April 1, 2008
Media Release

EPMU welcomes redundancy rebate

The introduction today of a redundancy rebate will mean greater justice for workers made redundant over the last 14 months and in the future, says the Engineering, Printing and Manufacturing Union.

From today, workers who have been made redundant since 1 December 2006 and who received redundancy compensation will be entitled to claim a rebate of 6 cents in the dollar up to a maximum rebate of $3600.

Workers who receive a redundancy compensation payment usually have it taxed at the highest tax rate of 39 cents, even though their ordinary tax rate is lower. The rebate means low and middle income workers who have received redundancy payments recently, and from now on, will not be adversely affected by having an artificial tax rate applied to their compensation.

EPMU national secretary Andrew Little says the move will mean greater fairness for workers facing the often unpalatable situation of redundancy.

“Up to November 1992, redundancy compensation was taxed at a heavily concessionary rate that only taxed 5% of the payment, and at the earner’s usual rate, because payments were regarded as compensation for loss of office or earning power and therefore capital in nature.

“The rules were changed so that redundancy was treated as just any other source of income, but the change resulted in unfairness with payments being taxed at rates workers themselves were never on.

“There have been some fairly significant redundancies in the last 14 months including around 400 Air New Zealand groundhandling workers, around 500 South Pacific Tyres workers in Upper Hutt and several hundred manufacturing workers across the country. We’ll be doing what we can to encourage our members who have been made redundant since then to claim their rebate.

The EPMU represents around 50,000 working New Zealanders and lobbied strongly for the law change along with the Manufacturing and Construction Union.

ENDS

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