Article

Payroll Q&A – Genuine redundancy payments and entitlements under contracts

Question

Under our employment contracts, there is usually a clause included that there will be a payment for one month’s salary for normal terminations and a payment of six months’ salary for a redundancy.

In the case of a genuine redundancy, would this mean that the first one month’s salary payment would be treated as an employment termination payment (ETP) and not tax free because the employee would have received this anyway?  Or would the whole six months’ salary payment be tax free?

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Disclaimer: This article is based upon information available as at the time of publishing and may be subject to change.