What is the standard redundancy process in New Zealand?

The redundancy process in New Zealand is designed to be entered into carefully. At its heart, Employment New Zealand’s guidelines require this of employers –

“An employer must follow a proper and fair process and all redeployment options exhausted before any positions are made redundant. The reasons for the redundancy must be genuine.”

Should a redundancy situation prove to be the only option, employers can’t quickly decide to make employees redundant – they must follow a specific workplace change process, that includes setting up a business case, presenting a workplace change proposal to employees, beginning a consultation process and gathering feedback. Our guide goes into the complete process – download it through the form on this page.

How does an employment agreement impact a redundancy?

Employment agreements stipulate the terms that an employer has set with an employee on commencement of their working relationship. With that in mind, the employment agreement may have an impact on the decisions around redundancy – or more likely, any alternatives to redundancy.

For example, if an employer is considering reducing overtime or lowering work hours instead of redundancy, they should carefully consult the employment agreements set out. They may be breaching specific conditions.

Likewise, in the event of a redundancy, an employment agreement may already include conditions that the employer should adhere to, such as any redundancy pay given by the company or a specified period of notice.

However, it’s important to note that an employment agreement cannot override the legal rights of the employee when it comes to the redundancy process. Employers should still ensure that they’re staying compliant and follow Employment New Zealand’s guidelines.

Do I have to pay redundancy compensation?

There is no legal obligation in New Zealand employment law for employers to pay out redundancy compensation to an employee who has been made redundant. However, a company could offer compensation if they choose to. If so, they should ensure that redundancy payments are specified in the employment contract with the employee.

What is a reasonable notice period for a redundancy?

When it comes to a notice period for employees who are made redundant, if there is no specific clause detailed in the employment contract or agreement, reasonable notice must be given in good faith. The definition of a reasonable notice period depends on a number of factors, such as the reason for redundancy, the employee’s length of service and the amount of compensation being paid, if any.

How can an employer handle redundancy with sensitivity? 

Once you know how to compliantly make your staff redundant, it’s time to start thinking about how to manage the emotions of the redundancy situation. This may put them under financial pressure, or leave them feeling stressed and in doubt of their professional future.

Redundancies can be a very emotionally-charged situation – it’s unreasonable to assume that people will be able to maintain a stiff upper lip when they are informed that they’re being made redundant.

Instead, leaders should accept that many employees will naturally be upset by redundancies. They should take every measure to reassure them and be transparent with them about the situation and what to expect. They should also go the extra mile to help them in their next career step (e.g. by offering time off to interview elsewhere).

Protecting the employment relationship and ensuring fair process.

Even if you’re going through tough times, managing employment effectively is crucial for a functioning business. Our guide will support you in making the right choices for your business, even when they’re difficult ones.

Download the guide today. 

Disclaimer: The information in this article is current as at 12 June 2024, and has been prepared by Employment Hero Pty Ltd (ABN 11 160 047 709) and its related bodies corporate (Employment Hero). The views expressed in this article are general information only, are provided in good faith to assist employers and their employees, and should not be relied on as professional advice. The Information is based on data supplied by third parties. While such data is believed to be accurate, it has not been independently verified and no warranties are given that it is complete, accurate, up to date or fit for the purpose for which it is required. Employment Hero does not accept responsibility for any inaccuracy in such data and is not liable for any loss or damages arising either directly or indirectly as a result of reliance on, use of or inability to use any information provided in this article. You should undertake your own research and to seek professional advice before making any decisions or relying on the information in this article.