Calculating Long Service Leave—Marginal Tax and Lump Sums A and B

Long service leave (LSL) payment calculations are affected by legislation that requires different tax rates to apply to the different periods during which the employee accrued the leave. We supply three LSL earnings: LSL MARGINAL, LSL LUMP A, and LSL LUMP B.

To calculate these earnings, you use the PeopleSoft-maintained formula TER FM LSL CALC. This formula is invoked by the formula TER FM PRE PROCESS, which is the first element in the Termination section. As soon as the Termination section's conditional formula TER FM TERM CHECK returns True, TER FM PRE PROCESS is invoked, which in turn invokes TER FM LSL CALC.

Note:

TER FM PRE PROCESS also invokes TER FM LSL PRE90, which is used to calculate LSL payments that are exempt from State Payroll Tax in NSW.

The formula first determines if the termination was for redundancy, early retirement, or partial or total disability (referred to as Redundancy in the following table).

Formula TER FM LSL CALC returns values for variables TER VR LS LUMPA, TER VR LS LUMPB and, if the termination was not redundancy, TER VR LS MARGINAL. These three variables are the units in the Unit × Rate calculation rules for the three LSL earnings. (The rate for all three earnings is TER FM DAILY RATE.)

This table shows how LSL may be paid according to the Action Reason of the termination:

Action/Reason for Termination	Payment Options
Termination Is Redundancy	Lump Sum A only Lump Sum B only Lump Sum A and B
Termination Is Not Redundancy	Lump Sum A only Lump Sum B only Marginal only Lump Sum A and B Lump Sum A and B and Marginal

Formula TER FM LSL CALC then uses other formulas that in turn use durations and system-generated accumulators based on the absence entitlements and take elements setup.

Note:

TER FM LSL CALC uses formulas that in turn use system-generated accumulators, the current members of which are customary data. If you create new absence entitlement or take elements, you must adjust the formulas to use the accumulators that the system generates for those elements. You may have to adjust the following formulas: TER FM LSL TKES, TER FM LSTKE PST78, TER FM LSTKE PST93, and TER FM LSL BAL. The first three of those four formulas use variables of which you need to set the values. They are, respectively: TER VR LSTKW TOTAL or TER VR LSTKM TOTAL, TER VR LSTKW PST78 or TER VR LSTKM PST78, and TER VR LSTKW PST93 or TER VR LSTKM PST93, depending on the frequency of the take (weekly or monthly). In the formulas and variables tables in these topics, these elements appear in bold to indicate that you may need to adjust them.