Marlin HR automatically calculates and applies employees' outstanding leave balances when processing a termination pay run.
March update - remove pay loading checkbox - automatically pays out with annual leave checkbox
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These are applied according to the selections made in the employee's Termination Options window, before initialising the termination pay run.
To payout unused leave as part of the termination pay:
- Tick the Pay Unused Annual Leave and other relevant checkboxes at the bottom.
The selected Termination Reason (above) also determines whether the employee's leave is included as a Gross Payment or Lump Sum in their termination pay run.
- If Redundancy is selected: The payout is taxed at the ATO's Redundancy Termination Payout Tax Rate of 32% (viewable in System > Options > ATO Options).
Before initialising a termination pay run, make sure to double-check the employee's leave balances.
If a casual employee has been set up incorrectly and has accidentally accrued leave, you can leave the Pay Unused Leave checkboxes unticked. HR will still clear the balances in the system, without paying out any leave.
See the Casual Employees Inform guide for further information.
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
Partial Termination Periods
Employees accrue leave on all standard hours worked during a partial final pay period.
If the termination date falls mid-pay period, exclude them from the normal pay run to avoid incorrect "Paid To" dates:
- Process a separate termination pay run for any outstanding hours, allowances, and leave payouts.
- If no payouts apply, a $0 termination pay run is still required to report final earnings to the ATO.
See Termination Periods for more information.
Pay Advice Details
Once initialised, the employee's Unused Leave Payout amounts are shown in red at the top of their Pay Advice table.
This can be viewed by double-clicking on the employee, after initialising the termination pay run.
If an employee's termination pay includes standard hours or leave entries, HR will also:
- Automatically calculate leave accruals on those hours
- And add them to the unused leave payout
Regardless of whether you pay out any unused leave, the termination pay run will automatically zero the employee's leave balances.
In linked systems, it will also send a pay journal to Marlin GTX reducing the accrued leave provisions by the same amounts.
Since termination pay runs automatically adjust employee leave balances:
- Do not create leave entries to pay out unused leave through the termination pay.
- Do not use leave balance adjustments to zero out unused leave that will not be paid.
- Do not transfer annual leave with loading to annual leave if leave loading will not be paid on the unused leave payout.
Termination Period Leave Accruals
Payrun > Payrun Processing > Initialise > [Employee]
Employees with leave accrual entitlements are entitled to accrue leave on any ordinary earnings hours (i.e. standard hours) worked during a final, partial pay period.
Any hours worked or leave taken since a terminated employee's last normal pay must be entered on their termination pay.
Terminated employees are also entitled to accrue leave on a pro rata basis for any hours worked since their last normal pay that are specified as ordinary time earnings (OTE) by the ATO.
This generally only includes:
- standard earnings
- annual leave
- personal leave
- long service leave
If you ticked the Payout Unused Annual Leave or Payout Unused Long Service Leave checkboxes in the Termination Options window before initialising the termination pay, the termination pay run will automatically calculate the partial accrual and add it to the unused leave payout.
See the Termination Periods Inform Guide for further information.
If an employee's final regular pay covers them up to Wednesday, but their employment ends on Friday, they are entitled to accrue leave for those two days (whether or not they work Thursday and Friday or take them as paid leave).
If an employee is terminated without the required notice, you need to use the Payment In Lieu of Notice allowance type, rather then enter additional standard hours. This ensures that the payment is correctly reported to the ATO and prevents the employee accruing additional leave on any incorrectly entered hours.
Accrued leave types cannot be renamed. If the wrong leave type has been selected on the employee (e.g. "Annual Leave" vs. "Annual Leave with Loading"). You will need to zero the balance, then re-add it using a leave balance adjustment.
Long Service Leave
To pay out Long Service Leave in a termination pay run:
- Tick the Pay Unused Long Service Leave box in the employee’s Termination Options before initialising the termination pay run.
If a terminated employee is entitled to a long service leave payout but it hasn’t been set up as an entitlement:
- You must configure it before processing their termination pay
- Then, enter the balance using a leave balance adjustment
Pre-1993 Leave Accruals
If any portion of an employees annual leave or long service leave was accrued before 18/8/93, you will need to deduct these portions from the unused leave balances before initialising the termination pay run.
See the Termination Deductions Inform Guide for further information.