Careers advice

Redundancy rights in NZ: a guide for employees

Here are the answers to some common questions on redundancy.

Being made redundant can be very distressing, and the uncertainty and financial implications that accompany it can be highly stressful.

However, if you’re facing this situation, it’s important you understand your rights under NZ employment law. Even during the Covid-19 crisis, businesses are still legally obliged to follow fair and reasonable processes if they want to make staff redundant.

In this article, we’ll explain your entitlements, and processes businesses should follow, so you can make sure you’re being treated fairly.

Know your redundancy rights

1. What reasons can employers give for making me redundant?

Redundancy is about positions, not people. Therefore, a business can not make you redundant based on:

  • Your performance.
  • Illness.
  • Pregnancy or parental leave.

In fact, the only reason an employer can give for making someone redundant is if they believe your position is no longer necessary to their operation.

Redundancy refers to positions not people, so you can't be made redundant due to factors like performance.

2. What does the process look like?

No employer can make someone redundant without first going through the workplace change process.

This is a seven-step process in which the employer has to:

  1. Make a business case – this is where they lay out what they’re trying to achieve through a restructure, and why this restructure is the only way their objectives can be achieved,
  2. Document this business case – this is so the employer can share their business case with the team. This case should be detailed and forms the basis of the employer’s consultations with staff.
  3. Have a meeting to discuss the proposal – this should involve anyone whose role will be or might be impacted. Any unions representing staff should also be made aware of the proposal. Importantly, this is a discussion, not a decision – and should be presented as such. You should be given clear indications of how you will be impacted, and what the rest of the consultation and feedback process will look like.
  4. Gather feedback – the business should give you plenty of time to consider their proposal and provide feedback. This can be either in written form, or through additional meetings. Your feedback should include solutions to the problems the business faces.
  5. Give proper consideration to the feedback – the employer should show they’ve given the feedback genuine consideration. If the business disagrees, or chooses to disregard your feedback, they should tell you why.
  6. Confirm their decision – once a decision is reached, the business needs to notify employers in writing and via a meeting (or virtual meeting). Where relevant, union representatives for staff should also be invited. Individuals impacted should also receive a personalised letter explaining the change and what happens next, as well a chance to meet and discuss. If your role is being made redundant, you should be informed of this before other employees hear about the impacts to their roles.
  7. Implement the change and continue communicating with staff – the business should keep talking to staff as the implications sink in.

Throughout the process, it’s important you:

  • Let your employer know how the change impacts you.
  • Have time to provide constructive feedback on the process.
  • Understand what’s happening at every stage, and ask questions if you don’t. You should be able to talk to your colleagues, manager and HR staff about the situation.
  • Look after yourself physically and mentally, and talk to your family or friends about what’s happening.

Make sure you understand and engage with all stages of the redundancy process.

3. How much notice should I get if I’m being made redundant?

While businesses must give a ‘reasonable’ amount of time to ensure a fair process, during the Covid-19 crisis, this timeframe is likely to be shorter. That’s because organisations may need to reduce headcount quickly in order to stay afloat.

That said, the notice you receive has to be at least the length of notice included in your employment agreement. If your contract has no specific redundancy notice clause, you’re entitled to ‘reasonable notice’, which is dependent on factors like:

  • How long you worked at the organisation.
  • How senior you were, and/or how much you were paid.
  • The reason you were made redundant.
  • How easy it will be for you to find alternative employment.
  • If you’re receiving compensation, and how much.

4. What payments am I entitled to?

On top of salary, which should continue up until your end-date, you should be paid out for any unused annual leave you have, as well as any other entitlements in your employment agreement.

There’s no right to further redundancy payments, unless these were built into your employment agreement. However, you can try and negotiate redundancy compensation with your employer.

5. Do I have to keep working?

Again, there are no hard and fast rules here. Employers can ask staff to work up until the end of their notice period, or alternatively can pay them their salary without requiring them to work.