1. Australia / New Zealand Payroll Implementation Guide
  2. Understanding Employee Termination in Australia

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 (AUS) Setting Up Foreign Employment Information for additional information 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.