Redundancy

Employee and employer responsibilities

Redundancy

An employer may need to reduce or change their workforce. In making an employee redundant, an employer must:

• follow a fair and proper process, including giving notice, if there are no other alternatives
• do all they can to find the employee an alternative role.

Fair process

Workplace change process

An employer cannot make an employee redundant without first going through the proper workplace change process.

The reasons for any redundancies must be genuine. If an employee were to lose their job but then be replaced by someone in an identical role, this would very likely be considered an unjustified dismissal.

Personal grievances

Restructuring and workplace change

Redundancy as a last option

Before making an employee redundant, an employer must have explored all possibilities to find them another position in the workplace. This is sometimes described as ‘redeployment’. Ending employment by way of redundancy, and a redundancy compensation payment (where this applies) must be considered a last option.

If the employer is unable to find the employee an alternative role, they must provide them with all the support mentioned in their employment agreement, workplace policies or change proposal. This is the minimum – but they may wish to offer more support, such as:

• checking what date the role will be disestablished, and:
  • if it will be needed for longer
  • if there are other options for the employee to stay on while further redeployment options are considered
• outplacement support, including counselling, resume writing and interview training support, and career advice
• other training that could help improve the employee’s chances of future employment chances.

The notice period:

• must be at least the length of notice referred in their or workplace policies
• can be extended by agreement or if the employee agrees to continue in their role, or in a special project of some sort, while the workplace change is completed; this can allow for other redeployment opportunities to be explored.

Employers exploring redundancy as an option can get support from the Ministry of Social Development.

Redundancy support for employers - Work and Income(external link)

Redundancy notice period

Any employee who is being made redundant must be given notice and paid for the notice period unless both parties agree to waive the notice period. This is applicable in situations such as when an employee finds work and wishes to leave early. An employer can require the employee to work the notice period, but may agree not to.

If there is no notice period specified in the employment agreement, ‘reasonable notice’ must be given. How much is ‘reasonable notice’ depends on a number of things, such as:

• the reason for the redundancy
• the employee’s length of service
• the employee’s seniority and/or remuneration package
• the employee’s ability to find alternative employment
• the amount of compensation being paid (if any)
• custom, practice and industry norms.

Pay and hours

An employee’s final pay

In calculating an employee’s final pay, an employer must include:

• unused annual holidays and salary
• any other entitlements.

Final pay

Redundancy compensation

Whether an employee receives a redundancy payment depends on their applicable employment agreement and any negotiations they’ve had with their employer.

If the employment agreement does not mention redundancy pay, then there would be no compensation.