What's covered in this guide?:
Overview
Workforce Payroll UK supports automatic payout of unused leave when an employee is terminated. If enabled on a leave type, the system will offer to pay out the remaining balance in the pay run covering the employee’s termination date.
It also prorates the balance based on the employee’s leave year and termination date.
Enable leave payout on termination
To allow a leave type to be paid out when an employee leaves, an administrator must enable the Pay out on termination setting on that leave type.
To enable the Pay out on termination setting on that leave type:
Go to Payroll > Payroll Settings > Leave Types.
Select the leave type (e.g., Holiday Leave).
Check Unused leave balance is paid out on termination.
Save your changes.
Important: Only leave types with this setting enabled are eligible for termination payout. If the setting is off, the leave balance won’t be automatically paid.
Process a termination pay run
To pay out leave balances when someone leaves:
Deactivate the employee
Set the employment end date on the employee’s profile.
Ensure the employment end date falls within the next scheduled pay run period (e.g., between the pay run’s start and end dates).
Open the pay run
Start or edit the pay run that covers the termination date.
Workforce detects employees with eligible leave balances and shows a Termination Leave Payout prompt on the pay run.
3. Add the payout line
Click the prompt +Pay out termination leave to open the payout interface.
Workforce displays each eligible leave balance and offers to add a termination leave line.
The system automatically adjusts the balance to account for the employee’s leave year and employment end date (no calculation needed on your part).
4. Review and finalise
The termination leave line appears on the employee’s payslip along with regular pay items.
Since it uses the same leave line, it feeds into wage totals and statutory reports automatically.
Finalise the pay run when you’re satisfied.
FAQs
Why don’t I see the termination payout option?
Why don’t I see the termination payout option?
Make sure the leave type is marked Pay out on termination, the employee has a balance for that leave type, and the termination date falls within the pay run period.
How does proration work?
How does proration work?
Workforce adjusts the leave balance based on the employee’s contracts and termination date.
Do I have to add the termination leave line manually?
Do I have to add the termination leave line manually?
No. When the conditions above are met, the system prompts you to add the line. You simply click to confirm.