HR Practice For Payroll Practitioners

HR Practice for Payroll Practitioners

Retirement

An employer cannot force an employee to retire as there is no age set in employment law.

There are basically two reasons for retirement:

1. Acknowledge the employee and their contribution to the organisation, and

2. Free up positions so other employees can progress through the organisation and employees don’t create a bottleneck where they sit in the same position for their career In older employment agreements (or based on the culture of the business), payroll may encounter retirement clauses where, based on the employee's time in the job (service), they can receive a payment if they meet the agreed-upon criteria and wish to retire.

Example of an employment agreement clause:

Retirement

If the employee has worked for a period of 20 years or more of full-time employment and wishes to retire the company will make the following retirement payment (on application);

• Not less than 20 years, a week for each year based on the employee’s current ordinary week

• Greater than 20 years up to 30 years, a week for each year based on the employee’s current ordinary week

• Greater than 30 years and more, a week for each year based on the employee’s current ordinary week

For additional information, look at this EmploymentNZ reference: https://www.employment.govt.nz/ending employment/retirement/

© New Zealand Payroll Practitioners Association, Sep 2024, Ver 12

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