Redundancies have been on the increase over the past 12-months, and as New Zealand’s economic recovery is proving to be more sluggish than most had anticipated, redundancies may continue to rise. Although some sectors have been impacted more than others, redundancies have been felt across the whole of New Zealand and in every part of the economy.
As a business owner, you may be looking at 2026 considering redundancies, or even a restructure. As an employee, you may have been hearing about possible redundancies in your workplace. Change processes in the workplace are inherently challenging for everyone involved, especially when the outcome may result in redundancy of one or more positions.
Obtaining professional legal advice is the gold standard for ensuring rights and responsibilities of employers and employees are upheld during a process that may result in redundancy. Below are just a few considerations to note:
- Genuine Business Reason
An employer must have a real business reason for proposing to disestablish a particular role or roles. In other words, the employer must be able to demonstrate an evidence-based commercial need for example, needing to reducing costs due to financial pressures. Redundancy is about the role not about the person in the role and shall be deemed void if the employer uses it as a pretext to dismiss a poor performer or ‘bad egg’. - Significant Change vs. Small Change
A significant change to a role can lead to redundancy, while a small change is often regarded as a restructure. The key difference is whether the new role is substantially similar to the old one and if it is then the old position is considered disestablished and the employee made redundant. A helpful guideline is whether there is a change of more than 20% to the role’s duties, pay, or location – if so, the change is likely to be a significant one. - Consultation and Consideration
A workplace change process must include consultation and genuine consideration of feedback to be effective and legally compliant. This involves an employer presenting a proposal, providing employees with time and a platform to give feedback, and then seriously considering that feedback before making final decisions. An employee is entitled to a representative during a workplace change process – where applicable this could be in the form of Union support. Providing support (for example via EAP Services) and resources to the impacted employee(s) during the change process is necessary. - Requirement to Explore Alternatives
Redundancy should be the ‘last resort’ – therefore before making a role redundant, an employer must genuinely consider options to retain the employee, such as redeployment to a vacant role if the employee has or can acquire the necessary skills. - No Legal Entitlement to Redundancy Payment
In NZ, there is no legal entitlement to a redundancy payment unless it is specified in an employment agreement. If the employment agreement includes a redundancy clause, the employer must adhere to it. If not, the employee is still entitled to a final pay, which includes for example unused leave entitlement and a payout for your notice period.
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