Processing termination payments

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Not using AccountRight 2016? See the help for MYOB Essentials | MYOB AccountEdge | MYOB AccountRight v19 | MYOB Payroll (NZ)

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 amount

Termination 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 payment

Do the following tasks to process a termination payment.

Task
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
7	Prepare ETP summaries

Need to provide an Employment Separation Certificate? Visit the Department of Human Services website for details.

FAQs

How do I reinstate a terminated employee?

If an employee returns after you have processed a termination payment, you can reinstate them by reusing their employee card. Once you remove the Termination Date from their card, check their payroll details as if they were a new employee.

Here's what to do:

Open their employee card (Card File > Cards List > Employee tab > open the employee's card).
Click the Payroll Details tab.
Click the dropdown arrow next to the Termination Date (to display the calendar) then click Clear.
Check the employee's payroll information.