Make a role redundant in New Zealand, the right way.

Redundancy, done right — for New Zealand employers

In New Zealand a redundancy is lawful because of the process, not because of a payment. There is no statutory redundancy pay to reach for — so a redundancy that pays out but is procedurally unfair is still an unjustified dismissal. Get the steps out of order — most commonly, deciding before you consult — and even a genuine business reason can land you at the Employment Relations Authority. This free AI toolkit walks you through a compliant redundancy for your exact situation and builds the evidence pack — the letters, records and consultation trail — plus a correct final-pay breakdown, so you can show you followed the process.

The redundancy process, step by step

1. Business case — record the genuine business reason the role is no longer needed (a restructure, a downturn, a site closing). It has to be about the role, not the person. A sham redundancy — using redundancy to move on a particular individual — is an unjustified dismissal.
2. Coverage — check the individual employment agreement and any collective agreement. They may set out redundancy compensation, a selection method and a consultation process you are bound to follow, over and above the general law.
3. Selection — if you are cutting some of several similar roles, set fair, objective selection criteria and a proper pool before names.
4. Consultation — consult in good faith under section 4 of the Employment Relations Act 2000, before any decision is made: share the proposal and the information behind it, give a real chance to respond, and genuinely consider the feedback.
5. Consideration — weigh what employees raise, and record it, before deciding anything.
6. Redeployment — look for suitable alternative work in the business before confirming a redundancy.
7. Decision — decide only after consultation is genuinely complete, not before.
8. Notice & final pay — give notice per the employment agreement, then pay notice, any redundancy compensation the agreement provides, and the final pay in full.

Is there statutory redundancy pay in New Zealand?

No. New Zealand has no statutory minimum redundancy or severance pay. Unlike many countries, the law does not fix a redundancy payment based on age or years of service — there is no formula and no table to apply.

Any redundancy payment comes only from the individual employment agreement, a collective agreement, or an established workplace policy. So the first thing to do is read the agreement: if it provides for redundancy compensation, you must honour it exactly. If the agreement is silent, no redundancy compensation is legally required — you still owe notice and a correct final pay, but no severance figure on top.

This is exactly why, in New Zealand, a fair process — not a payment — is what protects the employer. Because there is no statutory sum to point to, the whole question of whether a dismissal was justified turns on how you consulted and decided.

Final pay

Whatever the agreement says about redundancy compensation, certain things must always be paid when the employment ends, under the Holidays Act 2003:

1. Wages to the last day — all wages or salary earned up to and including the final day of employment.
2. Notice pay — payment for the notice period set by the employment agreement (or pay in lieu of it, if the agreement allows).
3. Unused annual holidays — any annual holidays already earned but not taken, paid at the greater of ordinary weekly pay and average weekly earnings.
4. 8% of gross earnings — 8% of gross earnings since the last holiday anniversary, for annual leave that has accrued but not yet become an entitlement.
5. Alternative (lieu) days — any owed alternative days for working a public holiday, paid out at the relevant daily pay.

A redundancy payment (if the agreement provides one) is taxed as a lump-sum payment. The ACC earners’ levy does not apply to a genuine redundancy payment, and there has been no redundancy tax rebate since 1 October 2013 — do not build one into the figures.

Fair process & your obligations

Two duties sit under every redundancy in New Zealand. First, good faith under section 4 of the Employment Relations Act 2000 — you must be active and constructive, share relevant information, and consult before you decide, not after. Second, the justification test in section 103A: a dismissal is only justified if what you did, and how you did it, is what a fair and reasonable employer could have done in all the circumstances.

If it goes wrong, the employee can raise a personal grievance within 90 days of the dismissal. That normally goes to mediation first, and then, if unresolved, to the Employment Relations Authority. Remedies can include reinstatement, reimbursement of lost wages, and compensation for hurt and humiliation — which is why the process, not the payment, is where the risk lives.

Note: a collective agreement, or the Part 6A business-transfer rules (for restructuring that involves certain services such as cleaning, catering or caretaking), may add further obligations — check the agreement and the circumstances before you act.

Common questions

These rules are current for 2026. A Holidays Act reform has been signalled — if you are unsure, confirm the current final-pay rules before you calculate. If in doubt, contact Employment New Zealand (employment.govt.nz).