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.