Q: We are processing a severance pay for a client which is for mutual termination agreement. Can I please check if we should ask for more details from the client? Also does severance pay contribute to holiday earnings and Kiwisaver

A: So first question can you define what this severance payment is?  Taxable, non taxable, has it been stated what it is being paid for?  Was it an agreed payment based on the employment agreement (contractual) or as a settlement?

Q: in the settlement agreement/deed of release it is referred to as a separation payment, which is taxable. There is a separate settlement document, so I think this is not as per employment contract.

A: I would class this as a truly discretionary payment under the Holidays Act so not included in leave.

But would see this part of KS as the definition for gross states: other remuneration of any kind.