Marlin HR enables careful management of pay runs for deceased employees.
All outstanding amounts and death benefits for deceased employees must be paid to the TFN and bank account of a trustee or beneficiary, as required by the ATO.
If they are being paid on the same date, all payments can be processed on a single termination pay run, including:
- Standard hours
- Overtime
- Bonuses
- Commissions
- Allowances
- Unused leave
- ETP payments
- Lump sums
- Death benefits, etc.
Most payments made to a trustee or beneficiary are not taxable, and not all are reportable to the ATO.
However, the year-to-date amounts reported to the ATO in the last pay run processed before the employee’s death must also be marked as Final.
No payments should be made to the deceased employee’s TFN or bank account.
For more information, please refer to the ATO website.
In case you forget a payment, or need to split payments over different dates, Marlin HR allows you to perform multiple termination pay runs for an employee. Each will have the same termination date and termination reason (as required by the ATO) but can have different dates paid.
add link?
For expert guidance, please consult the ATO, Fair Work Ombudsman, your employer association or a qualified tax accountant about:
- Employee payments (types and amounts)
- Tax withholding requirements
- STP codes for ATO submissions
Quick Reference
Reviewing Leave Balances
Deceased employees' leave balances must be reviewed before changing the their status to Deceased, as it will be locked afterwards.
Open the Leave Entry module (Main > Leave Entry):
- Select the employee.
- Review the accrued leave in the Balance column at the bottom of screen.
If any of the balances are incorrect:
- enter a leave balance adjustment to correct them.
Long Service Leave
If the employee is entitled to a Long Service Leave payout but this leave type is not available (i.e. does not appear at the bottom of screen):
- Go into their Entitlements tab in Employee Maintenance and add a Long Service Leave entitlement
- Return to the Leave Entry screen and enter a leave balance adjustment for the payable hours as of the employee's death
Do not clear out any Annual Leave or LSL balances:
- The termination pay run will display and ask whether these balances are to be paid out
- It will then automatically clear the balances, whether you pay them out or not
Personal Leave
Personal leave is not typically paid out upon termination.
If personal leave is to be paid out:
- It must be entered on the termination pay as a $amount on an allowance type with a special ETP code.
- Take note of the current hours balance now so that you can calculate the $amount to enter
Whether or not personal leave will be paid out:
- Perform a Leave Balance Adjustment to clear the balance now.
If the employee took leave (A/L, LSL or Personal Leave) between their last pay and their death:
- Enter a Leave Entry for those dates/hours now, as usual
- The leave entry will be automatically recorded on the termination pay run
Changing Employee Statuses
After reviewing the employee's leave balances, you should immediately set their Status to Deceased.
This ensures that they can only be included on termination pay runs, and that no further payments can be made to their TFN or bank account.
To change an employee's status, open their file in Employee Maintenance:
- Click on the General tab at the top
- Change the Status drop-down at the top-left to Deceased
- Click on the Save icon at the top
- Respond Yes to the Deceased Warning pops up
A new Deceased Date field will appear in the Important Dates section on the right:
- Enter the date of death
- Click on the Save icon at the top
Do not change the employee's pay rate, as it will be used on the termination pay run to calculate any unpaid hours, unused annual leave and long service leave, as well as to reduce the provision for leave in the General Ledger (if applicable).
Beneficiaries and Trustees
Once you have been informed in writing of an authorised trustee or beneficiary's details, you will need to add them to Marlin HR so that they can be selected on the termination pay run.
These can be added (as beneficiaries) by selecting Select Main > Beneficiary Maintenance from the menu bar.
To add a beneficiary:
- Click on the Add button at the top
- Enter the required details
- Click Save
The beneficiary must have a valid unique TFN. The special TFNs provided by the ATO for employees in certain circumstances (e.g. 000000000, 111111111 etc) are not allowed for trustees or beneficiaries.
Beneficiary Passwords
If you are emailing the pay advice to the beneficiary, you will also need to tell them the password to open it.
The password is their Beneficiary Code followed by the first 4 digits in the Date Of Birth, eg. BRAELE1305.
