Redundancy pay in NZ: is there a payout, and how do you negotiate one?

What the law says

Employment NZ is clear: employers are not required to provide redundancy compensation. It is payable only if it's in the employment agreement, in a workplace policy, or agreed with the employer. It may not apply if a suitable alternative role is offered in good faith or you decline one without good reason. The amount should be in the agreement, and if it isn't the parties must agree one. It is usually paid in the final pay.

Where to look

1. Your signed employment agreement: search for 'redundancy', 'restructuring', 'severance', 'termination'.
2. Any collective agreement that covers you. Unions often negotiate a formula.
3. The staff handbook or HR policy (but only if the contract or practice makes it binding).
4. Letters of offer or emails from when you were hired or promoted.
5. Past practice: if the employer has regularly paid a certain amount to other people, mention it.

If you can't find your agreement, ask for a copy in writing. An employer must provide one.

What formulas look like

There is no official rate in NZ. In collective agreements and policies, common formulas are a number of weeks per year of service (for example, 2 to 4 weeks' pay for each completed year, sometimes capped) or a flat sum. Many private-sector employees have nothing beyond notice. Do not take any figure here as a 'going rate'; it varies by industry, employer size and contract.

How to ask when there's nothing in the contract

• Ask during the consultation, not after the decision. Community Law notes you can agree a payout during the process even if your agreement doesn't provide for one.
• Link it to something: years of service, the time it will take to find work, the cost of retraining, or loss of benefits.
• Ask for non-cash items too: longer notice, paid garden leave, an agreed reference, training funding, outplacement support, keeping a laptop or phone, a good statement of service.
• Pay attention to leverage. If the process has holes or a grievance is plausible, the employer may prefer to settle. Don't threaten; say you are considering your options and would like to resolve it.
• Get anything you agree in writing before your last day. If it's a full and final settlement, take advice first.

What happens to the payment

• It is taxable income (see the tax guide).
• Receiving redundancy pay can affect when you can get Jobseeker Support: Work and Income may treat some or all of it as income and delay your payment. See the stand-down guide and use the stand-down tool.
• It doesn't reduce your entitlement to unused annual leave and notice. Those are paid on top of any compensation.
• Consider holding at least part of it in a savings account until your income is stable.