<span data-swiftype-index="true">

AccountRight Plus and Premier, Australia only

AccountRight Plus and Premier, Australia only

When an employee leaves your business, you'll need to process a their final pay for them. You'll need to calculate any termination amounts you owe the employee—for example, unused annual leave amounts or a golden handshake—in addition to processing their final standard pay.

Final payments are taxed at different rates depending on your employee's age, how long they were employed with you and the reason they're leaving (such as voluntary redundancy or retirement).

If the employee returns, you can reinstate them.

. 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
• redundancy
• 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.

Working out the final payment amount

Final payments can get complicated as there are a number of awards and employment contract provisions that determine what needs to be paid. You may also make an additional payment in lieu of good service or workplace policy. The procedures we've outlined explain how you record the different elements of a final payment. However, you'll need to work out the payment amount and how the payment needs to be reported to the ATO (for example, are the amounts reported as ETP payments or lump sum payments).

Before you begin, check the relevant award or employment contract for exact details of what needs to be paid to the employee on leaving. We also suggest you read the ETP information on the ATO's website, as it explains what's classified as an ETP (Employment Termination Payment) or a lump sum payment. If you're unsure about how to handle a payment, please speak to the ATO.

How to process a 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).

<div style="display: none;" data-swiftype-name="keywords" data-swiftype-type="enum">final pay</div> 
</span>

Image Added