Q: I have a question relating to bonus payments made after an employee terminates employment.

Scenario:

Employee terminated on 31/12/2021.

There was an agreement they would still be paid their Bonus, which is payable in March 2022.

Today we are paying the bonus along with:

• 8% holiday pay
• Employee and Employer KiwiSaver contributions.

Our CFO is querying why we are paying KiwiSaver, as they are no longer an employee. His view is the employee/employer relationship is no longer in place.

I’m trying to find something in legislation that relates to people who are no longer employees, and the requirement to still pay KiwiSaver contributions.

Can you point me to relevant section of legislation that could help explain this to our CFO.

A: I would love to say here is the section but legislation is not that helpful.

You have agreed to make a taxable payment to an employee after their termination date so along with PAYE being deducted all other required deductions would need to be applied.  It is still a valid payment as it is part of the employees taxable gross that is why the 8% is payable and KS employer and employee contributions would still be made.