enter the PDBA that the organization uses to track long service leave that was accrued between August 1978 and August 1993. This amount is known as the Band 2 amount. Due to changes in ATO tax regulations, a separate calculation is necessary to accurately calculate tax amounts for long service leave that was accrued during this period.
Balance PDBA's 5 Enter the PDBA code that you use to track the employee's total long service leave balance. This PDBA should include Band 1 and Band 2 amounts, along with any long service leave that was accrued since that time, which is considered Band 3.
Tax Area Tax Type 5 Enter the tax type that is used to tax amounts that are associated with approved early retirement, redundancy, or invalidity scenarios.

Because tax information periodically changes, you should contact the ATO to verify that this information is current.

Tax Area Tax Type 6 Enter the tax type that is used to tax amounts that are associated with Band 3, or the Post 1993 component.
Tax Area Tax Type 7 Enter the tax type that is used to calculate the tax amounts for lump sum amounts. Currently, the tax rate for these amounts is 31.5 percent.

Because tax information periodically changes, you should contact the ATO to verify that this information is current.

Tax Area Tax Type 8 Enter the tax type that is used to calculate the tax amount that is associated with normal resignations. This rate should reflect the current standard marginal rate.

Because tax information periodically changes, you should contact the ATO to verify that this information is current.


Additional versions will be required for P75A0008 to cater to the different parts of the organization, for example, those that receive Leave Loading as part of the termination and those that don't.

12.2.2 Prerequisites

Before you complete the tasks in this section:

12.2.3 Forms Used to Create Termination Payments

Form Name FormID Navigation Usage
Work With Terminations W75A0008A Australia/New Zealand Inquiries (G07BUSP16), Employee Termination Entry Access the termination payment forms.
Employee Termination Pay W75A0008B On Work With Terminations, click Add. Enter termination payment information. Additionally, you can use selections from the Form menu on this form to review employee leave balances and to access interim entry. Interim entry is available only if you have set the processing options to create interim payments during termination entry.
Work With Employee Termination Payments W75A0010A Australia/New Zealand Inquiries (G07BUSP16), Employee Termination Payments Search for and select existing ETPs that you want to update.
Employee Termination Payment Details W75A0010C On Work With Employee Termination Payments, click Add. Enter ETP payments.
Employee Termination Payment Revisions W75A0010B On Work With Employee Termination Payments, select a record and then click Select. Enter or update information for an ETP payment.

12.2.4 Entering Termination Payment Information

Access the Employee Termination Pay form.

To enter termination payment information:

  1. Complete the basic information about the termination payment.

    (Release 9.2 Update) Select a value from UDC table 75A/IS in the Include in STP field to specify whether to include the employee in Single Touch Payroll (STP), and flag the appropriate values based on the value in ETP code.

  2. Click the Retrieve Balances button.

  3. Select the ETP Calculation tab and enter the value in the Payments in lieu, Golden handshake amount, Unused RDO balance and unused sick leave and other fields.

  4. Select the Leave Entitlements tab and review the information.

    The system uses the information that you entered in the processing options, along with employee history, to populate the fields on this tab.

  5. Select the Leave Entitlements - Foreign tab and review the information.

    The system uses the information that you entered in the foreign-related processing options, along with any available foreign employment payroll history, to populate the fields on this tab

  6. To enable the fields in the Balance, Gross $, and Tax $ columns for entry, select the Enable Hours option in the header of the Employee Termination Pay form and make any necessary changes to the values on this tab.

    When you enter values in the Balance column of the Leave Entitlements tab, the system calculates values in the associated field in the Gross $ column. You can override these calculated values if you select the Enable Hours option.

  7. Review each tab on the Employee Termination Pay form to ensure that you have entered all necessary termination details, and then click the Calculate Tax button.

    The system uses the information in the processing options, tax setup, and employee history and the values that you have entered on the Employee Termination Pay form to calculate all of the tax information for the termination payment.

  8. Select the Summary tab to review summarized information about the payment calculations.

  9. Select the ETP Calculation tab to review detailed information about the payment calculations.

    After you verify that all the details are correct, the timecards containing all of the termination details need to be created.

  10. Click the Create Timecards button.

    This creates the timecards using the pay types as defined in the processing options.

