Transaction Type - Pay

You must create new pay transaction types to pay out of balances. This can include annual leave, long service leave, and sick leave.

You need a leave balance payout transaction type for each leave balance that is paid out on termination. Creating a new transaction type ensures values that are paid on standard leave are not calculated when leave is paid out on termination (such as SGC in Australia). The leave on termination transaction type should be the same as the leave transaction type (including setting it with a calculation method of Rate or Rate Modifier).

The transaction type should not be:

Balance tracked.
Included in normal hours.

You should also consider the accumulators in which to include the transaction type. In Australia — for example, leave on termination is not included in the payroll tax or SGC accumulators. Other accumulators which may not include leave on termination could be: salary sacrifice, after-tax percentage deductions or percentage pay transaction types.

Australia

In Australia, you must set up two transaction types for:

Each of the Balance Tracked transaction types for termination when reason is a Normal Termination (for example, voluntary resignation, employment terminated because of inefficiency, retirement), or
A Special Termination (bona fide redundancy, invalidity or Approved Early Retirement Scheme).

When you select the Create GL journals for accruals option on balance accrual transaction types, the general ledger account must be set up as an expense account on leave balance payout transaction types. The termination process creates a general ledger journal to reduce the leave balances to zero and reverse the accrual.

Note: Annual Leave on Term transaction type is not included in all the potential accumulators.

When you have created your leave payout transaction type you must update the leave transaction type with the termination one. This is done in the Payout Balance on Termination section of the Balances tab.

You must define whether the accrued balance should be paid out or whether the entitled only should be paid out. When you have defined the value to be paid out you must select the payout transaction type from the Transfer to dropdown list.

The Special Termination option is enabled for Australia and only applicable for annual leave and long service leave.

New Zealand

When an employee is terminated, they are entitled to 8% of their gross earnings since their start date or last anniversary date if the company has a global anniversary date.

On the transaction type for New Zealand, the Payout must be set to Entitled only for this to work, and the accrual rule must be setup so that the leave is only entitled on an anniversary, not immediately. The amount to be paid out is calculated on termination.

Once this is completed, users in Fiji and New Zealand can process a termination payment for an employee.