QuickBooks Online blocks employee termination until pay runs are finalised

Payroll season brings a familiar question to community threads from Australian users of QuickBooks Online. The option to end an employee’s record is there, yet the termination will not go through. The accepted answer to one such thread, published by Intuit for the Australian edition, names the cause and documents two supported routes. The cause is not a fault in the software: an employee cannot be terminated while any of their pay runs remains unfinalised.

The one rule that blocks termination

The vendor’s guidance is blunt about the prerequisite. Termination cannot happen until every pay run associated with the employee has been finalised. The software will not close a record while that person’s earnings still sit inside an open run. If the Terminate step will not complete, an unfinalised run is the first place to look. The steps that follow reflect the Australian payroll app, so wording on your screen may differ in another edition.

Terminate the employee from their record

Once the runs are final, the shortest route works from the employee’s own details.

1. Open All apps, choose Payroll, then Employees.
2. Select the employee whose employment is ending.
3. Scroll to the bottom of the page and select Terminate Employee.
4. Enter the termination date, then select Terminate to confirm.

Termination marks the record inactive rather than deleting it. The employee cannot be included in future pay runs once the change takes effect.

Terminate the employee inside a pay run

The second route folds the termination into the final pay run, and it is the one that shows the payout as it builds.

1. Open All apps, choose Payroll, then Employees.
2. Select New Pay Run, fill in the relevant fields, and create the run.
3. Select the employee who is leaving.
4. Open the Actions button and choose Terminate Employee.
5. Enter the termination date and save.

The employee’s line then shows recalculated earnings together with accrued leave due as part of the termination pay. The run still has to be finalised before the employee is excluded from future runs, so the last step matters as much as the first.

Which route should you use?

Both routes end in the same place: an inactive employee who drops out of future pay runs. The pay run route puts the calculated earnings and accrued leave on screen while you work. For a departure with wages and leave still to settle, that visibility is the practical difference.

Leave payouts and the details that trip people up

Most of the confusion sits in the payout section, because some behaviours are automatic and one is not.

• Leave categories configured to pay out on termination are calculated automatically. Deselect the Pay out option for any category you want left out.
• A checkbox applies a percentage loading to a leave category, and annual leave loading is the usual case.
• A balance without the automatic Pay out flag needs that option selected by hand if you want it paid.
• Categories set up so they do not accrue automatically never appear in this section at all.
• Employees on default standard hours who leave mid-period have their hours recalculated on a pro-rata basis. The vendor suggests checking those figures before committing, and we would second that.
• Once the run is finalised, the employee is inactive and ineligible for any future pay run. Their line in that final run is marked to record the outcome.

Tax on the final payout

Termination pay carries its own withholding rules, and the guidance spells out one change worth knowing. Since 1 July 2019, amounts withheld for study and training loans, including HELP, SSL, TSL and the Student Financial Supplement Scheme, have been combined into a single withheld amount. That figure comes from the Study and Training Support Loans tax tables, which are refreshed each year. Unused leave paid out at termination is one of the payments these rules touch.

Before you finalise the run

Our read of the accepted answer is that the trap is sequence, not mechanics. Finalise every run for the employee first. Check the pro-rata hours if the departure lands mid-period. Decide which leave balances pay out, and which loadings apply, before the last save. After that, the employee is inactive and out of every future pay run, so the choices made in the final run are the ones that count.