  11. Click OK to save the record.

    • Term Type

      Enter the type of termination. This code is used to determine how the termination payment should be taxed, because different termination types have different taxation rules.

    • Term Date

      Enter the date that the employee was terminated, if applicable.

      The date that you enter in this field is used to calculate the employee's age at the time of termination, the number of years of service to the organization, and the number of pre-July and post-July 1983 days that the employee has worked.

    • Payment Date

      The date that you enter in this field is used to create the timecards that the system uses to generate the actual termination payment.

    • Pay Sick Leave balance In Termination

      To include any unused sick leave that the employee has accrued, select this option.

    • Pay Contingent LSL Balance In Termination

      Select to include any unused long service leave that the employee has accrued.

    • Notice Period

      Specify the number of weeks of payments in lieu of notice that you want to include in the payment.

    • Gross/ Week

      Enter a value that indicates the standard, gross weekly pay that the employee receives.

      The system automatically calculates this amount using employee pay history. You can override this amount by entering a value in this field.

    • Gross Severance

      Click the Calculator button next to the Gross Severance field, complete the calculation, and then click OK to calculate the amount of pay in lieu of notice that you want to include in the payment.

      The system populates this field when you click OK on the Calculator form.

    • Comp Years Of Service

      Enter the number of years that an employee has worked for the organization.

      The system calculates the value in this field using the employee's start date and the date that you enter in the Term Date field.

    • Amount Paid Severance

      Complete this field with the amount of pay for service length that you want to include in the payment.

    • Golden Handshake Amt

      Enter the amount of any golden handshake payment that you want to include in the termination payment.

    • Payee Type

      Enter a code that indicates the type of payee to which the payment is made.

      This field must be completed only if the termination is a death benefit payment. In cases in which an employee's termination payment is given to another employee, you must identify the type of payee. This information is used to determine the tax amount of the payment.

    • Tax File Number

      Enter the employee's number.

    • Professional Title

      Enter the professional title of a Who's Who person.

    • Given Name

      Enter the first name of an individual. This field is informational only.

    • Middle Name

      Enter the middle name or initial of an individual. This field is informational only. The name does not appear on any reports.

    • Surname

      Enter the last name of an individual. This field is informational only.

    • Birth Date

      Enter the employee's date of birth.

    • Address Line 1

      Enter the first line of a mailing address for an employee, customer, or supplier in the Address Book system.

    • City

      Enter a name that indicates the city that is associated with the address.

    • State

      Enter a UDC (00/S) that specifies the state or province. This code is usually a postal service abbreviation.

    • Post Code

      Enter the United States ZIP code or the postal code that specifies where a letter is routed. Attach this code to the address for delivery in other countries.

12.2.5 Setting Processing Options for Australian Employee Termination Entry (P75A0008)

Processing options enable you to specify the default processing for programs and reports.

12.2.5.1 Defaults

1. Create Payment on Interim

Specify whether the system creates a payment on interim. If you enter Y for this option, you must also enter values for options 10 and 11 on this tab. Values are:

Y: Create payment on an interim payroll.

N: Do not create payment on an interim payroll.

2. Standard Hours Per Day

Specify the value to determine the employee standard hours per day from Employee Master. Values are:

0 or Blank: Do not use standard hours per day from Employee Master.

1: Use standard hours per day from Employee Master.

3. Standard Hours Per Day Override

Specify the number of hours for a standard work day. You use this hour to calculate the value of leave entitlements. A value entered in this field is used regardless of the value specified in the standard hours per day processing options.

4. Lump Sum Tax Free Threshold for Bona-Fide Redundancy Payments

Specify the tax free threshold amount applicable to bona-fide redundancy payments, as defined by the ATO. The system adds this to the amount from processing option number 5, and payment over that amount is considered an ETP.

5. Tax Free Amount Per Year of Service

Specify the amount that is tax free for each year of service, as defined by the ATO. It is multiplied by the years of service prior to being added to the tax free threshold.

6. Low Rate Threshold Amount

Specify the ETP Cap as defined by the ATO.

7. Pay Type for Bona Fide Redundancy Payments (Tax Free)

Specify the pay type that is used when timecards are created for redundancy payments.

8. Whole of Income Threshold Amount

Specify the whole of income cap as defined by the ATO. This cap is reduced by the taxable component of the excluded ETP.

