Summary

In New Zealand, terminations usually require only an X. Termination-type allowance transaction and a taxation override allowance transaction.

Process

1. Check other open pays.

If you terminate an employee who has transactions (such as a pay header) in other open pays, then you cannot process the employee’s termination pay until you:

• Process and close those pays (if the employee should have the transactions)

  or

• Delete all transactions for that employee from other open pays (if the employee should not have the transactions).

You can use the Delete employee from pay sequence menu option in Transaction View to delete all employee information (such as a pay header and all linked transactions) from a pay sequence.

2. Check the employee’s final pay

Check that the employee's final Standard pay is correct.

3. Check that termination conforms to NZ Holidays Act 2003.

For example, the Act states that you need to add the annual leave entitled to the termination date and pay the employee for any public holidays in that period.

4. Add the termination transaction.

You should add the X. Termination-type allowance transaction in a Manual pay.

5. Add a taxation override transaction.

If the employee's termination pay is greater than their normal pay, then add a taxation override allowance to ensure that they do not pay too much tax.

Fields

Date terminated:

Enter the date the employee will cease employment.

Reason Code:

Select a reason code for the termination from the pick list.

Pay LSL Entitled:

Choose whether or not pay out the employee unused Long Service Leave (See LS units available on the Employee record).

Default setting is Yes.

Days worked this period:

Read only label displaying the days worked value stored in the current pays pay header record.

Profiled Hours this period:

Read only label displaying the profiled hours value stored in the current pays pay header record.

Extra Pay Details

• Elects to tax at higher rate – Default “No” controls whether PayGlobal is expected to apply a higher PAYE tax rate if the employee’s “Gross-up” amount puts does not put them at the highest tax rate.
• Calculate grossed up amount – Default “Yes” controls whether PayGlobal is expected to automatically calculate the employee’s Grossed up annual amount or just use a value manually supplied.
• Grossed up annual amount – Default “0.00” on input.

• Yes = On processing the pay, PayGlobal will automatically the amount for you and display it. To see the value on an open pay you must press CTRL + D.
• No = You should enter an amount that reflects the following:

  If the employee has a primary tax code, then the Gross-up amount should equal the "annualised amount" of last 2 paid pay periods only. PayGlobal will add the sum of all the extra pay transactions in the pay to determine the tax rate to apply in the background.

  If the employee has a secondary tax code, then the Gross-up amount should equal the "annualised amount" of last 2 paid pay periods + the low threshold amount for their tax code only. PayGlobal will add the sum of all the extra pay transactions in the pay to determine the tax rate to apply in the background.