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Processing an employee termination payment (ETP)
Processing an employee termination payment (ETP)

Processing employee termination payments (ETP)

Updated over 11 months ago

When terminating an employee, they may be entitled to several lump sum payments. These lump sum payments may be employment termination payment (ETP), including:

  • payments for unused sick leave or unused rostered days off

  • payments in lieu of notice

  • redundancy pay payments

A full list can be found on the ATO's website.

Creating termination types

To create termination types in your account, navigate to Payroll > Payroll Settings and select 'Termination Types'

Click '+ NEW' to add a termination type and complete the following fields.

Applying termination payments to an employee's final payslip

On the employee's final payslip, click "+ ADD" to create a termination payment line.

Enter a Taxable Amount and, if applicable, a Tax-Free Amount, based on the ATO's Table 20.

Tax calculations are then automated for Termination Payment Types "Other" and "Redundancy". Other termination types require a manual tax calculation.

Termination payments will appear as follows on the employee's payslip.

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