1).For terminating an employee some elements needs to be 
attached. The elements are as follows:
    a).Retrenchment  Compensation Information
    b).Voluntary Retirement Information
    c).Commuted Pension Information
    d).Leave Encashment Information
    e).Other Termination Information
    f).Provident Fund Settlement Information

2).Link all these elements to your Payroll. 

3).Attach all the above elements in your entries
4).Run quick pay for that particular employee.

1.For terminating an employee some elements needs to be 
attached to payroll of that employee. The elements like 
allowances gratuity etc are to be attached with their pay 
value.
2.Go to end employement of that particular employee master 
and put an end date to it.
3.then run the quick pay for that person.