When your employer makes you redundant it's useful to know how the process works, what you're entitled to and what happens next. This transition can be challenging, but if you plan ahead, you can make it easier.
When an employer makes changes to their business (restructures) they may decide that some jobs are not needed. In other words, they are redundant. Restructuring needs to happen for genuine business reasons which may include financial difficulties, sale of the business, disestablishment of a department, outsourcing certain business functions, or adoption of a new business strategy.
Unfortunately, if your position is made redundant, that means losing your job and either moving to a new role or leaving the business.
If I'm made redundant what are my rights?
If your employer is restructuring, they must first consult with employees whose jobs will be affected. They should tell you:
Once you’ve received this notice in writing, your employer should provide time for you to provide feedback or suggestions on their proposal. You can do this via writing or a private meeting (where you’re free to bring a support person).
Your employer has to genuinely consider your proposals. Once they have, they will either confirm their proposal is unchanged or make changes and start the consultation again. If they reject your suggestions, they need to tell you why.
If your employer decides to go through with the redundancy, they must adhere to the redundancy process set out in your employment agreement (including whatever redundancy payment or compensation is mentioned in your agreement).
If a notice period is not set out in your employment agreement your employgartgarer must provide you with fair and reasonable notice, which is generally 2-4 weeks, according to Employment New Zealand. The amount of notice that’s right for your job will depend on:
Once you’ve been provided notice your employer should invite you and a support person to a meeting, where they'll reconfirm details of your redundancy and answer your questions.
If you’d rather not work the notice period, you can ask your employer. They may allow you to take Gardening Leave (time off work on full pay), use some of your annual leave within the notice period or skip your notice period so you can start a new job right away.
If redundancy pay is stipulated in your employment agreement your employer must honour it (along with all other conditions). However, if a redundancy payment or compensation is not detailed then the law does not require employers to provide redundancy pay in NZ.
Redundancy insurance
Redundancy insurance is an optional extra that can be added to some income protection insurance policies. With a policy like this you'll be paid out a regular stipend for up to six months if you're involuntarily made redundant (but not if you're fired, leave your job or are voluntarily redundant).
An emergency fund
Most financial advisers recommend having an emergency fund equal to 3-6 months of after-tax income saved up just in case. That way if you’re made redundant, you’ll be able to fund your lifestyle while you look for a new role.
Upskilling and education
Anything you can do to make yourself more employable can help protect you in case you’re made redundant. Whether that’s industry training, formal education, new certifications or a new side hustle - doing this stuff while you’re employed can make getting your next job much easier.
Get financial advice
It’s a great idea to get financial advice at any time of your life - it’s never too early or too late. A good financial advisor can help make sure you have the right savings, insurance and investments to ensure you can make it through anything in life, whether that’s your car breaking down or being made redundant.
Read more about finding a financial adviser and getting free financial advice.
Disclaimer:
This ‘Redundancy in NZ: Everything you need to know’ blog is general information only. The views and opinions expressed do not necessarily reflect those of the FSC. It is not intended to constitute legal or financial advice and does not take your individual circumstances and financial situation into account. We encourage you to seek assistance from a trusted registered financial adviser, legal or other professional advice.
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The FSC and its employees make no express or implied representations or give any warranties regarding this blog, and we accept no responsibility for any loss, damage, cost or expense (whether direct or indirect) incurred by you as a result of any error, omission or misrepresentation in this blog.
Sept 2024.