Question:

I have a client who is making a few employees redundant. They are wanting to pay  1 mths salary under the hurt & humiliation banner. My question is:

a)      Do we pay the employee the gross value of 1mths salary or the net value (ie gross less the lump sum tax rate)

b)      How do we record this in payroll? I was opting to set up a after tax allowance code & not have this on the file for PAYE. But was not sure if it needed to go through to IRD under the exempt earnings?

 

Answer:

 

If you are paying a payment under Hurt and Humiliation it would be a tax free payment based on an agreement value i.e. a month’s gross earnings.

 

Either do this in payment at a tax free payment personal grievance or through accounts payable.