INFORMATION FOR EMPLOYEES ABOUT REDUNDANCY

An employer must have a genuine work-related reason for a redundancy. Your employer cannot make you redundant because of concerns about you personally (such as your performance).

Process

You and your employer must act in good faith throughout the process.

Your employer cannot decide to make your position redundant until he or she has consulted with you. Generally, this will involve your employer making you aware of what he or she is proposing and why. Your employer must give you any relevant information (for example, about the problems they perceive and their goals) so you can make a meaningful contribution, and the opportunity to comment on that information before the final decision on the redundancy proposal is made.

Your employment agreement should have a process to be followed in redundancy situations. If it does, then your employer must follow this process.

In all circumstances, your employer must follow a fair process. A fair process could include aspects such as:

giving appropriate notice about any redundancy proposal
being open minded to alternatives to redundancy, such as redeployment, and
offering counselling and career advice services.

Notice

Your employer must give you notice if they decide to make your position redundant. The required period of notice should be in your employment agreement.

Your employer can require you to work out the notice period or they may pay you for it.

Compensation

Generally, there is no right to redundancy compensation unless your employer and you and/or your union have agreed to it. This can be done before or after an actual redundancy is planned. It is also up to the parties to decide what any redundancy compensation should be.

However, in some restructuring situations, employees (who do certain catering, cleaning, caretaking, laundry and orderly work) can ask the Employment Relations Authority to decide what redundancy entitlements they should receive For further information see the restructuring fact sheet (http://ers.govt.nz/factsheets/restructuring_protection_era2004.html)

If you receive redundancy compensation, you may be eligible for a redundancy tax credit. For information about the tax credit, visit Inland Revenue’s website (http://www.ird.govt.nz/yoursituation-ind/retirement/)

Payment for annual holidays

Your annual leave entitlement should be included in your final pay. If it is not included, or you do not think it has been calculated correctly, talk to your employer in the first instance. If you and your employer cannot resolve this, a Labour Inspector may be able to help. Call the Department of Labour on 0800 20 90 20 to find out more.

Redundancy during parental leave

Your employer may not make you redundant for being pregnant or for applying for parental leave. The law does not prevent employees on parental leave from being made redundant for legitimate reasons. However, it must be for a good reason and must be done fairly. For more information see our redundancy and parental leave fact sheet (http://ers.govt.nz/parentalleave/employees/redundancy.html)

Challenging redundancy

If you believe that your employer has acted unjustifiably or you believe that the redundancy is not genuine you can raise a personal grievance. If the grievance is not resolved between you and your employer or by mediation the Employment Relations Authority or the Employment Court will look at each case individually, including whether:

the redundancy is for genuine commercial reasons
the provisions of the relevant employment agreements have been observed, and
your employer has acted reasonably and fairly in the way the redundancy was carried out.

If an employer is found to have acted unjustifiably in a redundancy, the Employment Relations Authority or the Employment Court may decide on one or more of the remedies for personal grievances.

Generally, the Authority and the Court have no power to award redundancy compensation in a genuine redundancy situation, except where the employment agreement says that a redundancy payment will be made.

Further information is available on our website for mediation (http://ers.govt.nz/problem/mediation.html) and about raising a personal grievance (http://ers.govt.nz/problem/pg.html)

Support available

If you are a union member, you can contact your union for advice. Your employer should consult with your union if you are covered by a collective agreement. The Council of Trade Unions (CTU) keeps a list of unions (including unions not affiliated to the CTU) and contact details on their website (http://union.org.nz/)

Work and Income can provide you with support while you are looking for work and help you find a job that’s right for you. Contact Work and Income on 0800 559 009 or visit their website (http://www.workandincome.govt.nz/individuals/looking-for-work.html)

Work and Income also provide information on the Government’s ReStart package of payments & services. To find out more visit their website (http://www.workandincome.govt.nz/individuals/a-z-benefits/restart.html)

Careers Services Rapuara can provide you with career information, advice and guidance. You can create a CV on their website (http://www.careers.govt.nz/)

This page was last updated on: 17-Dec-2008 and is current.

Further information & guidance

We welcome the opportunity to help you further. If you can't find an answer to your question, or you want further clarification, more detailed information or guidance on any matter covered here, please contact us. We value your query and will respond to you as quickly as possible.

Call us free on 0800 20 90 20 or visit our website at www.ers.dol.govt.nz.

The content of this document covers common problems. It will not answer every question and should not be used as a substitute for legislation or legal advice.

The Department of Labour takes no responsibility for the results of any actions taken on the basis of information on this website, or for any errors or omissions.