9. Time Entry MBF Version

Specify which version of the Time Entry Master Business Function (P050002A) you want to use to process timecards. If you leave this processing option blank, the system uses the default version ZJDE 0001.

10. Payroll ID to Use When Creating an Interim Header Record for Redundancy Processing

Specify the payroll ID to use when creating an interim header record for redundancy processing.

11. Interim Header Record for Redundancy Processing

Specify the value to indicate whether the Interim payment is made using a new or existing Interim Header Record. Values are:

1: Create an interim.

0: Do not create an interim.

12. Maximum Value of Leave Entitlements to be Taxed at Flat Rate (for example $300)

Specify the maximum value of leave entitlements to be taxed at flat rate (for example, 300 AUD). The balances of Long Service Leave post 18th August 1993 (Band 3), Annual Leave and Leave Loading are accumulated. If the result is less than this processing option value, the tax is calculated at a flat rate based on the entry in the Flat Rate of Tax Where Leave Entitlements are Less Than the Maximum Value for Flat Rate Tax option.

13. Flat Rate of Tax Where Leave Entitlements are Less Than the Maximum Value for Flat Rate Tax

Enter the value for flat tax percentage. The value of leave entitlements up to the amount in the previous processing option will be taxed at this rate.

12.2.5.2 Balance PDBA's

1. Annual Leave DBA Holding the Employee Balance

Enter the PDBA number containing leave hours and balances to be paid.

2. Sick Leave DBA Holding the Employee Balance

Specify the sick leave DBA that holds the employee balance.

3. DBA Holding the Long Service Leave Balance Accrued During Band 1

Enter the PDBA number containing pre 16th August 1978 (Band 1) hours and balances to be paid.

4. DBA Holding the Long Service Leave Balance Accrued During Band 2

Enter the PDBA number containing 16th August 1978 to 18th August 1993 (Band 2) hours and balances to be paid.

5. DBA Holding the Long Service Leave Balance Accrued During Band 3

Enter the PDBA number containing post 18th August 1993 (Band 3) hours and balances to be paid.

6. Reserved for Future Use

This processing option is reserved for future use.

7. RDO DBA Holding the Employee Balance

Enter the PDBA number containing Roster Days Off hours and balances to be paid.

8. Leave Loading Percentage (nn.nnnn)

Enter the Leave Loading percent that you use to calculate the Leave Loading amount to be paid. Leave Loading hours are multiplied by this percent to calculate the amount to be paid.

9. Include Accrued Leave in Leave Loading Calculation

Enter a value to indicate whether you would like to include Accrued Leave in the Employee Termination Payment. Values are:

1: Do not include

0: Include

12.2.5.3 Foreign Balance PDBA's

1. Foreign Unused Long Service Leave DBA Holding the Employee Balance

Enter the DBA that holds the balance for Foreign Long Service Leave.

2. Foreign Assessable Unused Annual Leave DBA Holding the Employee Balance

Enter the DBA that holds the balance for Foreign Assessable Unused Annual Leave.

3. Foreign Exempt Long Service Leave DBA Holding the Employee Balance

Enter the DBA that holds the balance for Foregn Exempt Long Service Leave.

4. Foreign Exempt Unused Annual Leave DBA Holding the Employee Balance

Enter the DBA that holds the balance for Foreign Exempt Unused Annual Leave.

5. Foreign Assessable Leave Loading Percentage (nn.nnnn)

Enter the Foreign Assessable Leave Loading Percentage using the nn.nnnn format. For example, enter 28.0000 in this option.

6. Foreign Exempt Leave Loading Percentage (nn.nnnn)

Enter the Foreign Exempt Leave Loading Percentage using nn.nnnn format. For example, enter 32.0000 in this option.

12.2.5.4 Tax Types

1. Tax Type for Normal Tax

Specify the type of payroll tax being processed. This is a user defined code (06/TX). You use this option to obtain the Unused Annual Leave Tax from the Tax Detail File.

2. Tax Type for ETP Tax

Specify the type of payroll tax being processed. This is a user defined code (06/TX). You use this option to obtain the Employee Termination Payment (ETP) Tax from the Tax Detail File.

3. Tax Type for Band 1 Tax

Specify the type of payroll tax being processed. This is a user defined code (06/TX). You use this option to obtain the Pre 16th August 1978 (Band 1) Tax from the Tax Detail File.

