Preparing for Single Touch Payroll Phase 2: Reporting termination reasons

Single Touch Payroll Phase 2: Termination reasons

February 3 2020 update: STP Phase 2 has been delayed by the ATO until January 1 2022.

With Single Touch Payroll Phase 2 on the horizon this year for Australia, the KeyPay team has been proactively thinking about what changes can be made in the platform now to prepare, and benefit users across other regions in the process.

One of the requirements of STP Phase 2 will be to start reporting termination reasons via STP. We’ve highlighted this as a useful feature for our users not only in Australia but in New Zealand and Singapore too because it will provide more transparency in an easier manner to assess reasons for turnover in the business.

ATO required termination reasons

The ATO has provided the following prescribed permissible termination reasons that are now available for KeyPay Australia.

  • Voluntary cessation – an employee resignation, retirement, domestic or pressing necessity or abandonment of employment
  • Ill health – an employee resignation due to medical condition that prevents the continuation of employment, such as for illness, ill-health, medical unfitness or total permanent disability
  • Deceased – the death of an employee
  • Redundancy – an employer-initiated termination of employment due to a genuine bona-fide redundancy or approved early retirement scheme
  • Dismissal – an employer-initiated termination of employment due to dismissal, inability to perform the required work, misconduct or inefficiency
  • Contract cessation – the natural conclusion of a limited employment relationship due to contract/engagement duration or task completion, seasonal work completion, or to cease casuals that are no longer required
  • Transfer – the administrative arrangements performed to transfer employees across payroll systems, move them temporarily to another employer (machinery of government for public servants), transfer of business, move them to outsourcing arrangements or other such technical activities.

When STP Phase 2 takes effect on January 1 2022, these termination reasons will remain non-compulsory in KeyPay but will be useful for employer reporting purposes. It’s also useful for AU employers as they will no longer need to issue separation certificates as it will all be captured via STP and reported to the relevant government agencies.

Termination reasons for other regions

For KeyPay Singapore and New Zealand, alongside the above termination reasons, users have the choice to select ‘Other’ to cover any other reason that may not fit within those options. This will not be available for KeyPay Australia to keep in line with ATO requirements.

Where can users view or manage termination reasons for each employee?

There are a range of ways to view termination reasons assigned to an employee in KeyPay. KeyPay also allows for several reports to help with business decisions or problem solving:

  • Employee details report: This report can be filtered to show relevant data on terminated employees.
  • Employee import file: This file allows users to export data to view termination reasons for all terminated employees. Users can also add or update termination reasons for employees and import back into the platform.
  • Employee details audit report: To track who added and how a termination reason was added for terminated employees users can generate the Employee details audit report.

Why is this functionality not being rolled out in the UK?

Due to different legislative requirements this feature would not be suitable for our UK users.


For more information on this feature, see our support articles:

Australia | New Zealand | Singapore

Not using KeyPay yet?

With over 175,000 Australian businesses on the platform, KeyPay was among the first payroll software vendors in Australia to be STP compliant, certified by the ATO. 

Evidently, our awesome product team is already working on the phase 2 STP changes to ensure new reporting requirements are ready for January 2022. With compliance built at core, KeyPay has the proven ability to not only meet ever-evolving Australian legislation such as STP, but make managing it as seamless as possible for payroll administrators and outsourced providers. 

If you’re a forward thinking business looking to be proactive in meeting STP phase 2 requirements, get in touch with KeyPay at sales@yourpayroll.com.au or try KeyPay for yourself - free for 30 days.


Kate Brown

Marketing Manager at KeyPay

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