End an employee’s employment

When an employee leaves, you’ll need to make a final termination payment to them including all outstanding leave balances. For example, annual leave and alternative holidays.

You can end casual employees with no outstanding holiday pay using the Employment tab. Or delete an employee from payroll if there are no related transactions in Xero.

Create leave requests

If the employee has any outstanding leave to pay out (excluding annual leave and alternative holidays), you'll need to create leave requests before processing the employee’s final pay. For example, long service leave (LSL).

  1. In the Payroll menu, select Employees.
  2. Click on the employee to open their details.
  3. Click the Leave tab, and then click New Leave Request.
  4. Select the leave type.
  5. Enter the start and end dates. They must be within the pay period for the leave to be included in the pay run.

    For example, for an employee who's paid fortnightly with one week LSL, and is leaving on the last day of the fortnight, the end date is the last day of the pay period.

  6. Enter the number of hours you want to pay out (the leave balance, plus any hours you need to accrue for the current pay period).
  7. Click Approve.

Set up pay run and the employee's final pay

You can make the employee's final payment in your next normal pay run or in an unscheduled pay run.

  1. In the Payroll menu, select Pay Runs.
  2. Process or delete any draft pay runs for the pay calendar.
  3. From Pay your employees, select the relevant pay run.
  4. Click Process Pay Run.
  5. From the final payment draft, click the employee's name.
  6. Click Set As Final Pay.
  7. Select the last day of their employment date, and click OK.

    The date must be before the end of the current pay period.

Amend employee's payslip and post pay run

In the same pay run, you'll need to add any additional hours worked, and make any PAYE manual adjustments in the employee's payslip.

  1. Under Earnings, click Add to enter any additional hours worked or other earnings still to be paid.
  2. Under Employee Taxes, click Add to make a PAYE manual adjustment.
  3. Under Leave Accruals, make sure the leave balances are all zero.
  4. Click Save and then click Back.
  5. Review all employees in the pay run.
  6. Click Post.
  7. Click Post to confirm.