Am I entitled to redundancy pay in New Zealand?

New Zealand has no automatic statutory redundancy compensation. Unlike Australia (which provides 4 to 16 weeks' pay based on service), NZ law does not guarantee any redundancy payment. Your entitlement depends entirely on what is written in your individual employment agreement, collective agreement, or workplace policy. If your agreement includes a redundancy clause, your employer must honour it. If it is silent on redundancy pay, you have no legal right to receive it, regardless of how long you have worked there.

What am I always entitled to when made redundant in NZ?

Regardless of whether your agreement provides redundancy compensation, you are always entitled to: all outstanding wages up to your last day (including any overtime or allowances owed), payment for all accrued but untaken annual leave under the Holidays Act 2003, payment for any accrued alternative holidays, payment in lieu of notice if your employer elects not to have you work your notice period (and the agreement allows this), and any other contractual entitlements such as earned bonuses or commissions. Unused sick leave is NOT paid out on termination unless your agreement specifically provides for it.

How much notice must my employer give for redundancy?

There is no statutory minimum notice period in New Zealand. The notice period should be specified in your employment agreement. If the agreement is silent, the employer must give 'reasonable notice', which depends on factors such as the employee's role, seniority, length of service, and industry practice. Typical notice periods range from 2 weeks for junior roles to 4 weeks for mid-level roles and up to 13 weeks (3 months) for senior management. The employer can choose to pay in lieu of notice, meaning they pay you for the notice period without requiring you to work it.

How is redundancy pay taxed in NZ?

Redundancy compensation, ex gratia payments, payments in lieu of notice, and annual leave payouts are all taxable as employment income. PAYE is deducted by the employer. Lump sum payments (including redundancy compensation) are taxed using the extra emolument (lump sum) method, which may result in higher tax being withheld at the time of payment. If too much tax is deducted, you can claim a refund through your end-of-year tax assessment with IRD.

Can I challenge my redundancy?

Yes. If you believe your redundancy was not genuine (for example, it was used as a pretext to dismiss you for performance or personal reasons) or the process was not fair and reasonable, you can raise a personal grievance for unjustified dismissal under the Employment Relations Act 2000. You must raise the grievance with your employer within 90 days of the dismissal taking effect. The Employment Relations Authority can award remedies including compensation for lost wages and hurt and humiliation. You can contact a Community Law Centre for free advice or engage an employment lawyer.

NZ Redundancy Entitlement Calculator

Quick answer New Zealand has no statutory redundancy payment: what you get is what your employment agreement provides. What IS owed regardless: your unused annual leave (here $3,462 for 12 days on a $75,000 salary) and either worked notice or payment in lieu, bringing the mandatory total on this example to $9,231.

This calculator works out what you should be paid when you are made redundant in New Zealand, covering both your mandatory entitlements and an indicative estimate of redundancy compensation. You enter your gross annual salary, completed years of service, the notice period in your agreement, whether you will work that notice or be paid in lieu, your accrued but untaken annual leave and alternative (lieu) holiday days, any outstanding wages owed, and the type of redundancy clause in your employment agreement (a per-year-of-service formula, a fixed number of weeks, a custom amount, or no clause at all). From these figures it returns your total mandatory entitlements, a separate redundancy compensation figure based on your chosen clause or a typical market benchmark, and a combined total estimated package, alongside a full breakdown of your weekly and daily pay, outstanding wages, leave payouts, notice pay and redundancy compensation. Use it to check what you are owed before signing off on a redundancy, or to sanity check an employer's offer against common New Zealand benchmarks of two to four weeks per year of service. Remember that New Zealand has no statutory redundancy pay: unless your agreement or workplace policy provides for it, you have no legal right to compensation beyond wages, leave and notice. All figures are gross, before PAYE, and are indicative estimates only, not financial, tax or employment law advice.

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Updated Employment Relations Act 2000, Holidays Act 2003 rules applied.

No Statutory Redundancy Pay in New Zealand

Unlike many countries, NZ law does not guarantee redundancy compensation. Check your employment agreement for a redundancy clause. If your agreement is silent, your employer is NOT legally required to pay any redundancy compensation, regardless of your length of service.

You ARE always entitled to: outstanding wages, accrued annual leave payout, and notice (or payment in lieu of notice).

1. Employment Details

Annual salary (gross)

Years of service (completed years)

years

Notice period in agreement

Will you work the notice period?

2. Leave and Redundancy Clause

Accrued annual leave (untaken days)

days

Accrued alternative holidays (lieu days)

days

Redundancy clause in your agreement?

