Terminating an Employee

There are three ways you can terminate an employee.

  1. Directly within the employee's file
  2. Within an employee details file import
  3. Within a pay run

1. Terminating an employee directly within the employee's file

Go to the employee's file, click on the 'Details' section.  At the bottom of the page, you will see a 'Terminate Employee' button. Clicking this button will bring up a pop-up box in which you need to enter the termination date. There will also be an option to select a termination reason (This article will explain termination reasons further).

 

                                  terminate_emp_au.png

 

From here, you can then select the 'Terminate' button which will terminate the employee and mark them as inactive.  This will mean that they are no longer eligible to be included in pay runs.

NB. Please note that terminating an employee using this method will not process a termination payment and the employee will not be notified.  

 

2. Within an employee details file import

If you go to 'Data Extracts' from the payroll settings section and select the employee data, you can download a template with employee data (including terminated employees).  If the fields 'TerminationReason' (this article will explain termination reasons further) is selected along with the 'EndDate' input, when the file is imported into your business the employee will show as terminated. This will mark them as inactive and they will no longer be eligible to be included in pay runs.  

NB. Please note that terminating an employee using this method will not process a termination payment and the employee will not be notified. 

 

3. Terminating an employee via the pay run

To terminate an employee via the pay run you need to click on the employee within the pay run and then from the 'Actions' button select 'Terminate employee'.

A pop up will appear as follows:

terminate_emp_nz.png

 

From here you will need to enter the employee's termination date and leave entitlement date. You will also have the option of selecting a termination reason (This article will explain termination reasons further) before clicking 'Save'.

The employee's record will turn pink (as an indicator it is in termination mode) and will display calculated earnings and any accrued leave to be paid out as part of the termination pay.

With regards to the section on 'Leave Taken':

  • Any leave category setup to be paid out on termination will automatically be calculated as part of the termination pay (Public holidays will be included when calculating the leave on termination pay out). If you do not wish for this to occur, deselect the 'Pay out' option;
  • If any leave loading associated with a leave category (for eg annual leave loading) is to be paid out you will need to select the 'Apply x% loading' checkbox;
  • If you want to pay out a balance for an associated leave category that does not have the 'Pay out' option automatically selected, you will need to manually select this option;
  • Any leave categories setup to not accrue automatically will not appear in this section.

  terminate_nz_pr.png

N.B. If the employee is set up to be paid default standard hours each pay and is terminated mid-pay period then the employee's hours will automatically be re-calculated on a pro-rata basis. We strongly suggest you double check these hours to ensure they are correct.  Once you have finalised the pay run, this employee will no longer be active or eligible to be included in future pay runs and the employee line will be highlighted red. 

N.B. If there are any unfinalised pay runs for the employee, you will not be able to terminate until those pay runs have been finalised. 

N.B. When terminating an employee that is using standard work hours, 0 hours will populate for 'reversal of leave taken in advance' for leave taken on dates falling on a weekend and a manual adjustment is required in this instance. 

N.B. The Termination reason entered when terminating an employee does not have any impact on PAYE or ACC Levy calculations (it is a "text" / FYI field only).  Any redundancy or retirement allowances should be processed as lump sum payments, via the Add lump sum payment option on the actions button within the employee's pay run record - choose the Redundancy or Retirement allowance (system) pay category. 

 

Cancelling a termination

If you want to cancel the termination in a pay run, click on the "Actions" box within the employee's pay details and then click on 'Cancel Termination':

2020-10-27_21-42-46.jpg

 

If you want to re-activate an employee, you can do this by going to the employee's file 'Details' section.  At the bottom of the page, you will see a 'Re-Activate Employee' button. Clicking this button will bring up a pop-up box in which you need to click 'Activate' to confirm you wish to re-activate the employee thus making them eligible for pay runs.  Alternatively you can reactivate the employee using an import file.

 

If you have any questions or concerns on terminating employees, please drop us a line via support@nzpayroll.co.nz.

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