4. Tax Type for Band 2 Tax

Specify the type of payroll tax being processed. This is a user defined code (06/TX). You use this option to obtain the 16th August 1978 to 18th August 1993 (Band 2) Tax from the Tax Detail File.

5. Tax Type for Band 3 Redundancy, Approved Early Retirement or Invalidity

Specify the type of payroll tax being processed. This is a user defined code (06/TX). Use this option to process the Redundancy and Invalidity terminations. You use this option to obtain the Post 18th August 1993 (Band 3) Tax from the Tax Detail File.

6. Tax Type for Band 3 Tax - All Other Cases

Specify the type of payroll tax being processed. This is a user defined code (06/TX). Use this option to process the terminations such as voluntary resignation or retirement. You use this option to obtain the Post 18th August 1993 (Band 3 - Other) Tax from the Tax Detail File.

7. Tax Type for Lump Sum

Specify the type of payroll tax being processed. This is a user defined code (06/TX). Use this option for Bona-fide Redundancy terminations. You use this option to obtain the Lump Sum Tax from the Tax Detail File.

8. Tax Type for Resignation

SSpecify the type of payroll tax being processed. This is a user defined code (06/TX). Use this option for Redundancy terminations. You use this option to obtain the resignation tax from the Tax Detail File.

9. Tax Type for Foreign LSL Redundancy, Approved Early Retirement, or Invalidity

Enter the tax type for foreign LSL redundancy, approved early retirement, or invalidity.

10. Tax Type for Foreign LSL Tax and All Other Cases

Enter the tax type for foreign LSL for all other cases than those listed in option 9.

12.2.5.5 Normal

1. Pay Type to Use to Pay Out the Unused Annual Leave Balance

Specify the pay type, deduction, benefit or accrual (PDBA). Pay types are numbered from 1 to 999. Deductions and benefits are numbered from 1000 to 9999. You use this processing option for resignation terminations. A timecard is created with this pay type to pay out the employee Annual Leave balance.

2. Pay Type to Use to Pay Out the Unused Annual Leave Loading Balance

Specify the pay type, deduction, benefit or accrual (PDBA). Pay types are numbered from 1 to 999. Deductions and benefits are numbered from 1000 to 9999. You use this processing option for resignation terminations. A timecard is created with this pay type to pay out the employee Annual Leave Loading balance.

3. Pay Type to Use to Pay Out the Unused Long Service Leave from Band 1

Specify the pay type, deduction, benefit or accrual (PDBA). Pay types are numbered from 1 to 999. Deductions and benefits are numbered from 1000 to 9999. You use this processing option for resignation terminations. A timecard is created with this pay type to pay out the employee Long Service Leave pre 16th August 1978 (Band 1) amount.

4. Pay Type to Use to Pay Out the Unused Long Service Leave from Band 2

Specify the pay type, deduction, benefit or accrual (PDBA). Pay types are numbered from 1 to 999. Deductions and benefits are numbered from 1000 to 9999. You use this processing option for resignation terminations. A timecard is created with this pay type to pay out the employee Long Service Leave from 16th August 1978 to 18th August 1993 (Band 2) amount.

5. Pay Type to Use to Pay Out the Unused Long Service Leave from Band 3

Specify the pay type, deduction, benefit or accrual (PDBA). Pay types are numbered from 1 to 999. Deductions and benefits are numbered from 1000 to 9999. You use this processing option for resignation terminations. A timecard is created with this pay type to pay out the employee Long Service Leave post 18th August 1993 (Band 3) amount.

6. Reserved for Future Use

This processing options is reserved for future use.

7. Pay Type to Use to Pay Out the Resignation ETP Amount (Employee is Under Preservation Age)

Specify the pay type, deduction, benefit or accrual (PDBA). Pay types are numbered from 1 to 999. Deductions and benefits are numbered from 1000 to 9999. You use this processing option for resignation terminations. A timecard is created with this pay type to pay out the Resignation ETP amount when the employee is under Preservation Age.

8. Pay Type to Use to Pay Out the Resignation ETP Amount (Employee is Preservation Age or Over)

SSpecify the pay type, deduction, benefit or accrual (PDBA). Pay types are numbered from 1 to 999. Deductions and benefits are numbered from 1000 to 9999. You use this processing option for resignation terminations. A timecard is created with this pay type to pay out the Resignation ETP amount when the employee is over Preservation Age and the Assessable amount is below the threshold amount.

