Final Pay - Payout of unused annual leave

Question

One of our employees is leaving & I am having to payout unused annual leave for the first time.

Can you please advise the best way to do this.  I have run termination process and am now preparing the final pay.

I allocated all unused annual leave against our Holiday Hourly Item. Is this correct or should I create a new item for the Annual Leave payout.

Additionally, the tax amount appears low. Should I be calculating this manually?

Advice would be greatly appreciated. Thank you Penny

Acctd4 · Accepted Answer

Hi Penny

Yes, the Holiday Hourly Payroll Item is correct - When you enter the total hours quantity for this on the Paycheque, it should reduce the Available Holiday (hours) displayed in that box on the right hand side:

Note the Pay Period will affect the tax calculation too.  Eg in the above example, $ 910 gross (This is the Holiday Hourly less the Super Salary Sacrifice) for the "one day" pay period shown will be taxed a lot higher than if the pay period was for that amount earnt over a week, then less again if it was for a fortnight.

Technically, there are a range of manual calculations to be made to pro rata the tax amount, however it's better to overtax than under tax as if it's too much, the employee will receive any excess back as a refund.  Therefore, I let the system auto-calculate it (as it will usually calculate more)

How much is the total gross amount?  If claiming the tax-free threshold, an employee can earn $ 350 p/wk / $ 700 p/fn before any tax is actually payable 😁

Acctd4 · Accepted Answer

(According to the ATO PAYG calculator) that tax amount is for a fortnight, double-check the Pay Period at the top right of the Paycheque.  For a week, it should be $ 869.