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Processing a termination pay in Reckon One

Learn how to process a termination pay within a single pay run in Reckon One, to ensure values are reported correctly to the ATO as part of the STP submission.

Terminating an employee and creating a final pay run

  1. Go to Payroll, then Employees.
  2. Select the employee.
  3. Go to Options, then select Terminate employment.
    Terminate employment can be found under the options menu on an employee
  4. Enter the End date and select the Reason for termination from the drop-down list. The Reason for termination will determine the default reporting categories for unused leave (which can be changed or adjusted once you create the pay run):
    1. If you select Redundancy or Ill health, any unused leave that has been selected to pay out on termination will be allocated to Lump sum A code R.
    2. If you select Voluntary Cessation, Dismissal, Contract Cessation or Transfer, unused leave will be allocated to Unused leave on termination.
      Terminate employment drawer
  5. Select Terminate employment.
  6. Select Create final pay run.
    Confirmation modal for final pay
  7. If you select Cancel, you can come back to the employee profile later and create the final pay run:
    1. Go to Payroll, then Employees.
    2. Select the employee.
    3. Select the Create final pay run in the top right hand corner. A pay run drawer will open.
    4. (Optional) You can edit the Pay date or the Pay period.
    5. Select Archive employee once the pay run is marked as paid to ensure the employee is set to inactive.
    6. Select Create pay run.

Create final pay run drawer

Editing pay details

  1. Once the final pay run has been created, you'll be on the pay runs screen. Select the pencil icon next to an employee to open the pay run drawer.
  2. If the employee's leave is set to pay on termination, the leave pay item will be calculated and the ATO reporting category displayed.
    Edit pay details of employee drawer
  3. Make any adjustments necessary to the termination pay. To adjust the reporting categories for unused leave you may need to edit leave items to and/or add new ones, and adjust the PAYG tax if necessary according to Schedule 7 – Tax table for unused leave payments on termination of employment.
Example of adjusting the reporting categories
In the following example, I have an employee that left the company voluntarily. I have set the Reason for termination to Voluntary cessations, so unused leave has been assigned to the reporting category Unused leave on termination.
The employee has the following leave balances:
- 80 hours annual leave
- 160 hours of long service leave (20 hours of which was accrued before 16/08/1978 and therefore needs to be reported as part of Lump Sum B).

I will need to:

  • reduce the hours of long service leave that are allocated to Unused leave on termination
  • create a new leave item for the long service leave that needs to be reported as part of Lump Sum B
  • adjust the tax, because Lump Sum B is taxed at a different rate to Unused leave on termination.

To reduce hours of long service leave allocated to Unused leave on termination:

1. Select Long service leave and reduce the Quantity from 160 to 140.

Screenshot of user editing long service leave item and selecting unused leave on termination.

2. Select Done.

To create a new leave item for the long service leave that needs to be reported as part of Lump Sum B:

1. Select Add against Earnings & leave and select Long service leave from the drop-down list.

2. Enter the Quantity as 20 and select Lump sum B.

Screenshot of user adding a Long Service Leave earnings and leave item with Lump Sum B selected for STP reporting

3. Select Add. The changes will be reflected in the pay run drawer and display the relevant reporting category.

To adjust the tax because Lump Sum B is taxed at a different rate to Unused leave on termination

1. As Lump sum B is taxed at a different rate, scroll down to PAYG Tax section and select Tax withheld.

2. Override the calculated tax value in the Custom tax withheld amount field.

  1. When you're finished editing and adjusting the pay run, select Done.

Marking the pay run as paid and submitting to the ATO

Learn how to mark the pay run as paid, view and email payslips and submit the pay run to the ATO.

Read more


Need more help?

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

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

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