Termination Essentials

NZPPA Certificate in Payroll Termination Essentials (Level 4)

What does payroll need when an employee resigns?

If an employee resigns, payroll needs the following:

• What type of resignation is it? (look at the previous section)

• What is the final date of employment?

• What is the notice period for this employee (either agreed in the employment agreement or agreed upon at the time of resignation)? • Is there documentation for the resignation (resignation letter from the employee or instructions on what the business wants to be done for the resignation, such as payment in lieu of notice. • Are there any other potential payments that could be paid after the employee leaves their employment? (People who have commission payments paid after they leave may be entitled to a percentage of that payment). • Is there any settlement agreement involved (personal grievance). • Is there any money owed to the employer (overpayments, employee loans, or company staff accounts) It is essential for payroll to be proactive and get the message out to management that payroll must be fully informed of all details that will impact on the employee’s final pay. This is not payroll, but it gets mentioned. An employee and employer get into a heated exchange, and in the heat of the moment, the employee states they resign. This is a dangerous situation, and the employer should not just accept the employee's resignation, which could be seen as constructive dismissal. Constructive dismissal is when the employee feels that they have no choice but to resign from an employer's action. The key action for the employer is to take the heat out of the situation and tell the employee to think about it overnight and come back and meet later (usually the next day). At the follow-up meeting, if the employee still wants to resign, then detail the steps (get it in writing, notice and final day (date)) but also state that this is not what the business wanted to happen. Resigning in the heat of the moment • Have any additional special payments been agreed upon?

© New Zealand Payroll Practitioners Association, Mar 2026, Ver 9

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