No legal minimum — it depends entirely on your agreement

This surprises people arriving from other countries: New Zealand has no statutory redundancy pay.

What that means

There is no legal minimum redundancy compensation. If your employment agreement or company policy contains a redundancy clause, it becomes a binding contractual obligation.

If it does not, no redundancy compensation is owed.

What you are owed regardless

Even where no contractual redundancy pay exists, you are still owed:

• Notice — the period stated in your agreement, or reasonable notice if none is specified
• Accrued leave
• Any other earned amounts

These final pay obligations are non-negotiable, governed by the Holidays Act 2003 and the Employment Relations Act 2000.

Read the redundancy clause before you sign

Because there is no statutory floor, that clause is the whole of your entitlement. Two otherwise identical jobs can differ by months of pay depending on what it says.

It is worth negotiating at offer stage, when you have leverage.

The process still has to be fair

The absence of redundancy pay does not mean the absence of protection. A fair redundancy must meet both the substantive and procedural tests for justified dismissal.

Genuine redundancy

Your employer must have a real business reason, not a hidden agenda to remove you personally.

The test is objective: would a reasonable employer have made the same decision? — Section 103A of the ERA.

The key is that the role disappears, not you. If your employer hires someone else to do the same job soon after, the redundancy may not be genuine.

Sham redundancies

If you suspect you were replaced by a relative or a cheaper worker, you can challenge it. The Employment Relations Authority can award reinstatement, lost wages or compensation.

Redundancy versus performance

Redundancy is about the role disappearing. Dismissal for poor performance is about your conduct or capability.

An employer using redundancy to remove a low performer without a proper performance management process is likely committing an unjustified dismissal.

Tax

Redundancy compensation is treated as income and is subject to PAYE.

The deadline

Ninety days to raise a personal grievance.