Cash out of leave and STP2

Cash out of leave in service and paying out upon termination

When cashing out leave, either in service or upon termination the aim is to reduce the leave entitlement balance, without accruing additional leave as would normally happen when actually taking leave.

For simplicity, leave loading will be dealt with separately. The examples also assume superannuation applies to cashed out leave but not leave paid out upon termination.

This first example demonstrates the configuration of a pay item for the purposes of cashing out annual leave. It is very similar to a pay item used for the taking of annual leave, with the one exception, the calculation method.
pay item cash out leave

Using a Per Item calculation method serves to reduce the leave entitlement, without accruing any further leave on the ‘taking’ of leave.

Under STP2 it is necessary to use the Payment Type of Cash Out when adding the pay item to the payslip.
AL cash out
Paying out leave upon termination is handled with a similar pay item to that used to cash out leave in service.
pay item termination
When processing, the Payment Type should be set to Unused Leave on Termination.
In the event that leave is cashed out, or paid out upon termination and that leave attracts leave loading (17.5%) then this needs to be handled as a separate earning on the payslip. This example is assuming that leave loading is being paid as a direct consequence of missing the opportunity for overtime. Under STP2, this needs to be reported as overtime when taken as part of normal leave as well as when cashed out or paid out upon termination.

The pay item is set to Type: Overtime, Payment Method: Loading and Rate: -82.5000 (-100+17.5).
pay item llo

When it is paid, there is no Leave Details panel as it is treated as Overtime, not Leave under STP2.

For more STP2 help in Sybiz Visipay, take a look at our STP2 FAQs.

Developing innovative accounting, ERP and payroll solutions for 40 years

Connect with Sybiz