Open topic with navigation

Employee Terminations

Details

The employee termination wizard enables processing the end of an individual's employment with a company.

Prior to completing the termination, shortcuts to check list items, asset details, and COBRA details, are provided.

For final pay, review the employee Master and details, as explained in the Determining Final Pay section of this topic.

Results of the Termination Wizard

A terminated employee's Master record remains for post-employment processing activities and record-keeping requirements. The employee status changes to reflect the new employment status from termination processing.

Completing the Termination Wizard yields the following results.

• Adds a Termination Detail. The termination process creates a termination detail (Human Resources) record with the termination date from the termination wizard.
• Adds a COBRA Detail.  The termination process creates an Employee COBRA Detail as part of finalizing the termination when Monthly COBRA costs are defined and the employee has a COBRA-eligible benefit.
• Updates the Payroll Tab within Employee Time Master. The termination process POPULATES Employment Status, Termination Code, Termination Date, and Re-Hirable indicator.
• Updates the Employment Tab within Employee Master. Values entered and recorded on the termination wizard populate fields on the Employment tab: Termination Code, Termination Date, Employment Status (determines current and future payroll entry and payroll processing status), and the Re-Hirable checkbox (determines whether the system permits the individual to be re-hired at a later date).
• Update the Compensation Tab within Employee Master. Values entered and recorded on the termination wizard populate the Pay Group field on the Compensation tab.
• Updates any Auto Pay Details. The Payroll Termination Date entered populates the End Date on the employee's current, active Employee Auto Pay Detail records. Whether an employee's auto pays are created for a payroll depends on whether the payroll calendar is marked as Scheduled, whether the employee's current Employment Status is set to allow payroll processing, and the effective and termination dates for the auto pays.
• Where the End Date for the Auto Pay is prior to the begin date of the final pay period, then the auto pay won't be created for the terminated employee.
• Where the End Date is after the final pay period or is not yet recorded, auto pays can be created. Other conditions required to allow auto pays to create are a Begin Date before or during the pay period, having the payroll calendar marked as Scheduled, and the employee having a current Employee Status that is defined to allow payroll processing.
• Updates any Benefit Details.
• Benefit Termination Date.  The Benefit Termination Date entered during the termination populates as the Coverage Termination Date on the Employee Benefits Detail.
• Payroll Termination Date.  The Payroll Termination Date entered during the termination populates as the Payroll Termination Date on the Employee Benefits Detail.
• Updates any Deduction Details. The Payroll Termination Date entered during the termination populates the End Date on the employee's current, active Deduction Detail records.
• Updates the Net Pay Details for direct deposits. The Payroll Termination Date entered during the termination populates the Termination Date on the employee's current Net Pay Detail records.
• The Termination Wizard doesn't populate the End Date on the Employee Tax Detail screen with the date of the termination. Any existing end dates on tax details are unmodified.

COBRA Compliance

If the COBRA Notification and Election Letter is one of your organization's designated reports on the Payroll Report Selection, produce and deliver this notification and election form according to regulatory requirements.

Final Pay

Return to the employee Master and Detail screens prior to the final payroll check creation and verify the information. Complete data entry, time entry, and pay final pay as applicable.

1. Auto Pays. Where Auto Pay records were created prior to the termination, the Auto Pay records are included in Pay Entry, and must be removed or adjusted as part of pay entry. Where the End Date for the Auto Pay is prior to the begin date of the final pay period, then the auto pay won't be created for the terminated employee. However, where the End Date was not yet recorded or is after the final pay period, auto pays are created.
2. Guarantee Net Pay. To prevent a guarantee net pay from processing during the terminated employee's final payroll run, de-select the Active indicator and/or enter an End Date with a date prior to the final payroll’s beginning payroll date.

Note:  The Employee Termination process doesn't populate the End Date field in the Effective Dates section of any Guarantee Net Pay Detail records.

3. Benefits Details and Final Pay. The benefit Termination Date populates from the Benefit End date entered during the termination process. Refer to the COBRA Detail screen, and complete all required records for the employee.

Note: The Employee Termination process doesn't create pay records for outstanding accrual balances.

