Subsequent payment after employment ends

In Profit you can make a subsequent payment for employees that have left employment. The payment is an actual back payment in the case of a severance pay, a pension benefit or a golden handshake. You process these using a back pay contract.

A subsequent payment for a contract that you have by now terminated, such as a payment of the hours worked in the previous period or the overtime hours, does not count as an actual subsequent payment. You process these payments as corrections.

Description

For entering a subsequent payment, you have to take account of the following situations:

  • A subsequent payment for the contract that you have by now terminated, such as the hours worked in the previous period or the overtime hours.

    You enter the amount as a wage entry in the last period of the employee’s employment. Profit processes this entry as an RAE entry in the next salary processing period. You do not add a separate back pay contract for this.

  • The payment is an actual back payment, such as a severance pay, a pension benefit or a golden handshake.

    You add a back pay contract for the employee. You then enter the subsequent payment for the back pay contract. An employee can have several back pay contracts, for example because subsequent payments occur in different periods. A back pay contract is always based on the last regular contract. If there are multiple back pay contracts, they are all based on the last regular contract.

Wage calculation

‘Loonheffing’ and (if the employee is insured) employee insurance premiums are always deducted from the subsequent payments based on back pay contracts. In the case of subsequent payments in the same year that the employee was still employed, Profit applies the VCR method. Because fiscally the subsequent payment does not refer to a wage time frame, it does not result in a growth of the franchise or premium maximum. For calculations, Profit uses the franchise and premium maximum accrued in the regular wage processing.

Example:

You employed an employee paid per month from January through May 2011 and the employee has accrued the franchise and premium maximum over this period. You make a subsequent payment in September 2011. This does not result in a further growth of the franchise and premium maximum. Profit therefore calculates the employee insurance premiums based on the franchise and the maximum premium basis accrued over the period from January through May 2011.

When processing subsequent payments in wages, Profit ignores current lines in the loan administration or the fleet administration. Adding leave and absence lines does not make any sense either.

Wage declaration

You can prepare the wage declaration for your employees, including employees with a back pay contract, in the regular way. In the wage declaration, employees with a back pay contract are not designated as employees with a new employment. The data in the wage declaration are determined as follows:

  • Data from the last regular employment

    Because there is no new employment, the following data is copied from the last employment: sequence number, start and end date, indication of the income relationship, and the code for the reason of terminating the income relationship with the flex-worker.

  • Current data

    All other data is current employee data, largely originating in the back pay contract and the corresponding agency line.

Pay slip

You can generate pay slips for subsequent payments in the regular way. The pay slip for a subsequent payment lists the employment start date and the employment end date of the last regular contract.

Employee has transferred to another employer

When an employee transfers to a new employer you end the employment with the old employer. For the new employer a new employment is created. You cannot add a back pay contract for the old employer now. If the new employer is part of the same holding company as the old one, you should make the subsequent payment through the new employer.

Employee is not registered in Profit

If you want to make a subsequent payment to an employee who is no longer employed and is not recorded in Profit, you first record the employee in Profit. When doing so, take the following into account:

  • You report the employment of the employee for one month. If the current date is 15-01-2012, you report the start date of the employee’s employment as 01-01-2012 and the end date as 01-02-2012.
  • You record a salary of 0.00.
  • You record a zero hour timetable.

After recording the employee, you can enter the subsequent payment as a wage entry.

Preparation

Procedure

Also see