Termination basics¶

Termination is when a person's employment ends. It can happen for many reasons — a resignation, a role ending, or a business change. Whatever the reason, a few things usually happen together. This lesson gives you the general picture.

This is an overview only. It does not tell you a notice period, a redundancy amount, or how to work out a specific final pay. For those, go to Fair Work, and get advice for any case that is unclear.

In one line

When employment ends there is usually notice, a final pay that may include unused leave and sometimes an extra payment, and a report of the end to the ATO.

Why this matters¶

Ending employment the right way protects both the person and your business. The person should get what they are owed, and the end should be reported correctly. Knowing the general shape helps you see the steps and know when to seek help.

What you will learn¶

What happens in general when employment ends
What a final pay may include
How the end of employment is reported to the ATO

Understanding the concept¶

When employment ends, three things usually come into play.

Notice. There is often a notice period before the last day. Fair Work sets the minimum notice rules. This lesson does not give notice periods — check Fair Work for the amount that applies.
Final pay. The final pay is the last pay after employment ends. It may include unused leave the person built up. In some cases it also includes an employment termination payment (ETP) — a payment made because the employment ended. Fair Work covers what a final pay must include and getting advice is wise for complex cases.
Reporting to the ATO. You report the end of employment to the ATO through Single Touch Payroll (STP), the system for reporting pay each time you pay staff. The report includes the cessation date (the last day) and a cessation reason (why it ended).

We do not cover redundancy amounts here. If a role is no longer needed, extra entitlements may apply — Fair Work is the place to check.

For accountants & bookkeepers

Under STP Phase 2 you report a cessation date and reason when an employee leaves, especially where there are termination-related payments such as an ETP or unused leave on termination. The ATO lists cessation reasons (for example voluntary, ill health, contract cessation, transfer). This lesson deliberately avoids notice periods, redundancy amounts and specific final-pay calculations — direct those to Fair Work and to professional advice.

Example¶

Aisha's team member resigns and gives notice. On their last day, Aisha prepares a final pay. It includes their normal pay for the period plus their unused annual leave. Aisha also records the last day and the reason the employment ended, so the end is reported to the ATO through STP.

Common mistakes¶

Forgetting that a final pay may include unused leave.
Not recording the cessation date and reason for the ATO report.
Trying to work out notice or redundancy without checking Fair Work first.

How this works in myaccountant¶

In the app — myaccountant has a termination flow that handles an employee's final pay, including an employment termination payment where it applies, and reports the end of employment to the ATO through STP.

Key points¶

Termination is when a person's employment ends.
There is usually a notice period — check Fair Work for the amount.
The final pay may include unused leave, and sometimes an ETP.
The end of employment is reported to the ATO through STP.
The report includes the last day and the reason for ending.
For notice, redundancy or unclear cases, use Fair Work and get advice.

Learn next¶

General information only — not tax, super or financial advice.

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