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When an employee leaves your business, you'll need to process their final pay. This will include their regular pay (up to their last day of work) and their unused annual leave.
Depending on the employee's workplace agreement and their reason for leaving, there may also be other payments you’ll need to finalise, like:
- unused long service leave
- an employment termination payment (ETP), like in lieu of notice. If you need to include an ETP in a final pay, you'll need to complete some additional steps. To find out if a payment is defined as an ETP, check the ATO website.
You'll also need to report the employee's termination to the ATO through your STP reporting.
Rules, tax and other complexities
Final pays can get complicated so we recommend you speak to an accounting advisor about the specifics of your final pay.
Processing a final pay
We'll step you through how to pay an employee's final regular pay and any unused leave. If the final pay includes an ETP, there's a little more you'll need to do.
To make it really clear to the employee what their final pay contains, we recommend processing separate pays for each of their final pay components (regular pay, unused leave, and any ETP amounts).
|1||Process the final standard pay|
|2||Determine any outstanding entitlements|
|3||Create payroll categories for termination payments|
|4||Exclude termination payroll categories from superannuation calculations|
|5||Record the final termination pay|
|6||Enter termination details|
If you haven't reported pays for the employee via STP, you'll need to Prepare an ETP summary instead.