Termination Essentials

NZPPA Certificate in Payroll Termination Essentials (Level 4)

Standard Termination Employment Agreement clauses

In an employee's end-to-end lifecycle, their employment agreement is the most important document for payroll to refer to. However, in some cases, the employment agreement can be less than useful, and payroll should voice its concerns if this is the case. Having a well-structured employment agreement covering a range of employee situations, such as when an employee leaves (for whatever reason), is an area that aids and provides what payroll needs to do based on what the business has decided, the four main clauses:

Termination clause

• • • •

Notice period

Redundancy compensation When a final pay will be paid

It is important that payroll clearly understands what these clauses require payroll to do if they are actually compliant with legislative requirements, and what questions the business or the employee may have on their application.

Termination clause

The employee might end their job by resigning.

The employer might end the employee’s job if there's a good reason (also called reasonable cause), and they follow a fair process in deciding to end employment. The employee or the employer will give notice in writing, unless otherwise set out in this agreement. If the employee does not give the agreed amount of notice, the employer might be able to claim a breach of this agreement. After notice is given, the employer and employee will discuss the kind of duties the employee will be expected to do during the notice period. This may include a change in duties.

The employer may decide to pay the employee instead of the employee working out their notice period (also known as “garden leave”).

Nothing in this clause prevents the employer from ending the employee’s employment without notice, or payment instead of notice, for serious misconduct or another reason set out in this agreement.

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

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