12.2.5.6 Redundancy

1. Pay Type to Use to Pay Out the Unused Annual Leave Balance

Specify the pay type, deduction, benefit or accrual (PDBA). Pay types are numbered from 1 to 999. Deductions and benefits are numbered from 1000 to 9999. You use this processing option for redundancy terminations. A timecard is created with this pay type to pay out the employee Annual Leave balance.

2. Pay Type to Use to Pay Out the Unused Annual Leave Loading Balance

Specify the pay type, deduction, benefit or accrual (PDBA). Pay types are numbered from 1 to 999. Deductions and benefits are numbered from 1000 to 9999. You use this processing option for redundancy terminations. A timecard is created with this pay type to pay out the employee Annual Leave Loading balance.

3. Pay Type to Use to Pay Out the Unused Long Service Leave from Band 1

Specify the pay type, deduction, benefit or accrual (PDBA). Pay types are numbered from 1 to 999. Deductions and benefits are numbered from 1000 to 9999. You use this processing option for redundancy terminations. A timecard is created with this pay type to pay out the employee Long Service Leave pre 16th August 1978 (Band 1) amount.

4. Pay Type to Use to Pay Out the Unused Long Service Leave from Band 2

Specify the pay type, deduction, benefit or accrual (PDBA). Pay types are numbered from 1 to 999. Deductions and benefits are numbered from 1000 to 9999. You use this processing option for redundancy terminations. A timecard is created with this pay type to pay out the employee Long Service Leave from 16th August 1978 to 18th August 1993 (Band 2) amount.

5. Pay Type to Use to Pay Out the Unused Long Service Leave from Band 3

Specify the pay type to use when paying out the assessable ETP when the employee is over normal retirement age.

6. Reserved for Future Use

This processing option is reserved for future use.

7. Pay Type to Use to Pay Out the Redundancy ETP Amount (Employee is Under Preservation Age)

Specify the pay type, deduction, benefit or accrual (PDBA). Pay types are numbered from 1 to 999. Deductions and benefits are numbered from 1000 to 9999. You use this processing option for redundancy terminations. A timecard is created with this pay type to pay out the Redundancy ETP amount when the employee is under preservation age.

8. Pay Type to Use to Pay Out the Redundancy ETP (Employee is Preservation Age or Over)

Specify the pay type, deduction, benefit or accrual (PDBA). Pay types are numbered from 1 to 999. Deductions and benefits are numbered from 1000 to 9999. You use this processing option for redundancy terminations. A timecard is created with this pay type to pay out the Redundancy ETP amount when the employee is over preservation age.

12.2.5.7 Disability

1. Pay Type to Use to Pay Out the Unused Annual Leave Balance

Specify the pay type, deduction, benefit or accrual (PDBA). Pay types are numbered from 1 to 999. Deductions and benefits are numbered from 1000 to 9999. You use this processing option for disability terminations. A timecard is created with this pay type to pay out the employee Annual Leave balance.

2. Pay Type to Use to Pay Out the Unused Annual Leave Loading Balance

Specify the pay type, deduction, benefit or accrual (PDBA). Pay types are numbered from 1 to 999. Deductions and benefits are numbered from 1000 to 9999. You use this processing option for disability terminations. A timecard is created with this pay type to pay out the employee Annual Leave Loading balance.

3. Pay Type to Use to Pay Out the Unused Long Service Leave from Band 1

Specify the pay type, deduction, benefit or accrual (PDBA). Pay types are numbered from 1 to 999. Deductions and benefits are numbered from 1000 to 9999. You use this processing option for disability terminations. A timecard is created with this pay type to pay out the employee Long Service Leave pre 16th August 1978 (Band 1) amount.

4. Pay Type to Use to Pay Out the Unused Long Service Leave from Band 2

Specify the pay type to use when paying out assessable ETP.

5. Pay Type to Use to Pay Out the Unused Long Service Leave from Band 3

Specify the pay type, deduction, benefit or accrual (PDBA). Pay types are numbered from 1 to 999. Deductions and benefits are numbered from 1000 to 9999. You use this processing option for disability terminations. A timecard is created with this pay type to pay out the employee Long Service Leave post 18th August 1993 (Band 3) amount.

