Termination Essentials

NZPPA Certificate in Payroll Termination Essentials (Level 4)

Long Service Leave

Long service leave is not a legislative requirement, so how and if it is paid out on termination is a matter of agreement (detailed in the employee employment agreement).

If the employee has been long-serving, payroll may see a payment of unused long-service leave being paid out on termination.

What does payroll need to do? •

Find out if this has been agreed to be paid out on termination • What is the agreed rate for the leave • It will be taxed as an extra pay. • If does not extend forward from termination like annual holiday entitlement. • It will be part of the gross for the 8% on termination.

Toil

Time off in lieu (TOIL) is another additional leave type that is not a legislative requirement. The purpose is to take time off from the employee's normal hours of work without paying any additional payment.

In some employment agreements, if the employee terminates their employment and they have TOIL not used, this can be paid out.

What does payroll need to do? •

Find out if this has been agreed to be paid out on termination. • Find out what is the rate for this to be paid out at. • It will be taxed as an extra pay. • If does not extend forward from termination like annual holiday entitlement. • It will be part of the gross for the 8% on termination.

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

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