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Processing a final pay

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When an employee leaves your business, you'll need to pay:

  • their last regular pay – for wages owed up to the employee's last day of employment

  • all unused annual leave – including leave loading (if this is normally paid when they take annual leave).

Depending on their workplace agreement and reason they're leaving, you might also need to pay:

  • an employment termination payment (ETP) – this is a lump sum payment for things like redundancy, time in lieu of notice, unused rostered days off, or unused personal (sick) leave. To find out if you need to pay an ETP, speak to your accounting advisor or check this ATO information. If you need to pay an ETP, first complete these steps to set up and make the payment. Then come back and complete the tasks below.

  • unused long service leave – if the employee has unused long service leave, you'll need to pay it out along with any other unused leave in a single pay. This ensures the PAYG tax is calculated on the entire unused leave payment.

You'll also need to report the employee's termination to the ATO through your STP reporting.

Rules, tax and other complexities

Final pays can get complicated so we recommend you speak to an accounting advisor about the specifics of your final pay.

To learn about tax on final pays, see this ATO information. For the rules, calculators and other final pay resources, check the Fair Work website.

Processing a final pay

We'll step you through how to pay an employee's final regular pay and any unused leave. If the final pay includes an ETP, there's a little more you'll need to do.

To make it really clear to the employee what their final pay contains, we recommend processing separate pays for each of their final pay components (last regular pay, unused leave, and any ETP amounts).

Complete all the tasks below to process an employee's final pay.