## Documentation Index

Access the complete documentation index at:
https://www.zoho.com/en-ca/payroll/llms.txt

Use this file to discover all available documentation pages before proceeding.

# Termination Payroll

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Termination Payroll allows you to process the final pay for employees leaving your organization. This includes handling their last pay check, unused vacation hours, severance pay, and any other final earnings. Zoho Payroll ensures that the termination process is smooth, compliant, and accurate.

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## Run a Termination Payroll

**Prerequisites:** Before you can start running payrolls for your organization, make sure you have completed the following:

*   [Configured your pay schedule](/en-ca/payroll/help/employer/getting-started/configure-pay-schedule.html)
*   [Configured taxes](/en-ca/payroll/help/employer/getting-started/configure-taxes.html)
*   [Added employees](/en-ca/payroll/help/employer/getting-started/add-employees.html)
*   [Configured Prior Payroll](/en-ca/payroll/help/employer/getting-started/configure-prior-payroll.html), if enabled

Running a termination payroll in Zoho Payroll involves four main steps:

1.  [Terminating an employee](/en-ca/payroll/help/employer/pay-runs/termination-payroll.html#terminate-an-employee)
2.  [Adding termination payroll details](/en-ca/payroll/help/employer/pay-runs/termination-payroll.html#add-details)
3.  [Submitting and approving the termination payroll](/en-ca/payroll/help/employer/pay-runs/termination-payroll.html#approve)
4.  [Recording payment for the termination payroll](/en-ca/payroll/help/employer/pay-runs/termination-payroll.html#record-payment)

### Step 1: Terminate an Employee

**Warning:** Terminating an employee cannot be undone.

To terminate an employee:

1.  Go to the **Employees** module.
2.  Select the employee who is being terminated.
3.  Click **More** on the top right and select **Terminate Employee**. You’ll be redirected to the _Terminate Employee_ page.

4.  Enter the employee’s **Last Working Day**.
5.  Enable **Encash all unused vacation hours** if you want to pay the employee for their unused vacation hours. Otherwise, disable it.
6.  Configure the pay date for the termination payroll:

**Pay Date Preference**

**Description**

**Pay as per the regular pay schedule**

The termination payroll will be processed based on the regular pay schedule.

**Pay on a given date**

Select a specific pay date for the termination payroll.

7.  Enter the employee’s **Personal Email Address** for future communications, as their work email may be inactive after termination.
8.  Optionally, add any comments or notes in the **Notes** field for future reference.

9.  Click **Proceed**.
10.  In the popup that appears, click **Yes**.

The employee will be terminated, and a termination payroll will be created for them. You can then proceed to add termination payroll details.

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### Step 2: Add Termination Payroll Details

To add termination payroll details:

1.  Enter the employee’s **Earning Hours** for the primary job role on the _Termination Payroll_ page.

**Earning Type**

**Applicability**

**Regular**

Applicable to all employees.

**Overtime**

Applicable only to hourly employees.

2.  Add the **Additional Earnings** information.

**Additional Earnings Information**

**Description**

**Bonus**

Enter the bonus amount for the employee.

**Commission**

Enter any commissions earned by the employee during the pay period.

**Severance Pay**

Enter the compensation amount for the employee.

3.  Click **Save and Continue**.

The payroll will be created in **Draft** status. Review the payroll details, make any necessary changes, and proceed to approval.

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### Step 3: Submit and Approve the Termination Payroll

**Prerequisites:** If you have configured Direct Deposit, ensure you have sufficient funds in your bank account to cover salaries of employees whose payment mode is Direct Deposit.

**Note:** The Approval feature is available only for certain plans of Zoho Payroll. Visit our [pricing page](/en-ca/payroll/pricing/) to check if it’s available in your current plan.

**Warning:** Once a termination payroll is approved, it cannot be edited or deleted.

To submit or approve a payroll:

1.  Go to the **Pay Runs** module. Your upcoming payrolls will be listed under the _Run Payroll_ tab.
2.  Click **Process Pay Run** next to the termination payroll.
3.  Depending on your role and permissions, follow one of these paths:
    *   If you have approval permissions (such as an admin or finance head), click **Submit and Approve** on the top right.
    *   If you don’t have approval permissions, click **Submit for Approval** on the top right. An authorized user will then review and approve the payroll.

**Insight:** If you have enabled [Zoho Books integration](/en-ca/payroll/help/employer/integrations/zoho-books/), you can choose to post the journal entry for the payroll transaction in Zoho Books. The transaction will be recorded under the account configured during the integration setup.

Once your termination payroll is approved, Zoho Payroll will automatically deposit salaries into the terminated employee’s bank account on the scheduled pay date if you’ve set up [Direct Deposit](/en-ca/payroll/help/employer/direct-deposit/) for your organization and the employee.

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### Step 4: Record Payment for the Termination Payroll

If you’re paying your employee manually via cheque, cash, or other methods, you can mark the payment as recorded on the payday.

To record payment for a termination payroll:

1.  Go to the **Pay Runs** module and open a payroll in the Payment Due status.
2.  Click **Mark as Paid** on the top right.
3.  In the pop-up that appears, select the **Paid Through Account** and **Payment Mode**.
4.  Enable **Send pay stub notification email to all employees** if you want to email the pay stub to your employees. Otherwise, leave it disabled.
5.  Click **Save**.

The payroll will now be marked as **Paid**, and the applicable federal and provincial taxes will be generated under the [Taxes](/en-ca/payroll/help/employer/taxes-and-forms/taxes.html) module.