Prior to entering a termination date for an employee you will need to complete any time entries or leave requests. Once you set a Termination Date, NetSuite will prevent further time entries being made against an employee.
Setting the Termination Date
- Navigate to the Employee Record > Payroll tab > Pay Component subtab and open in edit the current salary/wages payment components (you will also need to do this for other recurring pay components if you wish to pro-rata them on the same basis as salary e.g. allowance employee gets every month)
- Enter the termination date into the end date field on the pay components
- A pop up will appear asking if you want to set this as the termination date - click OK to confirm this is a termination
This will set the termination/release date on the Human Resources tab.
If the employee’s leave date has already passed you will be able to see that the employee record status will change to terminated.
Annual Leave Payout & One Off Pay Details
If applicable to the Employee, an entry for Annual Leave Payout will need to be included in their final payment.
First you will need to work out the annual leave that has been taken and whether this is over or under the pro-rata entitlement (from the start of the annual leave year to their leaving date). For this you will need:
- the number of days/hours entitlement they have accrued
- the number of days/hours they have taken
Once you have worked this out you will need to enter this as a one off pay detail.
- Navigate to Payroll Administration > Payroll Activities > Enter One Off Pay Details
That will bring up the enter one off details page where you have to put in:
- A date within the correct period.
- The employee who you are entering the payout for
- Sub Type – “Annual Leave Payout (UK) “
- Quantity – amount of hours you want to pay, you can also deduct annual leave e.g. -8 if employee has overtaken 8 hours annual leave
- Click Add
You may also want to enter further lines at this stage such for payment in lieu of notice or a statutory redundancy payment
- Click Submit
These payslip details will be picked up in the next pay run.
Run the Pay Run as usual - more information on running a payroll on the Pay Run Processing Guide
Check the payslip prior to approval to make sure that the salary/wages pay components have been calculated as expected on a pro rata basis to the leave date and that the annual leave payout and other one off details are present.
Leave Balance Reconciliation
Using "Annual Leave Payout - UK" will also reduce / increase the employees leave balance. If you do not use Infinet Cloud Leave Management this can be disabled.
When you’ve run the payroll for the period that the employee leaves you need to make sure you report them as leaving employment on your FPS.
Check this prior to submitting the FPS by sorting the leave date section on the FPS page with dates at the top.
Generating a P45
- Navigate to Payroll Administration > UK Reports > Employee Termination > New
- Enter the employee name you are creating the P45 for
By selecting the employee the majority of the data on this page will autofill
- If you hold a cumulative tax code for the employee please ensure that Week Number or Month Number fields have a value – if missing please update with the employees last payment week or month
Ensure that the company address has pulled through, enter this if not
The address can be entered in the Payroll Configuration record to be auto-completed in future follow this guide to Add Address to Payroll Configuration
- Ensure that all other information is correct and select Save
- Click “Generate P45 PDF”
- Download the P45 PDF that has been created - you can then print or email this
After their final Pay Run and prior to initiating the next Pay Run you will need to follow the Excluding an Employee from Payroll guide to make sure they are not included.
Payment After Leaving
If you have to pay an employee after they leave
- use tax code 0T on a ‘week 1’ or ‘month 1’ basis (use the code S0T if they’re taxed at the Scottish rate or C0T if they’re taxed at the Welsh rate)
- deduct National Insurance (unless it’s a redundancy payment) and any student loan repayments
- report the payment and deductions in your next FPS, using the employee’s original ‘Date of leaving’ and payroll ID, and set the ‘Payment after leaving’ indicator
- give the employee written confirmation of the payment showing the gross amount and deductions
- add the additional payment in the ‘Year to date’ field if the payment is in the same tax year
The payment should be the only one in the ‘Year to date’ field if it’s being paid in the next tax year.
You must not give the employee another P45.
Processing the Payment
- Navigate to the employee record
- Ensure the employee's pay frequency is not "exclude from payrun" and is set to their previous frequency (e.g. Monthly)
- Ensure that their Payroll Employment Status is not "Terminated" but is their previous status (e.g. Full Time)
- If you do not need to pay any regular payments (e.g. Base Salary) leave these with the pay frequency of Exclude from Pay Run and an end date
- Create the one off details you wish to pay the employee as in
- Add the employee into your next pay run as you would usually do
- When at the process payslips stage in the payrun open the employee's payslip record
- Click recalculate
- When on the recalculate payslip page ensure you tick "Payment After Leaving"
- Click Recalculate
- Review the payslip to ensure it only includes what is required and is as expected - you will see the indicator is set on the payslip record
- Continue with the payrun as usual
- Check that the employee is being reported correctly on the FPS - original leave date, Payroll ID etc.
After you have run the payroll you will need to set the employee's pay frequency back to "exclude from payrun" and set their Payroll Employment Status back to "Terminated" - Excluding an Employee from Payroll