Termination - Unused Leave on Termination
Some types of leave balances are paid out upon the termination of an employment, in accordance with the industrial instruments that define the entitlement to leave, some may be considered:
- Lump Sums – the pre-18 August 1993 accrual for annual leave, annual leave loading and long service leave for normal terminations and all leave accruals for annual leave, annual leave loading and long service leave for termination due to genuine redundancy, invalidity or early retirement schemes.
- Employment Termination Payments (ETP) - such as for Rostered Day Off (RDO), TOIL and Personal Leave that are paid out on termination.
The type of leave balances that are ordinary time earnings when the absence is taken are not ordinary time earnings when paid out on termination. The unused leave paid on termination is comprised of the post-17 August 1993 component of the following leave types, only for normal terminations (other than for genuine redundancy, invalidity or early retirement schemes):
- Annual Leave – holiday or recreation leave for full time and part time workers.
- Leave Loading - a bonus payment, usually a percentage of the leave balance.
- Long Service Leave - granted to reward a specified period of continuous employment for full time, part time and casual workers.
Adding an Unused Leave on Termination
Follow the next steps to create an unused leave on termination:
The termination flag must be set and a valid termination reason must be selected, you can find the termination options under the employee's payroll details.
- Access the ETP - Leave from the application toolbar
- Click Unused Leave
- The Termination - Unused Leave window appears
- Employee select the employee "terminated employment"
- Termination Date & Reason pre-filled based on the selected employee
- Leave Type select the unused leave type
- Leave Duration select the leave duration applied
- Hourly Rate this should be the employee's base rate
- Available Hours number of hours of accrued leave
- Leave Loading applicable to annual leave, select Yes if the employee is entitled to 17.5% leave loading
- Payment Date select the date of payment
- Click Save
Leave duration changes based on the selected leave type and the employee's employment date "Start Date". There are 2 possible options for Annual Leave (Post-17 August 1993, Pre-18 August 1993) and there are 3 possible options for Long Service Leave (Post-17 August 1993, 16 August 1978 to 17 August 1993, Pre-16 August 1978).
The selected leave duration will determine the type of payment (Unused Leave Payment or Lump Sum Payment) and the tax amount to be withheld from this payment.
Employees with no Accrued Leave
There might be some situations where you have not recorded any leave entitlements for the employee, yet you still need to pay the leave entitlement on termination, what you should do is to add the total hours for the required leave type as transferred leave then create the unused leave on termination payment. You can check how to create a transferred leave under the Employees category.