Termination awards

Karishma Updated by Karishma

Similarly, if the employee requires a Termination award, you will also need to set up relationships as required using the following Payment types:

  • PILON
  • Contractual PILON
  • Redundancy pay
  • Statutory redundancy pay

These new Addition relationship types will ensure that the correct tax and NI calculations are used. You will also need to tick the new Do termination pay calculation checkbox in the Modify miscellaneous parameters window.

New Employee fields have been added to support this:

  • Taxed term. Pay – Taxed termination pay
  • Tax free term. Pay – Tax free termination pay
  • Taxed term. Pay t/d – Taxed termination pay to date
  • Tax free term. t/d – Tax free termination pay to date
  • Notice period type* – D = days, M = months (this can only be months if the notice period is in full months and none are worked)
  • Notice not worked* – This is set manually in days or months
  • Post-empl. Notice* – Post Employment Notice Pay. This is set manually to override its calculation. If it is at zero, the calculation will be done in full.

In the employee’s Payroll details, you will then need to fill out the Notice period type, Notice not worked and Period days worked fields to ensure this works correctly.

*These fields require input by the user. The rest are calculated automatically, provided you tick the Termination pay calculation preference.

Payroll will then apply the calculations as appropriate during the payroll calculation, populating the remaining fields. It will then override the taxable, subject to NI / 1A NI checkboxes as necessary to apply the £30,000 and PILON rules. Any RTI values will be automatically calculated for you.

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