Q: We would just like to clarify that a remedial payment to an ex-employee is full and final and that if it is paid to a current employee it falls into AWE only.

A: If you have a settlement agreement with the employee then Yes it is full and final BUT it can be reopened by IRD if they audit and also if an employee believes the settlement did not meet legislative terms (i.e. Holidays act remediation payments) and the ERA member overturned the settlement. For instance the Labour Inspector reviewed what had been paid and believed the employee had still been underpaid for leave taken etc.

A remedial payment under the Holidays Act is under RD7(3) of the Income Tax Act 2007 as it is considered as an extra pay so only AWE or ADP would include it, as it is not part of a week or a day.