Table of Contents

STP Phase 2 - Cessation Type in Reckon Accounts 2023

ATO Requirements

Cessation Type describes the reason for the separation of the employer and employee relationship that ceased their employment. Services Australia will use the cessation type reported via the pay event to minimise the need for payers to provide an Employment Separation Certificates (ESC).

A cessation type code must be reported when a cessation date is reported.

The different cessation reasons are:

  1. Voluntary cessation
  2. Ill health
  3. Deceased
  4. Redundancy
  5. Dismissal
  6. Contract cessation
  7. Transfer

See When an employee transfers or leaves | Australian Taxation Office (ato.gov.au) for more information.


Reckon Accounts implementation

Until Reckon Accounts 2022, the termination of an employee was managed by:

  • Manually entering a Release Date after finalising the last pay for the employee.
  • The use of the Terminate Employee wizard, setting the Termination type and reason, as well as the Release Date. This places the details on the Employment Info tab of the Employee record.
Mapping of the existing reasons to correlate with the STP Phase 2 requirements has proven complex, and we have elected to implement a new field instead to capture the termination reason.

New cessation type field

In Reckon Accounts 2023, a new field named Cessation Type was implemented in the Employment Info tab and will only be enabled when a Release Date is present.

All the cessation reasons from ATO are included.

Please note that the presence of the Release Date previously enables the Deceased checkbox under the Release Date calendar field.​

The Deceased checkbox has been removed in lieu of the Cessation reason: Deceased.


Company file post-upgrade

Any existing but terminated employees would not have the Cessation type updated as it has no relationship with the Terminate employee wizard. It will only perform the validation if the employee record is modified.


Updating data

The Cessation type can be set on the employee record by manually editing the record, provided that a Release Date is present.


Messaging

The Cessation type is mandatory for a terminated employee with a Release Date. When missing, it will display the following warning:


IIF files

The Cessation Type was added to the IIF file with the header name: CESSATIONTYPE.


Cessation type descriptions

The following are excepts from When an employee transfers or leaves | Australian Taxation Office (ato.gov.au).

CESSATION TYPE

CODE

DESCRIPTION

Voluntary Cessation

“V”

An employee resignation, retirement, domestic or pressing necessity or abandonment of employment.

Transfer

“T”

The administrative arrangements performed to transfer employees across payroll systems, move them temporarily to another employer (machinery of government for public servants), transfer of business, move them to outsourcing arrangements or other such technical activities.

Redundancy

“R”

An employer-initiated termination of employment due to a genuine bona fide redundancy or approved early retirement scheme, or a non-genuine redundancy.

Ill health

“I”

An employee resignation due to medical condition that prevents the continuation of employment, such as for illness, ill health, medical unfitness or total permanent disability.

Dismissal

“F”

An employer-initiated termination of employment due to dismissal, inability to perform the required work, misconduct, or inefficiency.

Deceased

“D”

The death of an employee.

Contract cessation

“C”

The natural conclusion of a limited employment relationship due to contract/engagement duration or task completion, seasonal work completion, or to cease casuals that are no longer required.


Need more help?

Ask the Reckon Community at: https://community.reckon.com/categories/accountshosted

Or Log a Support Ticket: https://www.reckon.com/au/support/

How did we do?

STP Phase 2 - Employment Basis in Reckon Accounts 2023

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