A death benefit, how does that work again?

"Dad's really bad, can you come right over?" The phone call Annabel had been dreading for ages came last week. She immediately drove to her parents' house, she was just in time to say a final goodbye to Bert, her father. Bert became ill just after his sixtieth birthday. After that it went fast. There was no cure, he had to stop working permanently and he died six months later.

For Annabel, the first week after his death was all about mourning and practical matters surrounding the cremation. Now she is busy with the administration, all those things that have to be arranged. She had never thought about it. Fortunately Bert had written down all his passwords.

Annabel calls Bert's employer, the municipality where she herself grew up. At the HR department they are still shocked. Bert had worked there for forty years! It had been at least five years since there had been a death at work. They had to look for the protocol and it was quite outdated, Max from HR tells her. With the protocol Max tells the next of kin what they are entitled to, such as a death benefit. Max wants to know into which account it should be paid. "Use mine then," says Annabel.

With the April mutations, Tim, the payroll administrator, also receives the mutation for the death benefit. Since Tim doesn't receive such a mutation every month, he checks out everything thoroughly.

The death benefit is tax exempt, if the benefit is for a maximum of three months. Tim knows that. But is the holiday allowance part of it or not, since it's in the Elective Budget? Wasn't there something to that? And this other account number, is that allowed?

Just to be sure, Tim checks with his supplier. They soon come up with a definite answer:

• A death benefit is paid to "surviving dependents," the spouse or partner. Annabel's story does not show whether there are any, the employer would have to check that.
• In the event of an employee's death, an employer is obliged to pay out one month's salary tax-free if there are surviving relatives. A higher payment is possible: it is exempt from income tax, if the amount does not exceed three months of salary. The maximum is the monthly salary agreed in the employment contract, multiplied by three, plus holiday allowance. If the death benefit is higher than this amount, the excess is taxed on the basis of the table of special remunerations.
• In the past there was a ruling that holiday allowance could not be added to the monthly wage because it was included in the Elective budget. This has now been included in the Payroll Taxes Handbook: 'To the taxable wage for a month you add the monthly amount of 1/12 of the annual amount of an elective budget to which your employee is entitled under a collective labor agreement or employment contract. It does not matter what your employee spends (part of) this budget on.
• The death benefit is usually transferred to the deceased's account number .

Tim calls Annabel and tells her how much the amount will be and that the benefit will be transferred to Bert's account number. He also asks her if there are any bequeathed relations. Annabel says that her father was living with Thea, so she is the survivor. She understands that the money goes to Bert's account. Fortunately, the relationship with Thea and her brothers is good. It's nice that this has been arranged. Annabel has something else on her mind now.