• Definitions

    Genuine redundancy

    Genuine redundancy has the following characteristics:

    • The employee has been dismissed from a job, not left voluntarily.
    • The employee has been made redundant (the employee's particular work has ceased or tapered off, or the workplace has relocated or closed).
    • The dismissal occurred before the employee had to retire (for example, before the age of 65, or before a set period of service).

    Invalidity

    Invalidity is when physical or mental capacity stops an employee from continuing in their present line of work, forcing them to leave employment early (and in any event, before the age of 65).

    Invalidity requires certification from two qualified medical practitioners.

    Early retirement schemes

    An employer-devised early retirement scheme offers incentive payments encouraging staff to retire early or resign. The employer must submit the scheme's details to us and, if it meets certain criteria, we will approve it as an 'early retirement scheme'. Under the scheme, certain payments become employment termination payments with a tax free component.

    Payments for unused annual leave paid as part of an early retirement scheme are not employment termination payments.

    Normal gross earnings

    Normal gross earnings include all payments, except those relating to termination payments, received in the last full period of employment (this includes taxable allowances, overtime, bonuses). Therefore, an employee's normal gross earnings are those earnings relating to the last full pay period worked.

    If an employee's pay fluctuates significantly over a number of pay periods, you can calculate normal gross earnings by using an average of gross taxable earnings for the financial year to date over the number of pays received.

      Last modified: 23 Sep 2014QC 19081