Voluntary redundancy calculator: take the offer or stay?
A voluntary redundancy offer pays off if you find new work quickly enough at a good enough salary. Enter the offer, your pay and the job you expect: the calculator compares taking it with staying over 12 or 24 months after tax, and gives the longest job search and the lowest new salary at which taking it still comes out level.
Worked out for the example. Change the boxes to make it yours.
| Voluntary redundancy payment | $42,000.00 |
|---|---|
| Notice paid instead of worked, 4 weeks | $6,923.08 |
| PAYE and other deductions | -$16,508.08 |
| In your hand from leaving | $32,415.00 |
| Stay: take-home over 12 months | $65,698 |
| Take it: the payment, then 40 weeks at $85,000 after 12 weeks looking | $80,577 |
| Taking it is ahead by | $14,879 |
| Break-even search | 24 weeks at $85,000 |
| Break-even new salary after 12 weeks looking | $54,900 |
| Weeks the payment lasts at $900 a week | 36 weeks |
- Take-home is worked at the 2026/27 rates (PAYE, ACC 1.75% to $156,641, KiwiSaver 3.5%). Tax on the payment is the extra tax a year at your current salary carries because of it. Your employer withholds at one rate on the whole sum (Inland Revenue's lump sum method), which can be a little more; the year's tax is squared up at the end of the tax year. Redundancy pay has no ACC levy or KiwiSaver taken from it, notice pay does.
- Both paths start on the day the job would end. Final holiday pay is owed either way, so it is left out. Pay rises, interest and any later redundancy if you stay are not counted.
- Before relying on a benefit, ask Work and Income. Redundancy pay means a stand-down of 1 or 2 weeks, and MSD can apply 13 weeks with no benefit if it decides you left a job voluntarily without a good and sufficient reason.
Free while you are between jobs. Your account adds the payment after tax (with any notice pay) to the savings in your money runway on Insights, and sets your weekly outgoings if you entered them, after asking.
What the comparison counts
Both paths start on the day your job would end. Staying is your current take-home pay for 12 or 24 months. Taking it is the payment after tax, any notice paid on top, then nothing while you look, then the take-home of the new job for the rest of the period. In the example, $42,000 and 4 weeks' notice on a $90,000 salary leave $32,415 in your hand. With 12 weeks looking and a new job at $85,000, taking it is ahead by $14,879 over 12 months, and it would still come out level with a search of up to 24 weeks. New Zealand law sets no amount for voluntary redundancy: it is whatever your employer offers and your agreement says. Our guide to redundancy in New Zealand covers the process your employer must follow.
Tax on the payment
Inland Revenue taxes a redundancy payment as a lump sum. No ACC earners' levy and no KiwiSaver come out of it, but a student loan repayment does. Notice pay is ordinary pay and carries all three. The calculator works the tax as the extra tax a year at your current salary carries because of the payment, at the 2026/27 rates. Your employer uses Inland Revenue's lump sum method, one rate on the whole payment, so it may withhold a little more; the year's tax is squared up at the end of the tax year. For a package with a redundancy clause and holiday pay, our redundancy pay calculator adds them up.
Jobseeker Support after a voluntary redundancy
Work and Income applies a stand-down of 1 or 2 weeks after redundancy pay, depending on the amount. There is a second question with a voluntary offer: section 225 of the Social Security Act 2018 says a person is not entitled to a work-tested benefit for 13 weeks if MSD is satisfied they left employment voluntarily without a good and sufficient reason. Whether accepting a voluntary redundancy counts is MSD's decision on your facts, so ask Work and Income before your plan relies on a benefit. The calculator counts no benefit either way. Our money runway calculator shows how long savings last with or without one.
What the numbers leave out
Staying is not certain either: a later restructure could end the role on the terms of your redundancy clause, or on none. Pay rises, interest on the payment and the value of the work itself are left out, and so is final holiday pay, which you are owed either way. A new job may also start a new 90-day trial period and new parental leave tests. The break-even figures are the honest test: if you are confident of finding work well inside the break-even search, at or above the break-even salary, the offer pays.
Questions
Should I take voluntary redundancy?
It pays if you find work quickly enough at a good enough salary. Compare the payment after tax plus the new job's pay with what you would earn by staying, and check how long a job search the payment can carry. The calculator gives both break-even figures.
How is voluntary redundancy taxed in NZ?
Like any redundancy payment: as a lump sum, with no ACC earners' levy and no KiwiSaver deducted, but with student loan repayments taken. Notice paid instead of worked is taxed as ordinary pay.
Can I get Jobseeker Support if I take voluntary redundancy?
Possibly, after a stand-down of 1 or 2 weeks. MSD can also apply a 13-week period with no benefit if it decides you left voluntarily without a good and sufficient reason, so ask Work and Income before you decide.
How much voluntary redundancy pay is normal in NZ?
There is no legal amount. It is whatever your employer offers, often based on the redundancy clause in your agreement or a collective agreement, and you can ask questions about it in good faith before you decide.
What happens when I save this?
Your account adds the payment after tax (with any notice pay) to the savings in your money runway on Insights, after asking, and sets your weekly outgoings if you entered them. It is free while you are between jobs.
Sources
- Inland Revenue: taxing employee redundancy.
- Inland Revenue: calculate PAYE for a lump sum payment at the end of employment.
- Inland Revenue: redundancy and KiwiSaver.
- Inland Revenue: redundancy and student loans.
- Employment New Zealand: redundancy.
- Work and Income: stand-down periods.
- Work and Income: fired for misconduct or leaving voluntarily.
- Social Security Act 2018.
More free tools: see all the calculators.