Whanganui District Council handed a leaving employee a lump sum payment of almost $200,000 last year.
According to its annual report, the council gave a $198,000 severance payment to a staff member in the 2014-15 financial year - more than eight times the annual median wage in the district. The median annual income in Whanganui was $23,500 according to the 2013 Census.
Finance manager Mike Fermor confirmed the payment but said it wasn't made to Kevin Ross, who stepped down as chief executive in late 2015.
Mr Fermor said he could not provide any further information about the payment.
This payment occurred in the final full year of Mr Ross' tenure, before recently appointed chief executive Kym Fell took office.
Mr Fell has committed to making "public efficiencies ... to make savings on the overall council salary budget" since being appointed at the beginning of this year.
The cost of employee salaries and wages at the council has risen by more than $2.4 million in the past five years.
The 233 full-time equivalent (FTE) staff were paid $14.86 million last year, according to the council's annual reports.
Calculating the number of staff with the total amount paid out indicated an average salary of $63,785 per employee.
Mr Fermor said payroll data showed the average hourly rate paid to staff was $28.33, which equated to $58,936 annually.
He said salary costs listed in the annual report included overtime and callout payments, and "does not give a true reflection of what the average employee is paid".
Forty-five staff were paid $80,000 or more in the last financial year, up from 35 staff a year earlier.
The council had an extra 18 full-time employees in June 2015 than it did in June 2013, and the 2015-16 annual plan budgeted personnel costs $775,000 higher than last year.
Mr Fermor said many council roles required at least a bachelor degree and council often had to source staff from outside Whanganui. "To retain these staff, we need to pay competitive salaries," he said.
He said the overall budgeted salary increase for staff was 1.67 per cent for the past three years.
Speaking about councils in general, local government analyst Larry Mitchell said staff salaries around the country had risen to the point of a nationwide "epidemic".
"Staff salaries have gone through the roof for no good reason other than slack accountability and poor governance control," said Mr Mitchell, a chartered accountant with a public policy master's degree in public sector finance. He worked for 20 years at accountancy firm Coopers and Lybrand.
Mr Mitchell, who worked as an audit director for the Office of the Auditor General for four years, said elected councillors were responsible for keeping employee salaries at an appropriate level, but he said many were ignoring their obligation as watchdogs.