Q: An employee has offered to take up voluntary redundancy.  Whilst there is a clause in the employment agreement for redundancy payment, it does not mention voluntary redundancy.

I understand that redundancy pay is not compulsory under the employment laws, how would voluntary redundancy payments be treated in terms of tax please?

Furthermore, what other issues should the business consider in this situation please?

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A: A voluntary redundancy payment is still extra pay (taxed as a flat tax rate, no ACC earner levy).

As long as it is agreed, all OK.

Other payments:

• Notice  (worker or paid in lieu of notice)
• Any leave entitlement (extended forward and the PH’s)
• 8%