Presently, the exemption can only be applied to employees whose employment agreement has not formally ended. If the former employer pays or reimburses retraining expenses on behalf of a former employee after termination of his or her employment, such expenses will be subject to wage withholding tax.
Effective 1 January 2021, it is proposed to apply the tax exemption to former employees as well, subject to the same conditions and limitations of the current exemption for employees. This proposed extension, once enacted, will provide for more flexibility in negotiating individual or collective redundancy packages.
Authored by Anita de Jong, Maria Benbrahim, and Alexander Fortuin