Backdated Terminations

Pento recognises the challenges of receiving payroll information after a pay run has been submitted. We have made the process of dealing with late leavers a lot easier by calculating backdated termination pay for you, whether an employee is due to receive further payments or owes money to you. 

If you have a leaver that has left in a previous pay period, you can terminate their employment, and Pento will calculate any overpaid PAYE, salary and pensions, which will be offset against any further payments due such as holiday pay, and will calculate the outstanding net pay due to the employee, or owed to the employer. 

Terminating a late leaver in Pento

To terminate a late leaver, you will need to follow the steps below: 

1. Navigate to Employees from the left sidebar
2. Search for the relevant employee
3. To the right of the employee's details, select the box with '...'
4. Select Terminate employment from the dropdown options:
   
   
5. Enter the termination date
6. Once you have entered the date, a modal will appear where you can enter the termination details

Backdated salary adjustment

Pento will automatically calculate the gross salary adjustment based on your entered termination date. How it is calculated depends on the Day rate method in your Pay schedule settings. For further guidance on how the adjustment is calculated, please refer to the Day rate method section in our help article How to add, view and edit your pay schedule settings. 

Money to be returned by the employee

This section will only show if the employee owes money and the gross amount owed by the employee, i.e. the amount owed before refunding any overpaid PAYE and/or pensions. If the employee owes money, you will need to recover this outside of Pento.

Once you are happy with the information entered, select Yes, terminate employment.

Understanding the payslip

Once you have terminated the employee, any backdated salary adjustment and holiday pay will automatically be added to the payslip preview. You can add any further additions/deductions to the payslip if necessary. 

PAYE and Pension adjustments

Employee PAYE & Pensions

Pento applies the thresholds for the tax period an employee should have been terminated and automatically adjusts and refunds any overpaid tax, employee NI & employee pension contributions. The employee's P45 will be processed with the correct taxable earnings and tax paid to their leave date. As a result, the P45 will show the Tax period as the month the employee should have been terminated. 

The tax, employee NI & employee pension refunds will be offset against any overpaid salary when calculating the Net over/underpayments due. 

The employee's year-to-date figures will also be updated on their final payslip, the payroll reports and the FPS submission to HMRC. 

You will need to contact your pension provider directly to recover any overpaid employee and employer contributions.

Employer PAYE and Pension adjustments

Similar to employee PAYE & pensions, Pento also applies the thresholds for the tax period an employee should have been terminated to the employer liabilities. This means that any overpaid employer NI and pension contributions will be refunded as a notional amount. Employer NI liabilities will be reduced in the year-to-date columns on the FPS submission and the HMRC PAYE bill for the current pay period.

Any pension refunds will need to be recovered from your pension provider. However, the year-to-date values on the employee's payslip and payroll reports will be reduced by the overpaid amount.