Treatment of RDO's paid out on Termination

Therese R
Therese R Member Posts: 114 Reckon Star Reckon Star
edited July 2024 in Reckon Payroll

Good morning

We terminated an employee in April. They had an ETP which included Unused A/L and Unused RDO's. On the EOFY report, the ETP is showing up under the ETP column but the RDO amount is also appearing in the Leave Column.

Attached is a set of screen shots showing the following:

  • RDO item set up in Reckon Payroll
  • Screen shot of the final payrun in detail showing the unused A/L and unused RDO
  • Screen shot of the 2 final payruns
  • Screen shots of the employees 2 final GovConnect records
  • EOFY report summary

This has thrown out my reconciling to my General Ledger by the amount of the RDO's paid out. If I submit this to the ATO, will it look as if the employee received $78.93 extra?

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Comments

  • Therese R
    Therese R Member Posts: 114 Reckon Star Reckon Star

    Hi Rav?

    Can you please provide any advice on this? I would like to send the file to the ATO today.

  • Therese R
    Therese R Member Posts: 114 Reckon Star Reckon Star

    HI anyone one from Reckon

    Please can someone advise on my question above? I need to lodge this employee to the ATO.

  • Therese R
    Therese R Member Posts: 114 Reckon Star Reckon Star

    Hi Rav

    Can you please tell me if someone is looking into this for me or do I have to escalate this somewhere else?

    I have had Clayton Oliver look at this and he has advised that I need Reckon to help resolve. He agrees that there appears to be a double up.

  • Rav
    Rav Administrator, Reckon Staff Posts: 16,811 Reckon Community Manager Community Manager

    Hi @Therese R

    Apologies for the delay in getting to your post, its been an extremely busy EOFY period on the Community, (which I'm sure you've been no stranger to yourself), so its taken a little longer to get back to everyone. Sorry about that!

    In regard to your query, I'll be honest with you I'm not an expert when it comes to the intricacies of termination pays so can't provide much guidance here yet but I'm happy to try and get a bit more info on what you're reporting to clarify whether there's something incorrect here.

    I've sent through an access request to your book which will come through as a separate email so we can take a closer look. Can you please grant access when you have a chance.

    Cheers!

  • Therese R
    Therese R Member Posts: 114 Reckon Star Reckon Star

    Thanks Rav - I have allowed the access.

  • Rav
    Rav Administrator, Reckon Staff Posts: 16,811 Reckon Community Manager Community Manager

    Thanks @Therese R

    Can you please confirm the first name of the employee your query relates to specifically.

  • Therese R
    Therese R Member Posts: 114 Reckon Star Reckon Star

    Jayden but we have 2 Jaydens so the query is for the one that was terminated in April this year. The other Jayden is Archived but was terminated in Payroll Premier in September last year.

  • Rav
    Rav Administrator, Reckon Staff Posts: 16,811 Reckon Community Manager Community Manager

    Thanks @Therese R

    Ok, so just had a word with the product team in regard to your query and have the below info -

    The unused RDO balance does not go into your ETP. Any leave pay item selected to pay out on termination will default to either Lump Sum A - Type R or Unused Annual Leave.

    If we're understanding this correctly and you have included the balance of the RDO in your ETP calculations then this is why its out of balance.

    Please note though, we're starting to get into the realm of accounting advice here and that's not something we can get into or advise on so if you need assistance with the calculation/inclusions of ETP, that's something we'll need to refer you to a registered accountant.

  • Therese R
    Therese R Member Posts: 114 Reckon Star Reckon Star
    edited July 2024

    Thanks Rav, but when I prepared the final ETP, the software picked up the unused RDO's as per this screen shot:

    image.png

    So it has been reported in ETP but it has also been reported in the leave. I don't understand how it can appear in 2 categories. In Govconnect, RDO's have a code of "O" but Unused Annual leave has a code of "U". Should RDO's paid out on Termination be given a code of "U".

    The set up for RDO is this:

    image.png
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    And this is the extract from the ATO:

    image.png

    As you can see in first dot point - RDO's can be included in an ETP.

