Redundancy in New Zealand

Is there a legal right to redundancy pay?

No law gives every employee redundancy compensation. Employment New Zealand puts it plainly: whether you receive a redundancy payment depends on your employment agreement and any negotiations with your employer, and if the agreement does not mention redundancy pay, there is no compensation. So the first document to read is your own agreement.

Some things apply whatever it says. You must be given notice and paid for the notice period, unless you both agree to waive it. Your final pay must include unused annual holidays and other entitlements. And the redundancy must be genuine and follow a fair process. One common catch: agreements that do provide redundancy pay often exclude it in a technical redundancy, where the business is sold and the buyer offers you a job.

What a fair redundancy process looks like

Employers must be able to show a proposed change is for genuine business reasons. Employment New Zealand says that if you lost your job and were then replaced by someone in an identical role, that would very likely be an unjustified dismissal.

Before a decision that would affect whether your job continues, your employer must give you information so you can understand the situation, and a chance to comment before deciding. Employment New Zealand's guidance sets out the steps, which make a useful checklist:

1. A proposal explaining what is changing and why, the timeline, how consultation will work and any selection criteria.
2. A meeting with affected employees, and any union, to explain it.
3. A reasonable time to consider the proposal, get advice and give feedback. If you ask for more time, your employer should consider the request in good faith.
4. Genuine consideration of the feedback, with a response saying which points were accepted or rejected, and why.
5. A decision, communicated to the people affected.
6. A fair selection process if some people in a group are to go, with objective criteria and a chance to comment on the results.

If the proposal might affect your job, you are entitled to all the information your employer holds about you, though not confidential information about other people. There is no fixed number of days for consultation: what is reasonable depends on things like how many people are affected and how complex the change is.

Redeployment: is there another job?

Before making you redundant, your employer must have explored all possibilities to find you another position in the workplace, including roles that are the same, similar or different, depending on your agreement. Ask directly which vacancies exist and whether you will be considered.

The rule works both ways. Generally, employees must accept redeployment to a role that is the same or similar, and turning one down could cost you your job and your entitlement to redundancy pay. Compare an offered role's duties, pay, hours and location with your current one, and get advice if you do not think it is genuinely similar.

Notice, final pay and holiday pay

• Notice is the period in your agreement. If there is none, reasonable notice applies, and for a redundancy Employment New Zealand says that will usually still be at least 2 to 4 weeks, depending on factors such as your length of service and seniority. Being paid instead of working your notice needs some form of agreement.
• Final pay must include wages owed; unused annual holidays, at the higher of ordinary weekly pay or average weekly earnings; 8% of gross earnings since your last anniversary date, less leave taken in advance; unused alternative holidays; and public holidays that would have fallen within your unused annual leave. There is no legal right to have unused sick leave paid out, although your employment agreement can provide for it.
• Timing: the final leave and holiday payment is due on or before the pay day of the final pay period.
• Fixed-term agreements: ending one early means following the dismissal or redundancy rules, and a fixed-term employee made redundant is entitled to the notice period in their agreement.

If your work is being sold or contracted out

Sometimes the work itself moves, because the business is sold or transferred or your work is contracted out. Every employment agreement must contain an employee protection provision setting out a fair and reasonable process for these situations. It does not apply to a sale of shares in a company, or when the employer is bankrupt, in receivership or in liquidation.

Part 6A of the Employment Relations Act 2000 goes further for "specified employees" in cleaning and food catering in any workplace; laundry in the education, health or aged residential care sectors; orderly work in health or aged residential care; caretaking in education; and security work such as guarding, crowd control, mobile patrols and cash collection. If your work is restructured, you can choose to transfer to the new employer on your existing terms and conditions, by sending a written, signed election notice within 10 working days of getting the information about the restructure. If the new employer later makes you redundant and your agreement does not cover redundancy entitlements in that situation, they are agreed with the new employer or, failing that, decided by the Employment Relations Authority. There are exceptions, so check with Employment New Zealand if this could be you.

If the process was not fair: personal grievances

If you believe the redundancy was not genuine or the process was not fair, you can raise a personal grievance within 90 days of the issue arising or coming to your attention, whichever is later. Put it in writing so your employer fully understands what happened and why you think it was unfair, and keep a copy. After 90 days it can only go ahead if your employer agrees, or if the Employment Relations Authority allows it because of exceptional circumstances. Once raised, you have 3 years to take a claim to the Authority.

You can also ask for a written statement of the reasons for your dismissal within 60 days of finding out, and your employer must provide it within 14 days of your request. MBIE's employment mediation services are free.

Tax on a redundancy payment

A redundancy payment is taxable income, taxed at Inland Revenue's lump sum rate. For a lump sum paid when your employment ends, your employer adds up your pay for your last two pay periods, converts it to a yearly figure, adds the redundancy payment, and uses the total to find the rate. Three things differ from ordinary pay:

• The ACC earners' levy does not apply to redundancy payments.
• KiwiSaver contributions are not deducted from a redundancy payment.
• Student loan repayments are deducted from it.

A redundancy can mean you earn more or less than usual in a year, so you may turn out to have paid too much tax and be due a refund, or to owe more. Inland Revenue works this out after the tax year ends, through an automatic assessment or an IR3 return. The old redundancy tax credit no longer exists: it applied only to payments made between 1 December 2006 and 30 September 2011.

Redundancy pay and Jobseeker Support

Work and Income can start helping before your job ends: its redundancy support service helps with looking for jobs or training, updating your CV, and organising financial support between jobs (RedeploymentSupport@msd.govt.nz). The Jobseeker Support rate for a single person 25 or over is $426.12 a week before tax, about $372.55 after tax, from 1 April 2026. How your payments interact with it:

• The stand-down is usually 1 or 2 weeks with no payment. Its length depends on your average weekly income before tax over the last 26 or 52 weeks, and a redundancy payment is included, so it can make the stand-down 2 weeks.
• A redundancy payment does not change the date your employment is treated as having ended. Holiday pay and pay in lieu of notice do: they push that date back by the days they cover, and the stand-down starts from the later date.
• The 13-week non-entitlement period applies to people who become voluntarily unemployed without a good and sufficient reason, or are dismissed for misconduct. The MSD Manual says it does not apply if you take voluntary redundancy because another employee would lose their job if you stayed.

The detail on stand-downs, tax, KiwiSaver and building a runway is in KiwiSaver and money between jobs.

Your first week after being told

1. Ask whether it is a proposal or a decision. A proposal comes with time to consider it, get advice and give feedback. You do not have to agree to anything in the first meeting.
2. Write it down the same day: the date, who was there, what was said and every document you were given. Keep copies of the proposal, your agreement and recent payslips outside your work email.
3. Read your agreement for the redundancy, notice and employee protection clauses. If you do not have a copy, ask: your employer must provide it within 7 working days.
4. Ask for the information behind the proposal: the business reasons, the selection criteria, the timeline and any roles available for redeployment.
5. Get advice early from Employment New Zealand (0800 20 90 20), your union, Citizens Advice Bureau or an employment lawyer. If your employer has an Employee Assistance Programme, it offers free, confidential counselling.
6. Put the dates in your calendar: the feedback deadline, your last day once confirmed, and 90 days for raising a personal grievance.
7. Work out your numbers, notice pay, holiday pay and any redundancy payment after tax, and talk to Work and Income before your last day.