Termination Essentials

NZPPA Certificate in Payroll Termination Essentials (Level 4)

Bonus, commission payments

On termination, there may be agreed terms (included in the employee's employment agreement or other document) that detail additional or part payment of bonus or commission or other types of payments to an employee on their termination.

For example:

You will be paid up to $15,000 per annum as an annual performance bonus based on achieving set KPIs. If you resign or are made redundant, you will be paid pro rata the value of your annual bonus based on the percentage of KPIs achieved up to your termination date. Payroll needs to identify if employees have any additional payments that will need to be paid upon their termination. The amount to pay will be determined by management.

What payroll needs to do? •

These additional payments based on agreed-upon terms will become part of the gross that the 8% on termination is based on. • As a lump sum payment, it will be taxed as an extra pay.

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

77