Redundancy process in NZ: a step-by-step guide for employers

In New Zealand a redundancy is lawful when two things are true. First, there is a genuine business reason for the role to go: the work has disappeared, been reorganised, outsourced or can no longer be afforded. Second, the employer has followed a fair process, which mainly means consulting the affected employee properly before deciding.

The Employment Relations Authority and courts look at both. A perfectly genuine reason handled with a rushed, pre-decided process is an unjustified dismissal. So is a beautifully documented process built on a reason that does not stand up, such as using "redundancy" to remove someone whose real issue is performance.

This guide is general information, not legal advice. Every restructure has its own facts, and the cost of getting it wrong is high. Speak to an employment lawyer or HR adviser before you start, and use the resources on the Employment New Zealand website.

Before anything is written, be clear on why the role is no longer needed and be able to evidence it. Typical reasons include a fall in revenue or work volume, a change in technology or process, consolidation of two roles, relocation of the work, or the sale or closure of part of the business.

Two tests to apply to yourself: would a reasonable employer in your position make this decision, and are you able to show the numbers or the business change behind it? Keep the evidence. If the redundancy is later challenged, the documents you gathered at this stage are what you will rely on.

Check the employment agreement too. Some agreements contain specific redundancy procedures, notice periods or compensation clauses that go beyond the legal minimum, and you must follow them.

You are proposing a change, not announcing one. The proposal document should set out:

• The business reasons for the proposed change, with supporting information
• The current structure and the proposed structure
• Which roles are proposed to be disestablished, changed or created
• Any proposed selection criteria if more people are affected than positions remain
• Redeployment options being considered
• The consultation timeline and how feedback can be given
• What support is available, such as time off to attend interviews and outplacement

Write it as a genuine proposal. Language like "the decision has been made" or "your last day will be" in the first document is one of the most common reasons redundancies are found unjustified. See our guide to the wider restructuring process for how to plan the change itself.

Consultation is where most redundancies succeed or fail. The employee is entitled to:

• Receive the proposal and all information relevant to it, including the financial or operational information behind the reason (commercially sensitive material can be summarised or provided under confidentiality)
• Reasonable time to consider it and get advice, usually at least a week for a straightforward proposal and longer for complex ones
• Bring a support person or representative to any meeting
• Give feedback, ask questions and propose alternatives, in writing or in a meeting

Hold the initial meeting in private, with the proposal in hand, and do more listening than talking. Do not defend the proposal or debate it in the room; take the feedback away. Offer a follow-up meeting. Keep notes and confirm what was discussed in writing afterwards.

Read what the employee has said with an open mind and be able to show you did. If they suggest an alternative, such as reduced hours, a different structure or a redeployment option, respond to it specifically. If you reject it, explain why in writing. If the feedback changes your view, change the proposal.

This is also the point to look hard at redeployment. If there is a vacant or soon-to-be-vacant role the person could reasonably do, possibly with some training, you are expected to offer it. Failure to consider redeployment is a frequent finding against employers.

Once feedback has been considered, confirm the decision in a meeting and follow up in writing. The letter should state the decision, respond to the key points raised in consultation, confirm the date the role ends, the notice period, final pay details, any redundancy compensation and the support available. If selection criteria were used, explain how they were applied.

If the decision is to proceed, the employee's notice period starts now, not when the proposal was first given. Notice periods come from the employment agreement; where the agreement is silent, reasonable notice applies, which for senior roles can be several weeks or more.

There is no legal entitlement to redundancy compensation in New Zealand unless it is in the employment agreement, a collective agreement or a company policy. Many agreements are silent, in which case the employee is entitled to their notice period (worked or paid in lieu, depending on the agreement) and all outstanding pay, holiday pay and entitlements, but no additional payment.

Where an agreement does include redundancy pay, a common formula is a number of weeks' pay for the first year of service plus a smaller number of weeks for each subsequent year, often capped. Whatever the agreement says, follow it exactly. Some employers offer compensation even when not required to, as recognition of service and to reduce the risk of dispute. That is a commercial decision, and it should be documented consistently across affected staff.

Stage	Typical duration
Planning, evidence and legal review	1 to 3 weeks before anything is shared
Proposal delivered and consultation period	1 to 2 weeks for a single role; 2 to 4 weeks for a wider restructure
Considering feedback and finalising decision	Up to 1 week
Notice period	Per agreement; commonly 4 weeks for senior roles, sometimes more

Six to ten weeks end to end is realistic for a well-run single redundancy. Trying to compress it into a fortnight is where employers get into trouble.

Outplacement is career transition support paid for by the employer and delivered to the departing employee: help with CVs, LinkedIn, job search strategy, interview preparation and offer negotiation. It is not a legal requirement, but it is increasingly expected for senior and long-serving staff, and it changes the tone of the whole process.

From the employer's side it shows the decision was about the role, not the person; it reduces the chance of a grievance; and it protects your reputation with the people who stay and with the wider market. In the Waikato, where the person you make redundant today may be a supplier, customer or referee next year, that matters.

We provide outplacement and career transition support for organisations going through restructures and redundancies, at every level from the shop floor to the executive team. If you are planning a change and want the people side handled well, talk to us early, ideally before the proposal goes out.