The standard transaction type for Severance Pay has a designation in the Vertex CMP Code field of Severance Pay Required by Law or Contract or Severance Pay.
Severance payments are issued to employees that have been part of workforce reductions and state authorities have different taxability implications. The taxation of such payments are controlled by the third-party tax engine, Vertex.
The new transaction type will need to have their Vertex CMP Code configured in Admin Tools > Transaction Type > Detail tab.
Create a Severance Pay Transaction Type
You will need to create a new transaction type to account for the Severance pay code that needs to be used. To create this new transaction type:
- Open Admin Tools > Transaction Type > Detail.
- Click Add New.
- Name this transaction type "Severance Pay" or something that will prompt users to understand it is for payment of Severance wages.
- In the Vertex CMP Code select Severance Pay.
- This will automatically set the pay code to Transactional.
- Select all the branches with which this deduction should be shared.
- Click Save.