Negotiating Your Redundancy: What Can Move and What Cannot
In a public sector round the formula is close to immovable, because moving it for one person moves it for everyone. The exit date, notice, leave, the reference, outplacement and the terms of any settlement are where a negotiation actually lives, and since 27 August 2025 you can ask a colleague what they were offered. Ask in writing, as one list.
What the formula is, and what it is not
There is no statutory redundancy payment in New Zealand. Employment New Zealand's guidance puts it plainly: whether you receive a redundancy payment depends on your employment agreement and any negotiation you have had with your employer, and if the agreement has no redundancy pay terms, none is required. Where a collective agreement has a formula, that formula binds the employer for the employees it covers, and it is usually applied to everyone else in the same restructure as a matter of practice. In the Land Information New Zealand and PSA agreement, for example, clause 10.16 provides three months' pay for less than ten years' service and six months' pay for more than ten, and clause 10.16.5 says there is no entitlement to any other compensation for the termination, except payment in lieu of notice.
That last sentence is the shape of most public sector negotiations. The formula is a floor that the employer has already agreed to and a ceiling that it is reluctant to move above, because moving it for one person moves it for everyone in the round. So negotiation lives in everything the formula does not cover, and in an agency restructuring hundreds of roles, those are the things a manager actually has discretion over.
Read your agreement before you ask for anything. Clause 10.16.2 of the same agreement says a letter of appointment can provide a greater entitlement, in which case the letter takes precedence. If you were recruited with a letter that promised more, that is not a negotiation; it is a contract.
This guide describes what is commonly negotiable and how settlements work. Whether to accept an offer, and what a settlement clause means for any claim you have, are questions for a union, an employment lawyer or a Community Law centre. Get that advice before you sign, not after.
The list
The exit date. A later last day is more salary, more leave accrual, and more time to find the next role while still employed. It costs the employer little if the work still exists. Notice: whether it is worked or paid in lieu, and whether garden leave is on offer, which is paid notice without the obligation to attend. Leave: the balance is paid out on termination at the rate the Holidays Act requires, and any long service or accrued alternative leave should be on the same schedule. A written reference, agreed now rather than requested later. Outplacement support, a retraining allowance, or paid time for interviews during the notice period. Keeping the phone or laptop, which is a small thing that costs the employer almost nothing.
Ask for the calculation in writing. A redundancy figure should come with the salary it was based on, the years of service counted, the leave balance, and the treatment of notice. Errors in final pay are common and awkward to correct after you have left, so the time to check the arithmetic is before the last day.
You can ask a colleague what they were offered. Since 27 August 2025, under the Employment Relations (Employee Remuneration Disclosure) Amendment Act 2025, an employer cannot take adverse action against an employee for discussing their pay, and pay secrecy clauses are unenforceable. Knowing that two people with the same service received different treatment is the most useful fact a negotiation can start from.
| Item | Usually | Why it moves |
|---|---|---|
| Formula | Fixed by the agreement | Changing it for one person changes it for the round |
| Exit date | Negotiable | More pay and more time to search, at little cost to the employer |
| Notice worked or in lieu | Negotiable | In lieu is cash now; worked is a paid job search |
| Reference | Negotiable | Costs nothing and is easier to agree now than to request later |
| Outplacement or retraining | Negotiable | Often budgeted for a restructure and unspent |
| Settlement clause | Negotiable, with advice | Trades your right to a grievance for certainty |
Settlement agreements
A record of settlement is an agreement that resolves an employment relationship problem, and under section 149 of the Employment Relations Act a mediator can sign it off, after which its terms are final and binding and cannot be reopened in the Authority. A settlement that is full and final closes any personal grievance you might have raised about the redundancy, which is why a lawyer or union should read it before you sign. What you receive for that is usually certainty and, sometimes, a payment above the formula.
How the payment is described matters for tax. Wages, notice, leave and redundancy compensation are taxable, and redundancy is taxed as an extra pay under Inland Revenue's method, with one rate applied to the whole payment. Compensation for humiliation, loss of dignity and injury to feelings under section 123(1)(c)(i) of the Act is not taxable, but only where it genuinely is that: a settlement cannot relabel wages as compensation, and Inland Revenue looks at what the payment was for. The employment settlements guide in this series covers the treatment in detail.
Read the clauses that are not about money. Confidentiality, non-disparagement, the return of property, the reference wording, and any clause about not applying for roles with the employer again. Each is negotiable, and each is harder to change once signed.
You give up any claim arising from the employment, including a grievance about the redundancy, in exchange for what the settlement provides. If you have not decided whether the restructure was genuine, decide that first. The grievance guide in this series has the 90 day clock.
How to ask
In writing, as one list, with a reason beside each item. A manager can take a list to the people who can approve it; a conversation gets lost. Ask for the response in writing too. A counter-offer is normal and not a sign of bad faith, and neither is a refusal; what you want from the exchange is a clear answer on each item and a record of it.
Be realistic about where the discretion sits. In a public sector round the formula is close to immovable, and a manager under a savings target has real discretion over dates, notice and support but little over money. In a smaller private employer the formula may not exist at all, and everything is a negotiation, including whether there is a payment. Ask what has been offered to others in the same situation, which the pay secrecy change lets you find out.
Keep the exit date in view. Every week of the negotiation is a week of the notice period, and the Work and Income stand-down, the tax on the payment and the checklist all run from the last day. The negotiation is worth having, and it is not worth having at the cost of the fortnight the rest of this pathway needs.
Related guides and tools
- Personal Grievance for Redundancy, decide whether the restructure was genuine before signing anything full and final
- Employment Settlements and Tax, how each part of a settlement is taxed
- Final Pay Explained, notice, leave and the arithmetic to check before the last day
- Redundancy Checklist, the fortnight this negotiation must not eat
Test Your Knowledge
Ten questions on what is fixed by the agreement, what is negotiable, the pay secrecy change, and what a full and final settlement gives up.
Sources: Employment Relations Act 2000 sections 123 and 149, and the Employment Relations (Employee Remuneration Disclosure) Amendment Act 2025, read on legislation.govt.nz on 3 September 2026; Toitu Te Whenua Land Information New Zealand and PSA Collective Employment Agreement 2023 to 2025, clause 10, released under the Official Information Act; Employment New Zealand, redundancy, last updated 26 November 2025; Inland Revenue, calculate PAYE for a lump sum payment, read 3 September 2026.