You may have the requirement to finalise the employment for a team member in the ClockOn system. This guide demonstrates the process for preparing for, and completing the termination process to allow for additional payments including the leave payouts and termination tax amounts.


This article contains the following items

  1. Cessation Reason Codes
  2. Preparing An Employee For Termination
  3. The Importance of the Working Week for Terminations
  4. Processing An Employee Termination

Cessation Reason Codes

As a part of the termination process, you will need to specify the reason for the employee's finalization of employment.

Please see below for a list of definitions for the cessation types;


Employee Initiated 

  1. Voluntary - Includes resignation, retirement, domestic or pressing necessity, or abandonment of employment.
  2. Health - Includes illness, ill health, medically unfit, and total permanent disability.
  3. Deceased - Death of the employee.


Employer Initiated

  1. Redundancy - Includes genuine redundancy or an approved early retirement scheme.
  2. Dismissal - Includes dismissal, incapacity to perform required work, misconduct, and inefficiency. 
  3. Contract - Includes the completion of an agreed contract, seasonal work completed, and no more work required.
  4. Transfer -  Includes transferring employees across payroll systems, and administrative arrangements between employees


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Preparing An Employee For Termination

To prepare an employee for termination in the system. The first step is to set the employee's termination date against their profile. This will indicate to the system, which payroll the termination will need to be processed in. 


This is done on the employee's profile under the Termination/Notes tab, by using the Terminate button.



We also strongly recommend a review on the employee's Working Week to ensure that the correct number of contracted hours is set. The number of hours listed within this section is used for determining items such as the employee's standard weekly wage, commonly used for long service leave and in, lieu of notice payments, and for the calculation of termination tax amounts.


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The Importance of the Working Week for Terminations

The employee's standard working hours play an important element when doing a termination as it influences the calculations for items including the following

  1. Determining the Standard weekly pay for items such as In Lieu of Notice and Redundancy payments,
  2. Determining the Long Service Leave payout amount,
  3. Determining the calculation and tax rate for the employee's Marginal Tax amount affects the taxation on items such as annual leave and LSL payouts.


For a full list of termination items that are calculated using the Marginal Tax rate please refer to the ATO's documentation at https://www.ato.gov.au/Rates/Schedule-7---Tax-table-for-unused-leave-payments-on-termination-of-employment/

The employee's Working Week is defined in the Employee Details > Working Week tab. 


For Long Service Leave calculations you may be required to use a calculation based on the average working hours that the employee has worked over a period of time. To calculate this we recommend referring to the Gross hours (day summary, averages) report.


This report will give you a breakdown of the total days worked per weekday for the employee, the number of periods that the employee has been included in, and the average hours for these periods per day for the employee.


Processing An Employee Termination

With the employees prepared for termination, the next step is to complete the termination through payroll.


ClockOn will show you which employees have a pending termination in the current payroll.

 

To action the termination use the Options button and select Termination.


This will then prompt you with a wizard to guide you through the options for final payments to the employees, such as leave payouts, in lieu of notice, redundancy payments, tax calculations, and additional employee termination payments (ETP).


ClockOn has support for several types of terminations that work to allocate payments and calculate tax, and submit information to STP as per the ATO's requirements. These types include

  1. Normal Termination
  2. Redundancy / Early Retirement
  3. Termination because of death 


Below is an interactive walkthrough for the termination wizard screens.



The redundancy option has an additional screen for including the redundancy amounts for payment to the employee.


Once the termination wizard has been finished, the payroll will reflect this on the payroll with the text Completed.


TIP: You are able to re-run the termination wizard if a mistake was made. This can be done at any point prior to the completion of the payroll.


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