AccountRight Plus and Premier, Australia only When an employee leaves, you need to process a termination payment 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. Termination payments are taxed at different rates depending your employee's age, how long they were employed with you and the reason for the termination (such as voluntary redundancy or retirement). Working our the final payment amountTermination 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 termination payment. However, you'll need to work out the payment amount and how the payment needs to be reported on payment summaries (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 termination. We also suggest you read the ETP information on the ATO's website, as it explains what's classified as an ETP 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 termination paymentDo the following tasks to process a termination payment. |