In the event an employee passes, employers should not rush to process any final payments before they identify the correct payments to be made and the recipient of such payments.

Payment Beneficiary

It is important for employers to know that no final payments can be made into the deceased employee's bank account. Employers should first determine the deceased employee's beneficiary, by requesting specific documentation from either an immediate family member or the deceased employee's Legal Representative.

Based on these documents the payments could be made to:

• a Dependant
• a Trustee
• a Non-Dependant

Unlike other Termination Payments, Death Benefits payments are not time-bound. This means an employer can legally hold any unpaid death benefits payments until the correct beneficiary is determined. 

Payment Types

There are two types of payments an employer may need to pay following the death of an employee:

Standard Unpaid Wages                                                 Death Benefits Payments

These payments include:                                                 These payments include:

- Unpaid worked wages;                                                  - Unused Rostered Days Off;

- Unused Annual Leave;                                                   - Unused Personal Leave (if the Employment Agreement requires payment for this entitlement)

- Unused Long Service Leave.                                           - Gratuity Payments.

This User Guide provides instructions on how to process Standard Unpaid Wages. Refer to our second user Guide on how to process Death Benefits Payments.

Finally, for more information on the legality of payments following the death of an employee, please refer to the Blog published on our website. 

Standard Unpaid Wages

These payments are not paid through payroll. Employers should first calculate the total of unpaid worked wages and unused entitlements and then accrue these payments into a clearing account on the Balance Sheet. Once the beneficiary is identified, the employer will simply pay these unpaid wages via EFT transfer. These payments are not taxed.

Create the Wages Clearing Liability account

1. Go to Accounting > Chart of accounts
2. Click on [Add Account]
   
   è  The Add New Account screen
   
   
   
   
3. Select/Enter the following details:
   • Account Type > Select: Current Liability
   • Code > Enter a 3-digit code starting with 8
   • Name > Type: Payroll - Unpaid Wages (Deceased Employee) 
   • Tax > Select: BAS Excluded
4. Click on [Save]

Create the Wages Expense Account

1. In the Chart of Accounts screen, click on [Add Account]
   
   è  The Add New Account screen
   
   
   
   
2. Select/Enter the following details:
   • Account Type > Select: Expense
   • Code > Enter a 3-digit code starting with 4
   • Name > Type: Employees - Wages (Deceased Employee) 
   • Tax > Select: BAS Excluded
3. Click on [Save]

Create the Unpaid Wages and Entitlements Journal

1. Calculate the total unpaid wages, unused Annual and Long Service Leave for the deceased employee
2. Go to Accounting > Manual journals
3. Click on [New Journal]
   
   è  The New Manual Journal screen opens
   
   
   
4. Select/Enter the following details
   • Narration > Type: Unpaid Wages & Unused entitlements #employeename
   • Date > Type the date employee's passing
     Note: if you are not aware of the specific date, any date close to the period will suffice
   • Amounts are > select No Tax
   • Line 1: Accounts > Select the Employees - Wages (Deceased Employee) Expense account and post the total value of the calculated unpaid wages in the Debit column
   • Line 2 Accounts >Select the Payroll - Unpaid Wages (Deceased Employee) liability account and post the equivalent value in the Credit column
5. Click on [Post]

Reconcile the Unpaid Wages Payment

Once the correct beneficiary has been identified, the payment of the unpaid wages can be made via EFT transfer. 

1. Go to the Bank Account Bank Feed Transactions
2. Find the Super Payment and click on the [Create] Tab
   
   è  The Bank Feed Transaction
   
   
   
   
3. Select/Enter the following details:
   • Who > Select/Create: The Beneficiary name
   • What > Select: Payroll - Unpaid Wages (Deceased Employee) liability account
   • Why > Type: Unpaid Wages Deceased Employee #employeename
4. Click on [OK]