Redundancy 

What qualifies as a genuine redundancy?

It is a genuine redundancy if a person's employment has been ended because their employer has decided, for ‘genuine reasons’ that the employee’s job is no longer needed. A ‘genuine  reason'  could, for example, be that the employer is making changes to enable the business to operate more efficiently and cost effectively; or closing down or selling the business.

For more information see the Ministry of Business, Innovation and Employment’s (MBIE's) information on redundancy.

If you think your redundancy isn't genuine see the question below.


What's the difference between a voluntary redundancy and a ‘normal’ redundancy?

A voluntary redundancy is where, during consultation for a restructuring process, your employer asks everyone in the workplace or a team whether anyone wishes to be made redundant when the workplace is restructured. This must still be a genuine redundancy. A ‘normal’ redundancy is where the job is no longer needed by the business and the person in that job has to leave. Sometimes a job may be removed but the employee is offered another job in the same business or organisation as an alternative to redundancy.


How much notice should an employer give when making an employee redundant?

An employer must give notice to an employee who is being made redundant. The notice period for redundancy will usually be included in your employment agreement. If your employment agreement does not mention a period of notice then “reasonable notice” is required. What is “reasonable” will depend on the circumstances, such as your length of service, your seniority, the amount of notice that other employees in similar situations have been given by your employer etc.


What can you do if you think your boss is just trying to get rid of you and it’s not a genuine redundancy?

If you are a member of a union, speak to your union representative and tell them why you think the redundancy is not for genuine reasons. If you are not a union member, advice from the Ministry of Business, Innovation and Employment by calling their Workplace Contact Centre (0800 20 90 20). Your local CABcommunity law centre, or a lawyer experienced in employment law, can also help.

If your employer does make you redundant and you have grounds for believing that it is not for genuine reasons, you can raise a personal grievance for unjustified dismissal. 

If you see your job being advertised (with no substantial changes) after you have been made redundant then this is likely to indicate that your redundancy is not genuine. You should get a copy of any such advertisement for evidence and seek advice.

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I don’t think my boss followed the correct procedures when I was made redundant. Can I do anything about it?

If you think that your boss has acted unfairly then the first thing you need to do is raise the issue with your employer to see if you can resolve it between you. You can also speak with your union representative if you belong to a union, or Ministry of Business, Innovation and Employment (MBIE) on 0800 20 90 20.

If you are considering bringing a personal grievance against your employer, read our information about personal grievances first. The Ministry of Business, Innovation and Employment has further information about how to do this, or you can speak to your local Citizens Advice Bureau for support. Remember that a personal grievance must be raised within 90 days of your dismissal.


What sort of redundancy provisions should there be in a typical employment agreement?

There is no requirement under New Zealand law for an employer to pay redundancy compensation. If your employment agreement mentions redundancy compensation, it will probably also state the amount of the compensation. 

If your written employment agreement does not mention redundancy compensation then it is unlikely you will be entitled to any payment, although you should seek advice (e.g. from your union representative or Ministry of Business, Innovation and Employment (MBIE)) to confirm this.  

Regardless of whether or not redundancy compensation is provided in your employment agreement, your employer must still follow a fair process when making decisions about restructuring or redundancy.

Restructuring or redundancy must be carried out in good faith and your employer must not mislead or deceive you. For a restructuring or redundancy process to be fair, your employer needs to (at least) do the following;

  • tell you the reasons for the proposed changes, and how they will affect your job;
  • consult with you and anyone else who may be made redundant;
  • give you a chance to get independent advice, and to have a representative or support person with you when you discuss the issue with your employer;
  • consider your suggestions before they make any decision about their proposed changes; and
  • consider alternatives to making you redundant e.g. giving you a job elsewhere in the company or reducing the hours you work.

For other examples of what your employer should do when thinking about redundancy see MBIE's Labour Information website.

There are three mandatory clauses which all employment agreements must include, which are related to restructuring:

  1. Restructuring due to transfer - the process that the employer will follow if a new employer is taking over some or all of the work currently being done by the employee
  2. Negotiations with a new employer - if some or all of the work being done by the employee will be taken over by a new employer, how negotiations between old and new employer will be communicated to the employee.
  3. No transfer or employment i.e. what will happen if the employee is not offered employment by the new employer, or chooses not to transfer to the new employer? 

Is there special protection for some types of employees in the event of a restructure?

Employees working in the following areas are given additional protection if the organisation they work for is being restructured:

  • cleaning services and food catering services in any place of work
  • laundry services for the education, health or age-related residential care sector
  • orderly services for the health or age-related residential care sector
  • caretaking services for the education sector.

Some examples of restructuring are:

  • where a business (or part of it) is sold 
  • a business contracts another business to perform work that was being performed inhouse
  • if your employer is a contractor and they lose a contract to perform services and the contract is granted to another business
  • where the business the contractor is performing the work for, decides to undertake the work in house

If a business is restructuring, people in the types of jobs listed above can choose to work for the new company on the same terms and conditions they currently have. If they make this choice, they will become employees of the new employer.

If those employees choose not to transfer, the existing employer may make them redundant and any notice/payments will be assessed by looking at their current employment agreement. If the new employer subsequently decides it has to make them redundant and there are no provisions in their employment agreement about redundancy, new terms should be negotiated by the employee and the new employer.

If redundancy terms cannot be agreed on with the employer, then the Employment Relations Authority may decide an appropriate redundancy provision.

For more information see the Ministry of Business, Innovation and Employment’s Labour Information website.

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What help is available to someone who's been made redundant?

Work and Income has an information service called Redundancy Support. They can tell you about any income support you may be entitled to, training opportunities, and help you find another job. 

If you received a redundancy payment before 1 October 2011 you may be eligible for a redundancy tax credit. You can claim for the redundancy tax credit up to four years from the date of the redundancy payment.  

You might also eligible for Working for Families tax credits if you have children and your partner is still in paid employment.

For more information, see our information on Tax Credits or go to the Working for Families website

You are welcome to contact your local Citizens Advice Bureau if you want to talk to someone about how to manage this difficult period in your life.