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Income Related Rent : Contents

Ceasing employment

If an applicable person is made redundant or is ceasing employment, a breakdown of their final pay is required.

Payments received by an applicable person at the time they stop work are used when determining when the employment ceased and are included as assessable income. This includes:

Redundancy pay

Redundancy payments are not classed as income and are not included in determining the date employment ceased. However, any unused amount of redundancy payment must be included as an assessable asset for Income Related Rent purposes.

Note income from assessable assets over the asset threshold is to be included as assessable income. See:

Income from assets

Determining when employment ceased

Find out the number of days represented by the payments received and the last day the client worked. If the number of days represented is not clearly shown on the verification provided, you will need to estimate the period that the payments would cover using the most appropriate of the following formula:

Formula 1

  • Determine the assessable income from employment over the last 52 weeks of employment
  • Divide by 52 weeks = weekly rate of pay
  • Divide by 5 days = the daily rate of pay
  • Confirm total amount of holiday pay and other appropriate payments from the verification provided
  • Divide this amount by the daily rate of pay and round down to the nearest whole day = number of days pay
  • Add the number of days pay to the last day the client worked. This is the date of change in circumstance
    Note do not count Saturdays and Sundays - use Monday to Friday weekdays only. If a client stopped work on a Friday, add the days from the following Monday.

If the client has not worked with the employer for 52 weeks or more before their last day of work, you may use the pay received over the period of employment and appropriate number of weeks of employment in the calculation.

Formula 2

  • Determine the assessable income from the employment over last 4 weeks of employment
  • Divide by 20 (number of working days in 4 weeks) = daily rate of pay
  • Confirm total amount of holiday pay and other appropriate payments from the verification provided
  • Divide this amount by the daily rate of pay and round down to the nearest whole day = number of days pay
  • Add the number of days pay to the last day the client worked. This is the date of change in circumstance
    Note do not count Saturdays and Sundays - use Monday to Friday weekdays only. If a client stopped work on a Friday, add the days from the following Monday.

Only calculate the period covered by holiday pay using the client's last 4 weeks of income if it does not disadvantage the client. If the income earned in the last 4 weeks does not reflect what the client normally earned, you may need to use the pay received over a longer period of employment and appropriate number of weeks of employment.

Note a change to the calculated rate of Income Related Rent cannot be activated until the date the change in circumstance occurs.

Example of determining when employment ceased

The client had been earning $320 net per week but stopped working from Friday 7 April 2023 and received $640 net in holiday pay.

This is the equivalent of 2 weeks' pay and, therefore, the date the client ceased employment would be considered to be Friday 21 April 2023. You would continue to include $320 net per week as assessable income for the period Monday 10 April 2023 to Friday 21 April 2023.

Note a change to the calculated rate of Income Related Rent cannot be activated until the date the change in circumstance occurs.

For more information see:

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All employees in New Zealand are entitled to at least 4 weeks paid annual holidays after 12 months employment. When an employee takes an annual holiday day (also known as annual leave), they are paid holiday pay instead of their regular wages or salary.

Casual workers and people on fixed-term contracts are not always paid holiday pay the same as permanent employees. These people may either have their holiday pay:

An applicable person is:

and

When a person enters into a fixed-term contract or engagement, instead of receiving salary or wages, they may be paid at the end of the term of the contract or on completion or the work specified in the contract.

In some cases contractors are paid in instalments and the final instalment is paid on completion of the contract. This is often the case for people hired to complete a specific task ...

When an employer terminates a person's employment, they must give the employee a period of notice unless they are being terminated due to misconduct. Notice periods are often 2 to 4 weeks.

Usually an employee works out their notice period, however an employer can choose to:

In all cases, the ...