This page is critical reading before you assume any redundancy entitlement. New Zealand is unusual internationally in that there is no statutory minimum redundancy pay — unlike Australia (which requires minimum redundancy based on service length), the UK, and most of Europe.
In New Zealand, there is NO legal minimum redundancy pay. Your redundancy entitlement is whatever your employment agreement specifies — which may be nothing at all. Always check your individual employment agreement or collective agreement first. Your guaranteed entitlements on redundancy are: remaining annual leave paid out, wages owed, and notice period (or pay in lieu of notice).
What the Law Actually Requires
Under New Zealand law when you are made redundant, your employer must pay:
| Entitlement | Legal Requirement | Notes |
|---|---|---|
| Accrued but untaken annual leave | Yes — legally required | All untaken leave must be paid out at your current rate |
| Notice period (or pay in lieu) | Yes — as per your agreement | Minimum notice periods under ERA; often 4 weeks at senior levels |
| Final wages owed | Yes — legally required | All hours worked must be paid |
| Redundancy compensation | No — NOT required by law | Depends entirely on your agreement |
Redundancy Pay Calculator
This calculator helps you estimate your payout based on what your agreement specifies.
Estimate Your Redundancy Payout
What Redundancy Pay Is Taxable?
All redundancy payments in NZ are taxable income. They are taxed at your normal marginal rate. There is no special “concessional” or reduced tax rate for redundancy in NZ (unlike Australia, which has specific redundancy tax treatment).
This means a large redundancy payment may push you into a higher tax bracket for that year. You will receive the gross amount, with PAYE deducted, and may receive a refund or owe additional tax when filing your year-end IR3.
Key Facts: NZ Redundancy Law
| Question | Answer |
|---|---|
| Is redundancy compensation legally required? | No — not by statute |
| What’s always required? | Final wages, untaken annual leave, notice period |
| Can I negotiate a better package? | Yes — especially for senior roles or long service |
| Is redundancy taxable? | Yes — at normal income tax rates |
| Can I challenge a redundancy? | Yes — if the process was not genuine (employer not following proper consultation) |
Negotiating Your Redundancy Package
Even without legal entitlement, you have room to negotiate:
- Check your employment agreement first — any specified amount is the floor
- Consider the business case — large employers, long service, and senior roles have more leverage
- Get the offer in writing before agreeing to anything
- Seek legal advice if the redundancy seems questionable — an employment lawyer can assess whether the process was genuine
- Consider a settlement agreement — if there are grounds to challenge the redundancy, employers sometimes offer enhanced packages to avoid an Employment Relations Authority claim
Your Rights During a Restructuring
Your employer must:
- Consult you genuinely about the redundancy before making a final decision
- Provide information about the proposed change and give you an opportunity to respond
- Conduct a fair process — “rubber stamp” redundancies where the decision was made before consultation can be challenged
If you believe the redundancy was not genuine (e.g., your role was later filled by a new hire), seek advice from an employment lawyer or MBIE’s Employment Relations service.