Custom redundancy amount (gross)

Outstanding wages owed (gross) (days worked but not yet paid)

Your Estimated Redundancy Package

Paid In Your Final Pay

$9,231

Leave, wages owed and notice in lieu

Total You Receive
$9,231
Gross, before PAYE, including notice pay

Redundancy Compensation

N/A

Per agreement or benchmark

Mandatory Entitlements (Always Owed)

Weekly pay (gross)$1,442

Daily pay (gross, 5-day week)$288

Outstanding wages$0

Annual leave payout (12 days)$3,462

Alternative holidays (0 days)$0

Notice period (4 weeks)$5,769 (lump sum in lieu)

Total in your final pay$9,231

Notice pay you receive either way$5,769

Total you receive$9,231

Why the notice period does not change the total

You are being paid $5,769 in lieu of working your 4-week notice period, so it arrives as a lump sum in your final pay. If you worked the notice instead you would receive the same $5,769, just as normal salary across those weeks. Choosing payment in lieu does not increase the total. What changes is timing, tax treatment, and that you are free to start another job immediately.

Redundancy Compensation (If Applicable)

Clause typeNo clause (not entitled)

Years of service5 years

Redundancy compensationNot applicable

Sick leave payoutNot paid out (NZ law)

Tax treatmentAll taxable as PAYE income

Personal grievance deadline90 days from dismissal

Total estimated package$9,231

Summary: Enter your details above.

Redundancy in New Zealand: What You Need to Know

Redundancy occurs when an employer decides that a position is no longer required for genuine business reasons such as restructuring, downturn, loss of a contract, or efficiency changes. It is about the role, not the person. A redundancy is treated by the courts as a dismissal and must be both genuine and procedurally fair under the Employment Relations Act 2000.

No Statutory Redundancy Pay

The single most important fact about redundancy in New Zealand is that there is no automatic statutory redundancy compensation. This is a significant difference from Australia (which provides a scale of 4 to 16 weeks' pay based on service under the National Employment Standards) and the UK (which provides a statutory formula based on age and service).

In NZ, redundancy compensation is only owed if it is written into your individual employment agreement, a collective agreement, or an established workplace policy or practice. If your agreement is silent on redundancy pay, your employer is not legally required to pay any, regardless of how long you have worked there.

What You Are Always Entitled To

Entitlement	Basis	Notes
Outstanding wages	All earned wages to final day	Including overtime, allowances, commissions earned
Annual leave payout	Holidays Act 2003 s 23	All accrued but untaken annual leave, at greater of OWP or AWE
Alternative holidays	Holidays Act 2003	Lieu days earned from working on public holidays
Notice (or payment in lieu)	Employment agreement	If agreement is silent, "reasonable notice" applies
Redundancy compensation	Employment agreement only	NOT automatic. Only if contractually specified.
Sick leave payout	Not applicable	NOT paid out on termination (unless agreement says otherwise)

Typical NZ Market Benchmarks

While not legally required, many NZ employers do provide redundancy compensation, either through their employment agreements or as ex gratia (voluntary) payments. Common benchmarks in the NZ market include:

Formula	Example (5 years, $75,000 salary)
2 weeks per year of service	10 weeks = $14,423
3 weeks per year of service	15 weeks = $21,635
4 weeks per year of service	20 weeks = $28,846
Fixed 4 weeks	$5,769
Fixed 13 weeks (3 months)	$18,750

Some employers cap redundancy at 26 weeks (6 months) regardless of the per-year formula. Senior or executive roles may negotiate more generous terms.

The Redundancy Process

A genuine, lawful redundancy in NZ requires:

Genuine business reason: The role is genuinely no longer needed (restructure, downturn, loss of contract, efficiency). It must not be a disguise for a performance-related dismissal.
Good faith consultation: The employer must consult the affected employee(s) before making a final decision, provide relevant information, give a genuine opportunity to respond, and consider the employee's feedback with an open mind.
Consider alternatives: The employer must genuinely consider alternatives such as redeployment to other roles, reduced hours, or retraining.
Fair selection: If multiple employees are at risk and only some positions are being removed, the selection criteria must be objective, transparent, and applied consistently.
Written notice: Formal written notice of redundancy with the effective date and details of entitlements.

Tax Treatment

All redundancy payments are taxable as employment income:

Redundancy compensation: PAYE (lump sum / extra emolument method)
Payment in lieu of notice: PAYE
Annual leave payout: PAYE
Ex gratia payments: PAYE

If excess PAYE is deducted from a lump sum payment, you can claim a refund through your end-of-year income tax assessment with IRD.

Challenging a Redundancy

If you believe the redundancy was not genuine or the process was unfair, you can raise a personal grievance for unjustified dismissal. The deadline is 90 days from the date the dismissal took effect. The Employment Relations Authority can award remedies including lost wages and compensation for hurt and humiliation. Free initial advice is available from Community Law Centres.

Related Calculators

Sources: Employment Relations Act 2000 s 103A (legislation.govt.nz). Holidays Act 2003 s 23 (legislation.govt.nz). Employment New Zealand redundancy guidance (employment.govt.nz). MoneyHub redundancy payouts guide (moneyhub.co.nz).

This calculator provides indicative estimates only and does not constitute employment or legal advice. Redundancy entitlements depend entirely on individual employment agreements and the specific circumstances of each redundancy. The market benchmark figures are illustrative and do not represent a legal entitlement. Consult an employment lawyer or Community Law Centre for advice specific to your situation.