Targeted and Negotiated Voluntary Redundancy arrangements

It has come to our attention that payments made under Targeted and Negotiated Voluntary Redundancy (TNVR) arrangements should correctly be treated as Employment Termination Payments (ETPs), rather than Genuine Redundancy Payments (GRPs), for taxation purposes.

These arrangements have operated within the State Service for decades and agencies and employees have entered into them in good faith in the understanding that a particular tax treatment would apply.

The Managing Positions in the State Service (MPSS) framework has been revised to reflect this and enable voluntary separations to continue as Targeted Voluntary Employment Separations.

The revised framework provides for a Head of Agency to approve an additional payment calculated to address the difference in tax withheld under current targeted separation processes.

The payment is intended to provide a comparable net financial outcome that which as in place under previous arrangements. Both the additional payment and Targeted Voluntary Employment Separation years of service payment will be treated as an ETP for taxation purposes.

The revised MPSS uses the term Targeted Voluntary Employment Separation instead of Targeted Negotiated Voluntary Redundancy (TNVR). This reflects that payments made under these arrangements are treated as Employment Termination Payments (ETPs) for taxation purposes rather than Genuine Redundancy Payments (GRPs).

Existing TNVR processes can continue under the revised MPSS. References to TNVRs or TNVR programs in these FAQs include existing processes being progressed under the revised MPSS.

Yes. Agencies may continue to progress Targeted Voluntary Employment Separations in accordance with the revised MPSS framework. This includes considering EOIs received through agency TNVR programs and progressing individual Targeted Voluntary Employment Separations where the requirements of the MPSS framework are met.

Each agency will determine whether a Targeted Voluntary Employment Separation should proceed, having regard to its workforce requirements and the requirements of the MPSS framework.

No. Existing TNVR processes may continue under the revised MPSS. The revised MPSS now refers to these voluntary separations as Targeted Voluntary Employment Separations.

An EOI does not guarantee that a voluntary separation or additional payment will be approved. Each agency will determine whether a voluntary separation should proceed in accordance with the MPSS framework.

The MPSS framework has been revised to reflect the taxation treatment of Targeted Voluntary Employment Separation payments and enable voluntary separations to continue.

The revised MPSS also provides for a Head of Agency to approve an additional payment where applicable. The additional payment is calculated by reference to the difference between the calculated tax withheld if the relevant payment is treated as an ETP and the calculated tax that would have been withheld had the payment qualified as a GRP. It is intended to provide the employee with a comparable net financial outcome at the time of payment.

Existing requirements applying to a Targeted Voluntary employment Separation continue to apply, including the requirement that the employee’s position is abolished for the Targeted Voluntary Employment Separation to proceed.

Agencies may continue to progress current TNVR programs in accordance with the revised MPSS framework.

Submitting an EOI does not guarantee that a separation or additional payment will be approved.

Your agency will contact you directly regarding the status of the program, your individual circumstances and any next steps.

Yes. Agencies may continue assessing EOIs received through their TNVR programs in accordance with the revised MPSS framework.

The requirements applying to the assessment of an EOI continue to apply, including the requirement that an employee's position must be abolished for a targeted voluntary employment separation to proceed.

An EOI being assessed does not mean that it will necessarily be approved. Your agency will contact you directly when an outcome is available.

If your EOI has been approved, your agency will contact you about next steps.  If a separation is offered, your agency will explain the taxation treatment of your payment, advise you of any additional payment approved by the Head of Agency and outline the next steps required to progress the separation.

The Government recognises that employees who have signed Deeds of Release may have made personal and financial decisions based on the expected taxation treatment and net financial outcome of their separation.

Your agency will provide you with a proposed variation to your existing Deed of Release to reflect the revised arrangements, including the taxation treatment that will apply and any additional payment approved by the Head of Agency.

Your agency will explain the proposed variation, what it means for you and the options available to you before you are asked to make a decision.

No. It will be up to you to decide whether to accept the proposed variation.

You will be provided with information about the revised arrangements and what they mean for you before you are asked to make a decision. You may wish to seek independent legal, financial or taxation advice before deciding whether to accept the variation.

If you do not accept the proposed variation, the separation will not proceed on the basis set out in the proposed variation and your employment will continue on your existing terms and conditions.

You may wish to seek independent legal, financial or taxation advice before making your decision.

No action is required from former employees at this stage. Further information will be provided as advice becomes available, including any contact with former employees as needed.

An Employment Termination Payment (ETP) is a payment made in connection with the end of a person’s employment. A Genuine Redundancy Payment (GRP) is a particular type of termination payment that must meet specific requirements to receive concessional taxation treatment.

It has come to our attention that payments made under Targeted and Negotiated Voluntary Redundancy (TNVR) arrangements should correctly be treated as Employment Termination Payments (ETPs), rather than Genuine Redundancy Payments (GRPs), for taxation purposes.

The revised MPSS provides for a Head of Agency to approve an additional payment, where applicable, to provide a comparable net financial outcome at the time of payment.

Individual circumstances can differ, and employees may wish to seek independent financial or taxation advice.

Based on specialist taxation advice, Targeted Voluntary Employment Separation payments are required to be treated as Employment Termination Payments (ETPs) rather than genuine redundancy payments (GRPs) for taxation purposes.

The revised MPSS provides for a Head of Agency to approve an additional payment intended to provide a comparable net financial outcome at the time of payment to that which would have applied had the relevant payment qualified for taxation treatment as a GRP.

Individual circumstances can differ, and employees may wish to seek independent financial or taxation advice.

No. Both the additional payment and Targeted Voluntary Employment Separation years of service payment will be treated as an Employment Termination (ETP) rather than a genuine redundancy payment (GRP).

The additional payment is intended to address the difference in calculated tax withheld and provide a comparable net financial outcome at the time of payment to that which would have applied had the payment qualified for taxation treatment as a GRP.

The additional payment is calculated as the difference between the calculated tax withheld if the relevant payment is treated as an ETP and the calculated tax that would have been withheld had the payment qualified as a GRP.

Detailed guidance on the calculation and administration of the additional payment will be provided by your agency.

No. The revised MPSS does not create an automatic entitlement to a Targeted Voluntary Employment Separation or an additional payment.

Existing MPSS requirements continue to apply, including the requirement that the employee's position must be abolished for a separation to proceed.

Where a Targeted Voluntary Employment Separation is approved, the revised MPSS provides for the Head of Agency to approve an additional payment, where applicable. The additional payment is calculated by reference to the difference between the calculated tax withheld for an ETP and a GRP and is intended to provide a comparable net financial outcome at the time of payment.

Each agency will determine whether to progress Targeted Voluntary Separations, taking into account its workforce requirements and the requirements of the MPSS framework.

This will depend on the stage you have reached in the process.

If you have submitted an EOI but have not entered into a formal agreement, contact your agency for information about withdrawing your EOI.

If your EOI has been approved and you receive an offer to progress a separation, you can choose whether or not to accept the offer.

If you have already executed a Deed of Release but have not yet separated from the State Service, your agency will contact you about the proposed variation to your Deed and the options available to you.

Employees should contact their agency Human Resources team in the first instance if they have questions or concerns about their circumstances.

Employees considering a voluntary separation are also encouraged to seek independent legal, financial or taxation advice, as appropriate, about their personal circumstances before making a decision.

Affected employees will receive direct communication from their agency. Updated information will also be provided through agency and whole-of-service communication channels.

We are considering the changes needed to establish redundancy arrangements that comply with relevant legislative requirements. This includes clarifying the TNVR framework and associated MPSS arrangements and identifying and progressing any amendments needed to support a compliant redundancy framework for the State Service.