6. Reserved for Future Use

This processing option is reserved for future use.

7. Pay Type to Use to Pay Out the Invalidity ETP Amount (Employee is Under Preservation Age)

Specify the pay type, deduction, benefit or accrual (PDBA). Pay types are numbered from 1 to 999. Deductions and benefits are numbered from 1000 to 9999. You use this processing option for disability terminations. A timecard will be created with this pay type to pay out the Invalidity ETP amount.

8. Pay Type to Use to Pay Out the Invalidity ETP Amount (Employee is Preservation Age or Over)

Specify the pay type, deduction, benefit or accrual (PDBA). Pay types are numbered from 1 to 999. Deductions and benefits are numbered from 1000 to 9999. You use this processing option for disability terminations. A timecard is created with this pay type to pay out the Invalidity ETP amount when the employee is over preservation age.

9. Pay Type to Use to Pay Out the Post June 94 Invalidity Component (Non Taxed)

Specify the pay type, deduction, benefit or accrual (PDBA). Pay types are numbered from 1 to 999. Deductions and benefits are numbered from 1000 to 9999. You use this processing option for disability terminations. The length of service after June 30, 1994 is tax free. A timecard is created with this pay type to pay out this non-taxed ETP component.

12.2.5.8 Death

1. Pay Type to Use to Pay Out the Unused Annual Leave Balance

Specify the pay type, deduction, benefit or accrual (PDBA). Pay types are numbered from 1 to 999. Deductions and benefits are numbered from 1000 to 9999. You use this processing option for terminations due to death. A timecard is created with this pay type to pay out the employee Annual Leave balance.

2. Pay Type to Use to Pay Out the Unused Annual Leave Loading Balance

Specify the pay type, deduction, benefit or accrual (PDBA). Pay types are numbered from 1 to 999. Deductions and benefits are numbered from 1000 to 9999. You use this processing option for terminations due to death. A timecard is created with this pay type to pay out the employee Annual Leave Loading balance.

3. Pay Type to Use to Pay Out the Unused Long Service Leave from Band 1

Specify the pay type, deduction, benefit or accrual (PDBA). Pay types are numbered from 1 to 999. Deductions and benefits are numbered from 1000 to 9999. You use this processing option for terminations due to death. A timecard is created with this pay type to pay out the employee Long Service Leave pre 16th August 1978 (Band 1) amount.

4. Pay Type to Use to Pay Out the Unused Long Service Leave from Band 2

Specify the pay type, deduction, benefit or accrual (PDBA). Pay types are numbered from 1 to 999. Deductions and benefits are numbered from 1000 to 9999. You use this processing option for terminations due to death. A timecard is created with this pay type to pay out the employee Long Service Leave from 16th August 1978 to 18th August 1993 (Band 2) amount.

5. Pay Type to Use to Pay Out the Unused Long Service Leave from Band 3

Specify the pay type, deduction, benefit or accrual (PDBA). Pay types are numbered from 1 to 999. Deductions and benefits are numbered from 1000 to 9999. You use this processing option for terminations due to death. A timecard is created with this pay type to pay out the employee Long Service Leave post 18th August 1993 (Band 3) amount.

6. Reserved for Future Use

This processing option is reserved for future use.

7. Pay Type to Use to Pay out the Assessable ETP Where Paid to a Dependent/Trustee

Specify the pay type, deduction, benefit or accrual (PDBA). Pay types are numbered from 1 to 999. Deductions and benefits are numbered from 1000 to 9999. You use this processing option for terminations due to death. A timecard is created with this pay type to pay out the Assessable ETP amount when paid to a dependent or trustee.

8. Pay Type to Use to Pay Out Assessable ETP Where Paid to a Non-Dependents/Trustee

Specify the pay type, deduction, benefit or accrual (PDBA). Pay types are numbered from 1 to 999. Deductions and benefits are numbered from 1000 to 9999. You use this processing option for terminations due to death. A timecard is created with this pay type to pay out the Assessable ETP amount when not paid to a dependent or trustee.

12.2.5.9 Normal - Foreign

1. Pay Type to be Used to Pay Out the Foreign Unused Annual Leave Balance

Specify the pay type to use to pay out the unused foreign annual leave balance for a normal termination.

