Payroll Standard Operating Procedure 12.0: Termination Processing Procedures for Staff Employees

Subject: Termination Processing Procedures for Staff Employees

Source: Financial Management Services

Original Date of Issue: April 2012

Date of Last Revision: August 2017

Rationale: How to process IU employee leave plans and benefits at time of termination or retirement.

Procedure

Monthly (S10, S12) and biweekly (BW1, BWP) appointed staff enrolled in leave plans are entitled to receive payout of benefit accrual hours at time of termination or retirement, subject to policy restrictions. When processing payout of benefit accrual hours, keep the following points in mind:

  • Biweekly staff (BW1) must have at least 6 months of service to receive termination payout for vacation hours. Contact UHRS for service date assistance.
  • All terminal payout for accruals should be processed with the last regular on-cycle payroll.
  • If terminal payout is not included in last regular on-cycle payment, it should be processed in the next available off-cycle payroll. There is no off-cycle fee for terminal pay.
  • Monthly (S10, S12) and biweekly (BW1, BWP) employees who transfer to Academic positions are entitled to payout of accrued benefit hours. If possible, include the terminal payment with the last monthly/biweekly payment. Contact University Human Resources or University Payroll for assistance.

Step 1: The department determines the employee's last day of work and initiates the termination eDoc

Refer to the Voluntary and Involuntary Separation policy and/or contact UHRS if you need assistance determining the last day of work, retiree status, and termination action reason codes. The Termination Effective Date is the first day not working, except in special circumstances.

For Monthly staff whose last day working (LDW) is the last day of the month, use the first day of the next month for the eDoc term date. For example, if a monthly staff’s LDW is 5/31, their term date will be 6/1; their term pay should be processed in the May payroll cycle.

For Biweekly staff whose last day working is on a Friday, use Saturday for the eDoc term date.

Note that when the termination eDoc reaches final approval, the employee will be removed from the payroll voucher. The payroll system will create a Final Check (FC Batch) paysheet. University Payroll will use the FC payline to process the final payment including terminal pay.

Step 2: The department prepares the Adjustment Voucher for termination payout

Use either the Paper Adjustment Voucher (PAV) or the Alternate Excel PAV. Keep the following points in mind:

  • Include all regular pay and time off earn codes for the last pay period for BW1/BWP staff.
  • Include all regular pay for S10/S12 for the last pay period. Do not include time off codes for monthly staff, as they are only recorded in ePTO.
  • Be sure to indicate the correct job record number.
  • Include active additional pays. Indicate correct sequence number and be sure to prorate, if appropriate.
  • Indicate the exact funding account split(s) for each earn code.

How to figure prorated accruals in the last working pay period for BW1/BWP staff: divide the accrual rate by 80, then multiply by the hours the employee was in the pay status. For example, for an employee with an accrual rate of 4.31 who was in pay status for 56 hours, you would calculate: (4.31 ÷ 80) x 56 = 3.017 (round to 3.02)

How to figure S10/S12 pay amounts for REG pay: divide the monthly rate by the number of workdays in the month to determine the daily rate for the month. Then multiply the daily rate by the number of workdays to calculate the prorated monthly amount.

How to figure Sick payouts for eligible S10/S12 retirees (must be enrolled in PERF or 11.25% retirement plan):

  • If accrued Sick hours are 152 or less, the Sick hours do not pay out.
  • If accrued Sick hours are more than 152 but less than 312, subtract 152 from the accrual amount and multiply by .25. For example, for an employee with 300 Sick hours accrued, you would calculate: (300-152) x .25 = 149x.25=37.25.
  • If accrued Sick hours exceed 312, subtract 312 from the accrual amount and multiply by .5, then add 40. For example, for an employee with 900 Sick hours accrued, you would calculate: (900-312)x.5 + 40 = (588x.5) + 40 = 294+ 40 = 334.

Biweekly (BW1) Staff Adjustment Voucher

  1. Review the employee’s timesheet to determine the hours worked and any time off hours used during the last pay period of employment. Note that the employee’s Approver and Payroll Processor can and should approve the timesheet to Final. The timesheet hours and approvals will be retained for audit purposes, but will be overridden by the final adjustment voucher entry.
  2. Review Leave Balances using the Leave Balances - Dept Access IUIE report to determine payout based on years of service and UHRS policies.
  3. Calculate prorated vacation accrual for the last pay period to include in termination payout.
    1. Refer to the Vacation/PTO Accrual Chart (xls), published on the FMS Payroll website.
    2. Determine the accrual rate based on service years.
    3. Divide the accrual rate by 80 to determine the hourly accrual rate (also listed in the Vacation/PTO Accrual Chart).
    4. Multiply the attendance earnings accrual rate by the hours in pay status in the final pay period.
  4. Prepare the PAV for the final pay period, additional pay, and all terminal payout.
    1. Separate work/benefit hours by FLSA pay period end date (week 1/week 2).
    2. RGN hours must equal total hours in pay status for the week even if the employee used time off codes. For example, an employee’s last day of work is on Friday, the adjustment voucher must reflect 40 hours RGN during the last week. If they took two sick days in the final week, the adjustment voucher would also reflect SCK = 16. The employee will receive pay for 16 hours SCK and 24 hours RGN.
    3. Indicate time off hours by earn code (SCK, VAC, etc.) in the appropriate week(s).
    4. Include any additional pay earn codes (ALW, FYS, Temp Pay, etc.) in appropriate week(s) by sequence number. Prorate FYS payment for partial weeks.
    5. Combine Accrued Vacation hours balance with the calculated vacation accrual for last pay period to determine termination vacation payout per policy restrictions. See Vacation/PTO Accrual Chart.
    6. Include Vacation payout hours in final pay period end date using the terminal earn code (maximum allowable hours: 872).
      1. BW1: TVC – Terminal Vacation-Biweekly
    7. Include Holiday hours in final pay period end date using the terminal earn code.
      1. BW1: THL –Terminal Holiday-Biweekly
    8. Include Compensation hours in final pay period end date using the comp payout code.
      1. BW1: CMP – Comp Hours Payout
    9. If the employee qualifies for retirement, calculate and include any Sick hours using the terminal earn code.
      1. BW1: TSK – Terminal Sick - Biweekly