Deceased Pay Runs
Once the deceased employee's leave balances have been checked, status has been changed and beneficiary has been added, their termination pay run can be processed as usual.
Enter Payrun Details:
- Pay Type: Termination Pay
- Date Paid: When the payment will be made
- Super Paid By: Same as date paid (included in net pay)
cycle?
To display and enable the deceased employee:
- Tick the Show Inactive, Terminated and Deceased Employees checkbox that appears below the employee list (after selecting Termination Pay)
Note: A red Deceased indicator will appear in their Status column
Termination Options
To edit individual payment options:
- Click on the Options button in the deceased employee's Termination column
The Termination Options pop-up will open, with the Termination Reason automatically set to Deceased and the Termination Date and Deceased Date automatically filled in, according to the information entered in Employee Maintenance.
In the Termination Options pop-up:
- Select the Beneficiary (added above)
- Edit the Individual Message to be be printed on the pay advice, if desired
- Tick the Pay Unused Leave/Loading checkboxes below, as appropriate
- Click Ok
Once the termination options have been selected, the pay run can be initialised as usual, by clicking on the Initialise button at the bottom-right fo the module window.
If the deceased employee worked any standard hours since their last pay:
- Enter those hours into the Termination Pay (after initialising)
- The system will automatically calculate and update pro rata leave accruals, adjust leave balances in the Termination Options window, and include any employer superannuation contributions.
Do not add Standard Hours to a termination pay to pay out unused leave, as those Standard Hours will attract additional leave accrual and employer superannuation.
Termination Payment Details
Since all payments must be made to an authorised beneficiary, rather than the deceased employee, both the employee and the beneficiary will appear on the on the initialised pay run.
This is so that Marlin HR can:
- Transfer the employee’s unused leave balances to the beneficiary.
- Submit an STP report to the ATO for the deceased employee, flagging amounts as Final
Note: These will match the year-to-date figures from the last pay run but will also mark the employee as Terminated with a Termination Reason of "Deceased." - Submit an STP report to the ATO for the beneficiary, reporting all unused leave payments, outstanding amounts, death benefits, and superannuation against the beneficiary’s TFN, which will be flagged as Final
All of the deceased employee's amounts will be zero and greyed out, since no payments can be made to them after death.
All payments must therefore be entered for the beneficiary, and most will not be taxable.
To view and enter the required payments, Double-click on the beneficiary
Do not enter any amounts against the deceased employee.
- No defaults from Employee Maintenance (e.g., earnings, allowances, deductions) are brought into a Termination Pay, as these apply only to normal pay runs.
- Deductions cannot be made on a Termination Pay for a deceased employee.
- Any superannuation will be included in the Net Pay amount and paid to the beneficiary via EFT or cheque.
Viewing Unused Leave Payouts
To view the unused leave payout (as per your selections on the Termination Options window):
- Click on the This amount of the Unused Leave Payout
Standard Hours and Leave Taken
Any hours worked or leave taken since a deceased employee's last normal pay must be entered on their Termination Pay.
These can be added as usual, by clicking on the Earnings field.
SS
Beneficiary Super is the amount of employer superannuation payable on any OTE earnings types entered in the Termination Pay Run.
Instead of being paid into a superannuation fund as usual, it is added as a payment and included in the beneficiary's Net Pay.
Deceased employees are also entitled to accrue leave for any hours specified as Ordinary Time Earnings (OTE) by the ATO, including:
- Standard Hours
- Annual Leave
- Personal Leave
- Long Service Leave
If the Payout Unused Annual Leave or Payout Unused Long Service Leave checkbox was selected in the Termination Options window:
- Leave accruals for these hours will be automatically calculated and added to the Unused Leave Payout figure
- These accruals will also be visible on the Leave Accrued line
Hovering over the Annual Leave No Loading (Payout) line will display a pop-up, showing how the leave figure and additional accrual were calculated. This information is also visible by clicking in the This cell of the Leave Accrued column.
Death Benefits and Unpaid Allowances
Any death benefits and unpaid allowances can be entered as usual, using the Before Tax Allowance field.
Only the payment types relevant to deceased terminations will be available for selection.
See the Termination Payments Inform Guide for further information.