2. Pay Type to be Used to Pay Out the Foreign Unused Annual Leave Loading

Specify the pay type to use to pay out the unused foreign annual leave loading for a normal termination.

3. Pay Type to be Used to Pay Out the Foreign Unused LSL

Specify the pay type to use when paying out foreign unused long service leave (LSL) from Band 3 for a normal termination.

4. Pay Type to be Used to Pay Out the Foreign Exempt Annual Leave Balance

Specify the pay type to use when paying out the foreign exempt annual leave balance for a normal termination.

5. Pay Type to be Used to Pay Out the Foreign Exempt Annual Leave Loading

Specify the pay type to use when paying out foreign exempt annual leave loading for a normal termination.

6. Pay Type to Use When Paying Out Foreign Exempt LSL

Specify the pay type to use when paying out foreign exempt LSL for a normal termination.

12.2.5.10 Redundancy - Foreign

1. Pay Type to be Used to Pay Out the Foreign Unused Annual Leave Balance

Specify the pay type to use to pay out the unused foreign annual leave balance for a redundancy termination.

2. Pay Type to be Used to Pay Out the Foreign Unused Annual Leave Loading

Specify the pay type to use to pay out the unused foreign annual leave loading for a redundancy termination.

3. Pay Type to be Used to Pay Out the Foreign Unused LSL

Specify the pay type to use when paying out foreign unused long service leave (LSL) from Band 3 for a redundancy termination.

4. Pay Type to be Used to Pay Out the Foreign Exempt Annual Leave Balance

Specify the pay type to use when paying out the foreign exempt annual leave balance for a redundancy termination.

5. Pay Type to be Used to Pay Out the Foreign Exempt Annual Leave Loading

Specify the pay type to use when paying out foreign exempt annual leave loading for a redundancy termination.

6. Pay Type to be Used to Pay Out the Foreign Exempt LSL

Specify the pay type to use when paying out foreign exempt LSL for a redundancy termination.

12.2.5.11 Disability - Foreign

1. Pay Type to be Used to Pay Out the Foreign Unused Annual Leave Balance

Specify the pay type to use to pay out the unused foreign annual leave balance for a disability termination.

2. Pay Type to be Used to Pay Out the Foreign Unused Annual Leave Loading

Specify the pay type to use to pay out the unused foreign annual leave loading for a disability termination.

3. Pay Type to be Used to Pay Out the Foreign Unused LSL

Specify the pay type to use when paying out foreign unused long service leave (LSL) from Band 3 for a disability termination.

4. Pay Type to be Used to Pay Out the Foreign Exempt Annual Leave Balance

Specify the pay type to use when paying out the foreign exempt annual leave balance for a disability termination.

5. Pay Type to be Used to Pay Out the Foreign Exempt Annual Leave Loading

Specify the pay type to use when paying out foreign exempt annual leave loading for a disability termination.

6. Pay Type to be Used to Pay Out the Foreign Exempt LSL

Specify the pay type to use when paying out foreign exempt LSL for a disability termination.

12.2.5.12 Death - Foreign

1. Pay Type to be Used to Pay Out the Foreign Unused Annual Leave Balance

Specify the pay type to use to pay out the unused foreign annual leave balance for a death termination.

2. Pay Type to be Used to Pay Out the Foreign Unused Annual Leave Loading

Specify the pay type to use to pay out the unused foreign annual leave loading for a death termination.

3. Pay Type to be Used to Pay Out the Foreign Unused LSL

Specify the pay type to use when paying out foreign unused long service leave (LSL) from Band 3 for a death termination.

4. Pay Type to be Used to Pay Out the Foreign Exempt Annual Leave Balance

Specify the pay type to use when paying out the foreign exempt annual leave balance for a death termination.

5. Pay Type to be Used to Pay Out the Foreign Exempt Annual Leave Loading

Specify the pay type to use when paying out foreign exempt annual leave loading for a death termination.

6. Pay Type to be Used to Pay Out the Foreign Exempt LSL

Specify the pay type to use when paying out foreign exempt LSL for a death termination.

12.2.6 Setting Processing Options for Employee Termination Payment (P75A0010)

Processing options enable you to specify the default processing for programs and reports.

