Preventing Payment of Invalid Payment Types to LAB Payees on Termination (AU Only)

Description

Changes have been made to the Termination pay batch stage in the Payroll Australia module so that the following payment types cannot be made to payees with an income type/payee type of Labour Hire (LAB):

• Lump Sum A

• Lump Sum B

• Lump Sum D

• Employment Termination Payments (ETP).

When terminating a LAB payee in a pay batch, the following applies to the Payroll > Pay Process > Pay Batch > Payee Pay Details > Termination screen (see Figure 1 below):

• The Payment Type field only lists the Gross option (the Lump Sum A and Lump Sum B options are unavailable) so that outstanding leave balances can only be paid out as gross earnings.

• The Add button in the Employment Termination Payment section of the screen is grayed out so that Lump Sum D and ETP payments cannot be added.

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Figure 1: Payroll > Pay Process > Pay Batch > Payee Pay Details > Termination Screen

Once a payee has been terminated in a pay batch, the Payee Type field in the header of the Payee record, as highlighted in Figure 2 below, becomes display-only (locked down) so that the payee’s reported income type cannot be changed after termination. That prevents situations where a payee has been terminated as an Individual Non Business (INB) payee with a Lump Sum A, B, D or ETP payment, and therefore changing the payee type to Labour Hire would result in the payee having invalid payment types for their payee type.

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Figure 2: Payroll > Payee > View/edit Payee Screen - Payee Type Field Display-only After Termination in Pay Batch

Benefits

This enhancement prevents payments, which are not valid for LAB payees, from being made to payees at the point of terminating a payee. From a Single Touch Payroll (STP) reporting perspective, all payments made to a LAB payee are reported as a single, combined gross earnings amount and no separate lump sum or ETP payments can be reported. Because Lump Sum A, B, D and ETP payments are subject to either a concession (i.e. reduced) rate of tax or no tax at all, reporting such payments as regular gross earnings indicates to the ATO that the payee has been under-taxed and therefore this enhancement prevents that from occurring.

Configuration

No configuration required.