Paying your employees > Processing termination payments > Task 2: [Optional] Create payroll categories for termination payments
Task 2: [Optional] Create payroll categories for termination payments
If a termination amount needs to be taxed at a different rate—for example, unused holiday pay—you need to create a new payroll category for this amount. Also, to pay an entitlement balance (such as unused holiday leave) you may need to create a payroll category to accrue the entitlement by calculating leave based on a percentage of gross hours. However, if you use this payroll category for a termination payment, you need to exclude the new payroll category from accruing leave.
1
Go to the Payroll command centre and click Payroll Categories. The Payroll Category List window appears.
2
Click the Wages tab.
3
Click New. The Wages Information window appears.
4
Type the name of the wage category in the Wages Name field. For example, if you need to create a wage category for unused holiday pay, type a name such as Unused Holiday Pay.
5
Select Hourly as the type of wages.
6
Click Employee. The Linked Employee window appears.
7
In the select column (), click next to the employee who is leaving.
8
Click OK and then OK again. The Payroll Category List window reappears with the new payroll category in the list.
Exclude payroll category from accruing leave
9
Click the Entitlements tab. The list of entitlement payroll categories appears.
10
Select the payroll category used to calculate the entitlement, for example, Holiday Entitlement, and click Edit. The Entitlements Information window appears.
11
Click Exempt. The Entitlements Exemptions window appears.
12
In the select column, click next to the payroll category name entered at step 4.
13
Click OK and then OK again. The Payroll Category List window reappears.
14
Repeat step 2 to step 13 for each required termination payroll category.
Related Topics
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Task 3: Process a paycheque for the final pay
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Processing termination payments

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