12.2.6.1 Defaults

1. Display Tax File Number

Specify a value to control displaying of the employee tax file number within the application. Values are:

Blank: Do not display tax file number

1: Display tax file number

12.3 Printing the ETP Calculations Worksheet

This section provides an overview of the ETP Calculations Worksheet and discusses how to:

  • Print the ETP Calculations Worksheet.

  • Set processing options for ETP Calculations Worksheet (R75A0100).

12.3.1 Understanding the ETP Calculations Worksheet

After you enter termination payment information, you can print the ETP Calculations Worksheet. This worksheet includes all of the details that are associated with the termination. Employees can use this worksheet to determine the termination related payments to be made to them.

12.3.2 Form Used to Print the ETP Calculations Worksheet

Form Name FormID Navigation Usage
Work With Terminations W75A0008A Australia/New Zealand Inquiries (G07BUSP16), Employee Termination Entry.

Select Print Worksheet from the Row menu.

Select an employee.

12.3.3 Printing the ETP Calculations Worksheet

Access the Report Output Destination form.

12.3.4 Setting Processing Options for ETP Calculations Worksheet (R75A0100)

Processing options enable you to specify the default processing for programs and reports.

12.3.4.1 Defaults

1. Enter the Lump Sum Tax Free Threshold for Bona-fide Redundancy Payments

Specify the lump-sum, tax-free threshold for bona fide redundancy payments.

2. Enter the Tax Free Amount per year of Service

Specify the tax-free amount per year of service.

12.4 Revising Termination Payment Information

This section provides an overview of termination revisions and discusses how to revise termination payment information.

12.4.1 Understanding Termination Revisions

After you enter termination payment information and allow employees to review the ETP Calculations Worksheet associated with their termination, you might need to revise the termination information.

For example, after reviewing the details of the termination, an employee might decide to take only a portion of the payment in cash and roll the remaining amount of the payment into an approved fund. If the payment instructions that the employee selects differ from those that were entered with the initial termination payment information, you must revise that information before you create the actual payment, because changes to payment instructions can affect the tax calculations for the payment.

You can revise termination payment information as many times as necessary to ensure that the payment is correct.

12.4.2 Form Used to Revise Termination Payment Information

Form Name FormID Navigation Usage
Employee Termination Pay W75A0008A Australia/New Zealand Inquiries (G07BUSP16), Employee Termination Entry Revise termination payment information.

12.4.3 Revising Termination Payment Information

Access the Employee Termination Pay form.

Make any necessary revisions to the termination information, and then select Calculate Tax from the Form menu. Continue this process until the payment is revised correctly, and then click OK to save the record.

12.5 Creating Timecards for Termination Payments

This section provides an overview of timecard creation and discusses how to create timecards for termination payments.

12.5.1 Understanding Timecard Creation

After you have finalized the details of an employee's termination, you can create timecards that the system uses to generate the actual payment. You can use the Australian Employee Termination Entry program to automatically generate timecards for the termination payment. You do so to ensure that:

  • The timecards use the correct pay types.

  • The system accurately calculates taxes on termination payments such as lump sum amounts.

After you generate these timecards, you can review and revise them until they include all of the information that is necessary to create the payment.

Note:

Oracle strongly recommends that you generate timecards for termination payments using the Australian Employee Termination Entry program. Using this program ensures that all of the elements of a termination payment are correctly taxed. Manually entering timecards for termination payments can result in inaccurate tax calculations.

After you create the timecards for the termination payment, you can process them through a payroll cycle to create the actual payment for the employee.

12.5.2 Forms Used to Create Timecards for Termination Payments

Form Name FormID Navigation Usage
Work With Terminations W75A0008A Australia/New Zealand Inquiries (G07BUSP16), Employee Termination Entry Access forms to enter and review termination payments.
Employee Termination Pay W75A0008B Select a record on the Work With Terminations form and click Select. Create timecards for termination payments. Also use this form to:
  • Review or update existing termination payments.

  • Create termination timecards.

Work With Time Entry by Individual W051121A On the Employee Termination Pay form, select Time Entry from the Form menu. Review timecards for a termination payment.

12.5.3 Creating Timecards for Termination Payments

Access the Employee Termination Pay form.

Select Create Timecard from the Form menu. The system generates the timecards and returns to the Work With Terminations form. You might accidentally or deliberately delete termination records. If these are deleted, unpaid timecards will also be deleted.