How to Separate (terminate) an employee in the POWERpay Module?
Employees can choose to leave an organisation or they may be asked to leave for various reasons. This Tab allows you to record separations as they occur. Once separated, an employee’s Profile Status will automatically change to that of Ex-Employee.
Note, posting a Separation record will trigger an Inactive Cycle Change for the employee once their is a Transaction Payroll Linkage.
Navigation: Process Payroll>> Employee Transactions >> Transaction Reasons
There are 4 steps involved in the Separation of an employee:
Step 1 - Create a Separation Transaction Reason and Reason Code
Step 2 - Setup a Transaction-Payroll Linkage for Separations
Step 3 - Enter the Separations Record
See how the payroll is affected when the Transaction-Payroll Linkage is used and a Separation record is entered: Cycle Changes: Separation (What happens in the payroll)
See what happens to the employee's profile: Employee Profile: Ex-Employee
See what happens to the ex-employee's position: Positions: Vacant Positions
Step 1 - Create a Separation Transaction Reason & Reason Code
If you do NOT have any reasons for separating an employee in the software, this step is required.
Examples of reasons for separating an employee from your organisation are Retirement, Resignation, Firing, Migration, etc.
- Select the Transaction Type from the drop-box.
- Enter a Reason Code and corresponding Description.
- Note, in some cases, your reasons for various transactions may be the same. While you can use the same description, your corresponding codes must be unique.
Step 2 - Setup a Transaction-Payroll Linkage for Separations
This will allow for the application to automatically calculate the employee’s Pay (or Salary Adjustment) as a result of the Separation.
1. Remember, Transaction-Payroll Linkages must be created for EACH Pay Group.
2. Please ensure you have a Payroll Earning Code for Salary Adjustment - this is the code that will be displayed on the employee's payslip and cycle pay register reports.
3. If the employee is a non-salaried employee (paid based on the number of hours worked, then simply enter the number of hours work as a cycle change record)
Navigation: Process Payroll>> Employee Transactions >> Transaction Payroll Linkages
Step 3 - Enter the Separations Record
- In the Separations window, click on New Separation Record and enter the information as prompted.
- In this example, Ms Sylvia Mitchell, the Human Resources Manager is being separated from the company and the reason is a Company Transfer.
Navigation: Process Payroll>> Employee Transactions >>Separations
- Upon selecting the employee’s name, Select a Transaction Reason Code from the drop box.
- Note, the date that the Separation becomes Effective and the Pay To Date may not always be the same. The Pay To Date allows for the employee’s Pay Profile to remain active up to a stipulated date in the event that severance (or other) payments need to be made after the employee’s separation.
- For example, if an employee is separated in Cycle 9 but the Pay To Date is in Cycle 12, employee’s Pay Profile remains active until Cycle 12 and any payments to the employee have to be manually entered into the Cycle Changes window.
- You can flag if this employee can be re-hired in the future or not as well as the Termination Type i.e. Retired, Resigned, Terminated, Transferred, End of Contract, Death etc.
- Next, you can flag if you wish the application to stop the employee’s benefits or not.
- The Posted and last updated fields are auto-filled by the software and cannot be edited.
- Save the record.
Step 4 - Post the Transaction
- Once posted, the transaction will trigger a Cycle Change with the Employee’s Separation Adjustment Pay or the Prorated amount of the employee’s Pay, depending on the Earn code you used to set up the Transaction-Payroll linkage.
- Note, a posted transaction cannot be un-done or deleted. If a change needs to be made to the separation record before the Payroll is run, you can use the Unpost button.
- If the Payroll is run but not as yet archived, reverse the Payroll and Unpost the Transaction to make the necessary changes. If the Payroll is run, archived, and the following Payroll is run, you will have to manually deduct/add the employee’s pay in the current Cycle or through an Post-Out-of-Cycle Change.
Cycle Changes: Separation (What happens in the payroll)
Navigation: Process Payroll>> Cycle Changes
- This example displays the separation adjustment in the Cycle Changes which was automatically triggered from the Separation transaction entered. This only happens when the Transaction-Payroll Linkage record is entered: Step 2 - Setup a Transaction-Payroll Linkage for Separations
- Notice the Batch Number ‘TR’ for ‘Transaction’.
- Also the amount is reflected is a negative figure. This is because the employee is being separated in the middle of the month and, being a salaried employee, the application has calculated the amount that needs to be deducted from her regular salary for the days within the month that she will not work. (The termination date is 13th April, see: Step 3 - Enter the Separations Record. Therefore, the above record will be available in the 4th cycle of a monthly pay group.
Additionally, another cycle change record will be automatically generated in the next cycle indicating the employee will be made INACTIVE!
The employee was separated in Cycle 4. As such, an inactive Profile Status Change is triggered in Cycle 5 making the employee inactive. A salary for the employee, therefore, will not be processed for the employee.
Employee Profile: Ex-Employee
- Upon posting the Separation record, you can verify the employee’s record.
- Conducting a search for the employee under the default status of Active, will render no results. Instead, change the Status to that of Ex-Employee to view the separated employee’s profile. Note, if the employee was flagged as retired in the Separation record, search for the employee under the status of retiree in this screen.
Navigation: Employee>>Employees
- Navigating to the Identity and Hire Data sub-tab, we can see that the Effective Date of the ex-employee’s separation is recorded in the Date Separated tab.
Positions: Vacant Positions
Navigation: Employees>> Payroll Positions>> Vacant Positions
- Here, we see that the employee’s old Position Number HRM1 is now a Vacant Position. An employee, therefore, can be hired into it.
- Note, whenever an employee is Separated from a Position that (old) Position will always become visible in the Vacant Positions Screen.
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