Biweekly Professional (BWP) Staff Adjustment Voucher

  1. Review the employee’s timesheet to determine the hours worked and any time off hours used during the last pay period of employment. Note that the employee’s Approver and Payroll Processor can and should approve the timesheet to Final. The timesheet hours and approvals will be retained for audit purposes, but will be overridden by the final adjustment voucher entry.
  2. Review Leave Balances using the Leave Balances - Dept Access IUIE report to determine payout based on years of service and UHRS policies.
  3. Calculate prorated vacation accrual for the last pay period to include in termination payout.
    1. Refer to the Vacation/PTO Accrual Chart (xls), published on the FMS Payroll website.
    2. Determine the accrual rate based on service years.
    3. Divide the accrual rate by 80 to determine the hourly accrual rate (also listed in the Vacation/PTO Accrual Chart).
    4. Multiply the attendance earnings accrual rate by the hours in pay status in the final pay period.
  4. Prepare the PAV for the final pay period, additional pay, and all terminal payout.
    1. Separate work/benefit hours by FLSA pay period end date (week 1/week 2).
    2. RBP hours must equal total hours in pay status for the week even if the employee used time off codes. For example, an employee’s last day of work is on Friday, the adjustment voucher must reflect 40 hours RBP during the last week. If they took two days off in the final week, the adjustment voucher would also reflect PTO = 16. The employee will receive pay for 16 hours PTO and 24 hours RBP.
    3. Indicate time off hours by earn code (SCK, PTO, etc.) in the appropriate week(s).
    4. Include any additional pay earn codes (ALW, Temp Pay, etc.) in appropriate week(s) by sequence number.
    5. Combine Accrued Vacation hours balance with the calculated vacation accrual for last pay period to determine termination vacation payout per policy restrictions. See Vacation/PTO Accrual Chart.
    6. Include PTO payout hours in final pay period end date using the terminal earn code).
      1. BWP: TMP – Terminal PTO
    7. Include Holiday hours in final pay period end date using the terminal earn code.
      1. BWP: TMO –Terminal Holiday
    8. Include Compensation hours in final pay period end date using the comp payout code.
      1. BWP: CMP – Comp Hours Payout
    9. Include any remaining Honorary Vacation hours in the final pay period end date using the terminal earn code.
      1. BWP: TMH – Terminal Honorary Vacation
    10. If the employee qualifies for retirement, calculate and include any Sick hours using the terminal earn code.
      1. BWP: TMS – Terminal Sick

Monthly (S10, S12) Staff Adjustment Voucher

  1. The ePTO administrator should work with the employee to make sure they have recorded all final time-off information in ePTO. The employee will have access to ePTO until their termination date; the supervisor or ePTO administrator can also add time-off data to ePTO on behalf of the employee.
  2. Submit the Termination eDoc.
    1. When an employee's last day working (LDW) is the last day of the month, their eDoc term date will be the first day of the next month. In other words, termination paperwork should be processed in the on-cycle closing on the month in which they last worked (e.g., if LDW on 5/31, then Term eDoc on 6/1 so their final pay will be processed in the May payroll cycle).
    2. Note the following information on the eDoc:
      1. The regular Pay amount for final month of work (prorated based on days in active status).
      2. A statement verifying that the ePTO calendar is up to date. If the ePTO calendar is changed after the eDoc routes, contact UHRS to correct it.
  3. When the Termination eDoc is approved, the ePTO administrator will access the employee's calendar to complete the terminal paper adjustment voucher (PAV).
    1. The ePTO administrator is responsible for:
      1. Providing the Honorary, Sick, and Holiday balances from the Time Off Detail tab in ePTO as of the last day of the month of termination.
      2. Submitting and approving the final monthly calendar.
    2. When the ePTO administrator logs into the employee's calendar, the system will:
      1. Display a bubble by the employee's name. This bubble indicates that the employee is terminated. Note that the employee will show in the hierarchy for one month from the termination effective date, or until the position is filled. After one month, if the position is not filled, only the bubble will display. The employee's calendar will still be available through the "Find Employee" search box for ePTO administrators. Once the position is filled, only a central office user will be able to access the employee's calendar.
      2. Prorate the monthly accruals for the month of the effective date of termination.
      3. Inactivate all entries in the system for the employee after the effective date of the termination.
  4. Prepare the PAV for the final pay period, additional pay, and terminal payout.
    1. Prorate monthly REG pay by the workdays in the month. This includes all days in active status in the month the employee terminated. The REG amount will also include any accruals used and/or holidays in the month the employee terminated.
    2. Include any additional pay earn codes (ALW, Temp Pay, etc.) by sequence number and prorated by workdays in the month.
    3. Include any termination payout due in accordance with the Voluntary and Involuntary Separation, Paid Time Off (PTO) for PA, and Paid Time Off (PTO) for PB policies.
      1. TMP – Terminal PTO
      2. TMO –Terminal Holiday
      3. TMS – Terminal Sick (IU Retirees only)
      4. TMH – Terminal Honorary Vacation
      5. TMV – Terminal Vacation (PB Plan only)
      6. TMB – Terminal Bonus (PB Plan only)

Cross Reference:

Responsible Organization: Financial Management Services