Termination Essentials

NZPPA Certificate in Payroll Termination Essentials (Level 4)

What does payroll need to do to recover a training bond from an employee's termination pay?

1. Clearly understand the terms of the bonding agreement regarding what can be recovered, as this is an agreed-upon term that must be followed. 2. If the amount is to be deducted from the employee’s termination pay, the requirements of the Wages Protection Act 1983 apply. Even if the employee had agreed to this deduction at the time of signing the bond agreement, they could redraw their consent (in writing), and payroll would not be able to deduct the bond amount.

Example of a Bond Agreement:

Training Bond Agreement

1. I ………………………………………….. agree that my employment will be bonded for a period of [state in months] from [date] to [date]. The training bond will cover the investment that my employer [employer name] has made in training me for the position of [position title].

2. The course that this bond relates to is:

• [state the name of the training course] run by [name of training provider] from [date] to [date] at a cost of [state the amount] plus GST.

3. I understand that by accepting this training bond agreement, I will be required to continue in employment with [employer] until the date specified above. Once the term of this bond is completed, the bond will be released, and I will not be liable thereafter. 4. If I terminate my employment with [employer] before the bond date is reached for any reason (except redundancy), I agree to pay the pro rata value of the course described above. The pro rata value is based on the course cost plus GST for the time not completed in the bonded period stated above. 5. If I refuse to repay the bond, I agree to [employer] taking any amount owed from my final pay, including any money paid for outstanding leave entitlements. If my final pay is not sufficient to cover this amount, I agree to pay the balance in full immediately. I understand that if I do not repay the bond amount, debt collection action may be taken against me.

6. By signing this agreement, I fully understand this training bond's terms and conditions.

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Employee signature

Date

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

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