Redundancy rights in NZ: a guide for employees
Here are the answers to some common questions on redundancy.
What you’ll learn:
- The difference between being fired and being made redundant
- Your redundancy rights in NZ
- What to do after being made redundant
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.
In this article, we’ll explain your entitlements, and the processes businesses should follow, so you can make sure you’re being treated fairly.
The difference between being fired and being made redundant
Ambiguous casual phrases like ‘losing a job’ or ‘being let go’ can muddy the waters between being fired and being made redundant, but there are important differences between these two.
What does redundancy mean in NZ?
If you’re made redundant, this means the company has decided to discontinue your role, because they feel it’s no longer necessary. This could be due to a change in direction or, more commonly, because they’re experiencing financial difficulties and need to downsize their workforce.
While they don’t legally have to do so, in New Zealand, companies often offer a redundancy package to employees who have been laid off.
Crucially, being made redundant is generally nothing to do with your individual performance as an employee, and usually speaks to larger forces at work within the organisation.
What does being fired mean in NZ?
By contrast, if you’re fired from a job in New Zealand, this is likely due to something associated with you as an employee, such as misconduct or poor performance.
There are different rules for what happens if you’re fired during a trial period, and what happens if this takes place after you’ve finished your trial period. If this took place when you weren’t in your trial period, you have the right to ask for a written statement detailing why you were fired. If you were fired during your trial period, and ask for reasons why you were dismissed, the employer still needs to respond, but this can be verbal.
Another core difference between redundancy and being fired is that you’re unlikely to receive any end of employment package from your former employer if you’re fired. It’s also important to note that employers understand the difference between being fired and being made redundant, meaning that the former can be more of a problem when it comes to applying for jobs in the future.
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.
- 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:
- 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,
- 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.
- 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.
- 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.
- 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.
- 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.
- 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?
Businesses must give a ‘reasonable’ amount of time to ensure a fair process, and 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.
What to do after you’ve been made redundant
1. Be kind to yourself
Being made redundant is a bitter pill to swallow, and you may have been through a long and stressful restructuring process where you had to wait to find out what was going to happen to your role.
While you’ll probably be keen to start making progress towards securing a new job straight away, you should also acknowledge that you’ve been through something uncomfortable, and take the time to let yourself process that. It’s often helpful to talk over what you’re experiencing with family or friends, and get their thoughts on what should be your next move.
2. Get a clear picture of your finances
Of course, one of your major concerns will likely be the lack of money coming in now that you aren’t working. Therefore, it’s crucial to have a firm understanding of your financial position, so you can plan accordingly.
It’s also important to remember that there are services such as Jobseeker Support that helps people financially while they’re between jobs.
3. Start looking for jobs
Depending on your priorities, you might want to either jump into job hunting, or take some time to consider your next move. For example, you might see this as the logical moment to take a career break, or to change paths entirely, if this is something you’re interested in doing.As well as searching relevant listings on Trade Me Jobs, remember to keep your Trade Me Jobs Profile up to date. This way, employers can find you if they have a relevant opportunity that you would be suitable for. Remember, you can also save your searches on Trade Me Jobs, so that we send you an email when new jobs are listed that match the type of role you're searching for.
4. Take upskilling opportunities
You can upskill yourself even when you aren’t currently employed. For example, there are heaps of free and cheap online courses, or, if you prefer in-person learning, then see what’s on offer through local adult education centres.
As well as being fulfilling, these extra skills you pick up could help you get back into work more quickly.
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