Payroll personnel can access the Benefits Details screen to see any outstanding balances of accrual benefits such as vacation or other PTO plans. Depending on your company's policies, payroll can use the balance of the accrual hours to determine the terminated employee's final pay. The Available Hours field represents the balance of accrual hours. Accruals are calculated before hours are paid in the payroll process, and so the hours may increase to include the current accrual, depending upon the Termination Date on the Benefits Detail record and the payroll period.

4. Deductions and Final Pay.

Are any deductions in arrears?

The Termination Wizard populates the End Date on the Deductions Detail screen. Review outstanding balances, any arrears, and the process payroll numbers. Adjust the terminated employee's deductions details and pay entry accordingly.

1. First on the Employee Deductions Detail screen, verify any outstanding balances for deductions, such as repayment of a company loan, by comparing the Deduction Limit Amount (which is the total amount to be deducted) to the Adjusted Limit (which is the remaining balance as of the last payroll run).

Explanation: The Deduction Amount field is the amount to be deducted each payroll period. To deduct the remaining balance, edit the Employee Deductions Detail record, enter the Deduction Amount to equal the remaining balance, enter an End Date of the payroll period’s end date, and save the Deductions Detail record.

2. Second, review the Arrears Processing fields. Since the deduction will be limited to the Maximum Amount of arrearage for this deduction, an adjustment to the Deduction Amount field may be needed to withhold all of the arrears from the final payroll check. Explanation:  The Arrears Processing field will display the current balance of arrears remaining for this deduction. The Maximum Amount to process existing arrears field will limit the amount of arrears that can be deducted in one Payroll period. The last field on the arrears processing line is the year to date balance of arrears for this deduction.
3. Third, verify that the correct Process Payroll X fields in the Processing Information section are selected as necessary.

Explanation:  If the final payroll is one where the deduction does not normally process, selecting another Process Payroll checkbox may be necessary. The Process Payroll X checkboxes determine which payroll(s) of the month include the deduction. Include the payroll containing the final pay of the terminated employee where arrears or an outstanding balance should be processed. For instance, if the deduction was defined to process for only the first payroll of the month and if a terminated employee's final pay was recorded for the second payroll of the month, the deduction would not process as part of the final pay.

5. Earnings Detail and Final Pay. Where the employee is owed the difference between the Earning Limit Amount (total amount of this earning to be earned by the employee) and the Adjusted Limit amount (amount the employee has earned for this earning as of the last payroll), edit the Earning Amount field and enter the remaining amount.

Note:  The Employee Termination process doesn't populate the End Date field for the Employee Earnings Detail records for the terminated employee.

• To prevent payment of an earning, enter an End Date prior to the beginning payroll period date of the final payroll run for the terminated employee.

OR

• To allow payment of an earning, verify that the End Date for the Earnings Detail is after the ending payroll period date of the final payroll run for the terminated employee.

6. Net Pay Detail and Final Pay.

Note:  Termination doesn't end a Net Pay Detail.

Should the net pay distribution be changed to a printed check?

The organization's policies may require a final payroll check instead of a direct deposit. The date of payment may need to be before the next regularly scheduled pay run. If the organization allows the terminated employee to choose how the final pay is disbursed, the Employee Net Pay Details may need to be edited.

To stop a particular net pay disbursement from processing, edit that Employee Net Pay Detail, and enter an End Date prior to the pay period. Where the net pay amount or percentage is less than 100% of the total net payroll amount, more than one record may need to be edited.

Time Entry for a Terminated Employee’s Final Pay

To help keep employees who are ineligible for pay from being paid:

• Wizards that create Auto Pays skip auto pays for any Employee Status that is set to suspend payroll processing.
• Online detailed pay entry blocks access to adding, editing, or deleting records for employees with statuses that suspend payroll processing.

It is possible to adjust the employee's status on the Employee Master to allow the payment of a final check, and then to adjust it to a different status after the final payroll.

During the final payroll processing for the terminated employee, a time entry record should be entered and verified to pay the employee according to your organization's policies. For organizations that pay accumulated paid time off hours at termination, add a pay entry record to pay the available hours, and include the additional accrual for the current period, if appropriate.

When a final pay check is required on the employee's last day, create a manual check for the terminated employee's final pay.