Setting Up Termination Pay Items and Entitlements

MYOB Acumatica — Payroll includes default pay items for unused leave and other region-specific entitlements:

• New Zealand: unused alternative days and public holidays.
• Australia: unused lump sum payments.

These pay items cover standard termination payments. If necessary, you can also create pay items for non-standard entitlements agreed to in an employee's contract.

For entitlements that are paid out on termination, you need to set how they're treated.

Creating a termination pay item for contractual leave

You can find the basic steps of creating a pay item in our knowledge base article. For termination pay items in particular, you need to set some options as follows on the Pay Items form (MP.PP.22.10):

• Set the Type to Unused Leave.
• The Taxation setting depends on the region you're in:
  • For New Zealand, set it to Taxable : Extra Pay because paying out unused leave is considered a lump sum payment.
  • For Australia, if it's an employment termination payment (ETP), set it to Taxable : Termination. Otherwise, set it it to Taxable : Standard PAYG.

Recording termination payments in the general ledger

Whether you're using the default termination pay items or creating your own, all pay items need a general ledger purpose, which determines how it should behave when being posted to GL journals. The default pay items have preset general ledger purposes, but you can change them if necessary on the Additional Info tab of the Pay Items form (MP.PP.22.10).

A common way of recording termination payments is to journal the leave accrual (debit the expense, credit the liability account), so when leave is paid out, it will debit the liability account instead of the expense account.

If you change a the general ledger purpose for a default pay item, your change won't be undone when you upgrade to a new version of MYOB Acumatica.

Paying an entitlement on termination

To include an entitlement or leave accrual in termination payments: