In this article
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:
- Navigate to Employees from the left sidebar
- Search for the relevant employee
- To the right of the employee's details, select the box with '...'
- Select Terminate employment from the dropdown options:
- Enter the termination date
- Once you have entered the date, a modal will appear where you can enter the termination details
For further guidance on how to complete a termination, please refer to our help article How to Terminate an Employee
Once you have populated the termination details, you will see a screen similar to the below:
Backdated salary adjustment
Pento will automatically calculate the gross salary adjustment based on the termination date you entered. 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 employee
This section will only show if the employee owes money and is the gross amount owed by the employee i.e. the amount owed prior to refunding any overpaid PAYE and/or pensions. If the employee owes money, you will need to recover this outside of Pento.
If you have processed holiday pay that exceeds the backdated salary adjustment, the modal will look similar to the screenshot below:
Once you are happy with the information you have 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 you need to.
PAYE and Pension adjustments
Employee PAYE & Pensions
Pento applies the thresholds for the tax period an employee should have been terminated in, and automatically adjusts and refunds any overpaid tax, employee NI & employee pension contributions. This means that 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.