L A S T U P D A T E D | J U N E 2 0 2 0
PROCESSING A TERMINATION PAY
Your guide to Terminations and Redundancies in SmartPayroll
Redundancies and Terminations
We've created this guide to give you step by step instructions on how to enter a Termination Pay in SmartPayroll.
You can follow this guide if any of the following situations have occurred:
Redundancy Resignation 90 Day Trial Period (for businesses with less than 19 employees) Abandonment of Employment End of fixed term contract Medical incapacity
Get in touch!
If you have any questions after reading the guide, you can get in touch with our Helpdesk on 0800 10 10 38 or [email protected]. Before you begin:
Before you start your Termination Pay process, please read the following points.
When should I pay the Termination Pay? The termination pay should be paid when the next payroll is due, unless specified in the contract that it will be paid at a different time e.g. on their last day of work.
Public Holiday payment If an employee is terminating right before a Public Holiday, you'll need to check if they have any earned leave (entitled leave under the Holidays Act).
1. You can check this by going to Employee Details.
2. Leave Balances and looking at the balance of leave, less the accrued hours.
If the employee was on paid annual leave, would their earned leave (using their normal /average hours per day) stretch across the public holiday?
If it would they are entitled to be paid for the public holiday . Redundancy If the termination is a redundancy (i.e. written into the employment agreement), then this is entered into the One Off Payments area.
You can find the One off Payment section by following the steps below:
1. Click on Run a Pay
2. Select the employee you are making redundant
3. Now click on + Add one off payment
4. A redundancy is the only payment you don’t have to pay ACC Earner Levy or KiwiSaver on. You can un-tick the ACC Earner Levy. There is also an option to un- tick Leave earnings in the One Off Payment area. Check the details of your Redundancy Agreement for clarification. 5. Now click OK.
Get in touch!
If you need to un-tick KiwiSaver, it's best to get in touch with our Helpdesk. You can get in touch on 0800 10 10 38 or [email protected]
Parental Leave
If you're terminating an employee who is not coming back from Parental Leave, it's best to contact our Helpdesk to ensure the employee's Annual Leave entitlement is correct before terminating. Get in touch! Extra Payments
If you need to enter an extra payment for 'In Lieu of Notice' this can be added as an allowance.
To add an allowance, follow the steps below:
1. Go to Company Details
2. Now click on Company Rules on the left hand side
3. Click Add 4. Enter the description e.g. Payment in Lieu of Notice
5. Press Save
6. Now click on Contract Groups on the left hand side
7. Select the correct Payment Group i.e Salaried Employees or Waged Employees
8. Scroll down to Allowances and tick on the allowance.
9. Now press Save. 10. Now click on Employee Details
11. Select the employee you are terminating
12. Now click on Employee Payments on the left hand side
13. Scroll down to Allowances and tick on the Allowance
14. Now click Save. Important: Give MBIE a call To keep yourself safe as an employer you should contact MBIE (Ministry of Business, Innovation & Employment) if any of the following circumstances apply to your situation:
If you cannot afford to pay the termination payment in full to the employee. If you are wanting to make a deduction from the termination pay that is not covered in your employment agreement and has not been agreed to by the employee. If you are not including all leave owing in the termination pay.
You can call MBIE on 0800 20 90 20.
How to enter a Termination Pay:
How to terminate an employee in SmartPayroll
Note: If you need to make your Termination Pay separately to your next normal pay run, skip to page 11 of this guide for instructions on how this can be entered. 1. To Enter a termination, click on Run a Pay.
2. Choose the correct pay group on the right hand side and pay period end date.
3. Select the employee you are terminating. 4. Enter any normal hours worked and click Save.
5. The system will ask you for the date you'd like to process this pay. Now go to the Actions box and click on Terminate the employee.
6. Enter the final date of work and the termination reason (optional). The leave showing includes the balances of Annual Leave, Lieu Hours and Alternate Public Holiday hours. Important
All leave should be ticked on, unless there is a very good reason the employee would not be entitled to these payments.
7. Press OK and then Save.
8. You will now see Terminated at the top of the page with the date of the termination.
9. In the box on the right you will see details of the pay, the termination will be included in the Gross Pay figure. For more details on how the termination pay is made up you can:
1. Click on Employee Details
2. Then select the terminated employee
3. Click Leave Balances on the left hand side
4. Under Term Pay click the information symbol 5. The Explain Termination Pay section will be shown.
If you need to make the termination payment separate to your next normal pay
1. Run a Pay
2. Click on Normal Pay Details and clear any pay information loaded and not processed for the employee you are terminating.
3. Now clear any pay information loaded and not processed for the employee you are terminating. Do this by ticking the employee and then click on the trash can icon. 4. Then click Manual Pay Details
5. Select the correct employee
6. Click + Add Manual Pay
7. Follow the previous steps from the How to enter a Termination section of the Guide to add the hours and the termination details.