Targeted and Negotiated Voluntary Redundancy arrangements

Dear colleagues,

I want to update you on the Targeted and Negotiated Voluntary Redundancy (TNVR) program operating under the Managing Positions in the State Service (MPSS) arrangements.

It has come to our attention that payments made under 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 taxation treatment would apply.

A revised MPSS 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 to that which was in place under previous arrangements.

Both the additional payment and voluntary separation years of service payment will be treated as an ETP for taxation purposes.

Agencies with TNVR programs underway will contact affected employees directly to explain the tax treatment, any additional payments and next steps relevant to their circumstances.

I appreciate that employees affected by these changes will have questions. Your agency will provide further information where you are participating in a current TNVR process, and I encourage any employee to seek further information from their People and Culture teams. Information is also available on the Department of Premier and Cabinet website.

Kind regards

Noelene Kelly

Acting Head of the State Service