Termination Essentials

NZPPA Certificate in Payroll Termination Essentials (Level 4)

Module 2: Legislative payments made as part of a termination pay Under the legislation, payroll must know and apply a number of requirements when an employee terminates. One of the main areas concerns the Holidays Act, which is overly complex and has numerous rules and calculations that need to be followed and checked to ensure compliance. • Understand the legislative requirements and how they need to be applied to payroll. • Understand how any agreed terms interact with legislation to ensure compliance and that any agreed (extra terms) are met. • Understand and ensure all payroll processes aid payroll in achieving compliance, are timely, and do not hinder payroll processing. • Understand all aspects of their payroll system, any areas where non-compliance is a risk, and what workarounds may be needed. Payroll needs to understand the following clearly:

In this section, we will cover:

Holidays Act 2003 •

Discretionary payments

• 8% “Pay as you go” on termination ▪ Terminate before 12 months ▪ Terminate after 12 months ▪ Extending leave on termination concerning upcoming public holidays ▪ Alternative Holidays • The calculation for annual holiday entitlement paid out on termination earned while on ACC.

Parental Leave and Employment Protection Act 1987 • The employee does not return from parental leave • The employee is made redundant on parental leave •

Employee returns from parental leave and then terminates

Extra Pay •

•

Exit inducement payment

• Restrictive Covenant Payments • Personal grievance payments

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

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