How to pay someone a tax free genuine redundancy on termination

KB148

Overview

To pay someone a tax-free portion of a genuine redundancy amount on termination, a special pay item is added to their final pay run.

Process

  1. Go to Payroll > Setup > Pay items
  2. Create a new pay item for your tax-free genuine redundancy
    1. Call it “GENRED” for example
    2. Set it as an allowance AFTER tax
    3. Payment type should be Lump sum: Lump sum D
  3. Add this item to the employee’s termination pay

Do not add any tax-free amounts to the ETP box when terminating someone – this is only for taxable ETP amounts.

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Last edit 23/12/21