  • Rav
    Rav Administrator, Reckon Staff Posts: 16,811 Reckon Community Manager Community Manager

    Hi @Therese R

    The item you've created is an Other-type leave item and more specifically, its been ticked to pay out on termination. When that is done, its treated in the same way as something like annual leave, in that it will default to either Lump Sum A type R or unused annual leave depending on the termination reason.

    If the balance you're referring to above should not be under unused leave you will need to remove that leave item from the termination pay run.

  • Therese R
    Therese R Member Posts: 114 Reckon Star Reckon Star

    HI Rav

    I am confused. The item appears in both the Leave balance and the ETP balance. Have I coded RDO correctly? It does not form part of the Unused Leave balance coded "U" . It is appearing in the balance of Leave coded "O" and is also in the ETP balance along with a payment in lieu of notice which is also classified as "O".

    Can I speak to you please?

  • Rav
    Rav Administrator, Reckon Staff Posts: 16,811 Reckon Community Manager Community Manager
    edited July 2024

    Lets just rewind this back a bit just so we're on the same page.

    ETP is manually entered in Reckon Payroll, its not automatically calculated. To me, it sounds like you've entered the $78.93 into this. Can you confirm if that is correct?

    image.png

    If the above is correct, then because you also have a leave item in the termination pay run as well (shown on the left) + the balance added into the ETP you're effectively 'doubling' it ie. from the ETP entry AND the leave item in the pay run.

    Reckon Payroll is not going to apply the balance of that RDO leave item you're using to ETP. ETP is a manual entry and previously mentioned. Your RDO leave item has been setup to pay on termination which means its going to be treated as unused leave on termination as it has in your termination pay run.

    If you've already added the balance of this RDO item to the entry for ETP then you'll need to remove the leave item from the pay run.

  • Therese R
    Therese R Member Posts: 114 Reckon Star Reckon Star

    Hi Rav

    I honestly can't remember. It was my first termination using Reckon Payroll. The Note at the top indicates that it will be pre-filled with the employees remaining leave balances that have pay on termination selected. So I am assuming these 2 items were pre-filled. Item 3 - the Payment in lieu of notice is one that I would have manually added. The Payment in Lieu of Notice does not include the RDO hours.

    image.png

    I still think there is an issue with the codings.

    Annual leave taken in the normal course of employment is treated as "O" under STP2. Then when it is paid out on termination it is treated as "U" and not added to the balance of "O". I have confirmed this by looking at the GovConnect records of the employee. I assume this is something that the software has created because I do not have a pay item in the pay items list showing Annual leave paid on Termination. The employee has 2 line items for Leave - one under "O" and the other under "U". The RDO leave type is "O" as is the Payment in Lieu of Notice. And both of these show on the ETP section which is what I would expect. But it seems that the RDO is also showing up in the leave "O" balance.

    Here is a screen shot of the last 2 payments totals in GovConnect for this employee.

    image.png

    The first line is the breakdown of balances under each type.

    The second line is the breakdown of balances after the termination pay.

    The third line is the difference between each.

    You will be able to see where the $78.93 RDO figure is showing up in the totals.

    I am sorry this is sounding like I am going round in circles but I just can't make sense of what has happened here. I actually just tested another employee by doing a mock termination using the Termination pay option and it prefilled all his accumulated leave including the RDO's.

  • Rav
    Rav Administrator, Reckon Staff Posts: 16,811 Reckon Community Manager Community Manager

    That's correct, the message at the top advises it will pre-fill the leave items that have been set to pay on termination and that's what is happening since your RDO leave item has been setup to do that.
    This is why the RDO item is appearing in the termination pay run.

    Your payment in lieu of notice item is not a leave item, its a termination item hence why it doesn't get prefilled and yes you're correct, you would have added this manually in the termination pay run.

    You need to remove the RDO item from the termination pay run as you've already added the balance of that item to the ETP.

  • Therese R
    Therese R Member Posts: 114 Reckon Star Reckon Star

    HI Rav

    I agree with all your points except I have not added it to the ETP. The amount I put manually in the ETP was $4075.76 not $4154.69. The Payment in Lieu of Notice amount is correct and does not include the RDO amount. Please refer to screen shot of the Termination Pay - Payment in Lieu of Notice.

    The amount in Govconnect under ETP is including the RDO amount plus the Payment in Lieu of Notice.

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