Order in Council legislation in 1982 increased the payment to $40 for each year of service and a 1988 order raised the rate to $80. The Fire Service Amendment Act 1990 increased the gratuity to $120 for each year of service.
Mr Smellie applied for his gratuity and received $371 earlier this year, calculated at $40 a year for his 11.5 years of service after April 1, 1976 ($460) less tax.
Feeling shortchanged, he sought a gratuity based on the Fire Service Amendment Act rate of $120 for each year of service, which would give him $1380 before tax.
Fire Service Muri Whenua Area manager Allan Kerrisk, of Kerikeri, said legislation compelled the gratuity to be paid at the rate which applied when Mr Smellie quit firefighting in 1987.
Mr Kerrisk said the Fire Service had documents showing Mr Smellie got a cheque for his gratuity many years ago.
"We've also got a statement from him saying he never got the money," Mr Kerrisk said.
The Fire Service had "put the matter right" by issuing another cheque for the gratuity Mr Smellie would have received in 1987. George Verry, chief executive of the United Fire Brigades Association said the legislation needed reviewing to bring all gratuity payments up to date.