Final Pay - Deduction in Lieu of Notice


If an employee leaves without giving notice,   the employer may be able to deduct the notice period from their final pay. 

This article from MBIE has more details.  

To set this up in FlexiTime,  you'll need to create a new Pre-Tax Deduction Pay Code.


Make sure that you tick Exclude from KiwiSaver Earnings as shown above,  this will ensure that the deduction is included in the employee and employer KiwiSaver calculation.  

Then create the employee's Final Pay and add this new pay code. 

Edit the pay line and set the Quantity to the number of hours to be deducted and the Rate to the employee's hourly rate.    Click Calculate Pay then check that you're happy with the results.

Be careful to ensure that the employee's net payment and tax are not negative.  This can happen if the lieu of notice deduction is more than the employee's other earnings,  Holiday Pay and Leave entitlements.   If this happens,  you'll need to reduce the lieu of notice deduction until the net payment is zero. 

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