Termination Payment Calculation

Termination payments are calculated in the payroll and not as a separate process. The final payment to an employee must include all money due to that employee. This compensation includes the regular salary, extra periods, unused vacation days, and unpaid overtime. The final payment must also consider any outstanding loans and advances, nonfulfilled preadvise days, severance pay, and litigation salary.

To calculate termination pay, the payroll process calculates:

  • The regular earnings and deductions that are due for the month of termination.

  • The compensation for the unused paid vacation days.

    To do this, the system multiples the daily rate (FNQ FM VAL D VAC) by the number of remaining paid vacation days.

  • The unpaid extra period earnings.

    Employees must be paid for the extra pay periods to which they contributed during the year. To calculate the compensation amount, the system multiplies the daily rate by the number of days accrued until the termination date. The system calculates the daily rate by taking into account the definition of the extra period. If an extra period has been paid in advance, the system generates an extra period earning with a negative value to deduct the amount paid for which the employee is not eligible.

  • The amount owed for loans and advances, independent of each other.

    This amount is automatically deducted from the last payslip.

  • The amount for nonfulfilled preadvise days, severance pay, and litigation salary.

For PeopleSoft Global Payroll for Spain, the payroll process generates termination payments based on the last day that an employee works, which is one day prior to the termination date. The termination date is equal to the effective date of the TER (termination) action on the employee's JOB_DATA record (Job Data component). The system also populates the Contract End Date field with that date, which PeopleSoft Global Payroll for Spain uses for processing.

When you enter a TER action, the system can invoke the JOB retro trigger to process the employee's termination pay. To ensure that the payroll process uses the date one day prior to the termination date for termination payment processing, the delivered JOB retro trigger for terminations offsets the termination date by –1 for actions that equal TER. This can be set by the Offset Days field value on the Trigger Definitions – Field Values page.

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