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

Processing employee termination payments (ETP)

Updated over a week 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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