Know Your Rights: Redundancy and what to do next
No matter the circumstances, being made redundant can be stressful and challenging. As disruptive as it is, the experience can have its upsides. Knowing your rights is essential to making sure you receive what your entitlements and will help you navigate the transition from your old job to the next.
What is redundancy?
Redundancy is when a role isn’t needed any more, resulting in the termination of an employment contract. This differs from other types of terminations, such as those for poor performance or misconduct, because redundancy is about the role itself, not the individual, explains Jaenine Badenhorst, Director at Empower Law.
Some of the most common reasons for redundancy are business downturns, restructuring, technology changes, or business closure or relocation.
Redundancy rights and entitlements for employees
In New Zealand, if your role is made redundant, your employer must have a genuine business reason for it, and they need to follow a fair process. If they don’t, you might have grounds to raise a personal grievance for unjustified dismissal, says Badenhorst.
“A fair process means you should have access to all the relevant information about why your role is being made redundant, and you should be given the opportunity to provide feedback before a final decision is made,” says Badenhorst. During this consultation period, you also have the right to bring along a support person and/or a representative.
If you are being made redundant, your employer must give you notice and continue to pay you during this time. An employer may also opt to give you a payout instead of requiring you to work during the notice period, but only if you agree and your employment agreement allows this (otherwise known as “payment in lieu of notice”).
You may also be entitled to redundancy compensation. While redundancy pay isn’t a legal requirement in New Zealand, some employment agreements allow for it.
Occasionally, employers may also offer redundancy compensation, even if there is no requirement to do so in your employment contract.
When you are made redundant, you are also entitled to a payout for:
- Unused annual leave
- Any accrued alternative holidays/days in leiu
Employees are not entitled to any payment for unused sick leave.
While there are many valid reasons for redundancy, sometimes employers may use it as an excuse to let go of employees who aren't meeting performance expectations or due to personality conflicts.
If you believe redundancy is being used as a cover for another issue, you may be able to lodge an unfair dismissal or discrimination claim.
In this case, Badenhorst advises seeking advice from an external legal expert, as they can help you navigate unfair dismissal claims.
Your rights under the Employment Relations Act:
- Your employer must consult with you about proposed redundancies, give clear reasons for the decision, and allow you to provide feedback.
- You must be informed about any possible alternatives to redundancy, such as redeployment to another role within the business or an associated company. Employers must genuinely consider redeployment as an alternative.
- You must receive proper notice of redundancy, as specified in your employment agreement or by law.
- You can bring a support person, such as a union representative, colleague, or legal advisor, to any meetings about your redundancy.
- You must be paid all owed wages, leave entitlements, and any redundancy compensation if it is provided for in your contract.
- You can challenge an unjustified dismissal or unfair redundancy through a personal grievance claim if you believe the process was unfair or the redundancy was not genuine.
You can seek advice and support from organisations such as Employment New Zealand, unions, legal aid services, or employment advocacy groups.
How to deal with redundancy
Being made redundant can be an intense emotional experience. “I've been made redundant twice in my career, so I know firsthand how all over the place your feelings can be,” says Organisational Psychologist Dr Michelle Pizer. “Redundancy can bring real grief. You might feel shock, anger, sadness, guilt, even relief – and sometimes all in the same day.”
This is because not only have you lost your job, but you’ve also often lost your routine, part of your professional identity and financial security. The future may suddenly seem unclear.
During this time, it’s critical to take care of your wellbeing and find healthy ways to deal with the change. Dr Pizer’s tips include:
- Be kind to yourself. Treat yourself as you would a friend going through a similar situation. Recognise your feelings but don’t let them take over.
- Maintain healthy habits. Eating well, sleep enough, moveyour body, and stay connected socially. Even a 10- to 15-minute walk can boost mood and focus.
- Focus on what you can control. While you can’t change the redundancy, you can update your professional profile, reconnect with your network, and stay engaged in your industry.
- Plan your days. Approach job searching like a part-time role, with dedicated time for applications, networking, and skill building, but also schedule breaks to recharge.
Going through redundancy can make you feel isolated, so reach out to friends, family or organisations for support if you need it. Look to your network, but think broader than your immediate circle, says Pizer, like past colleagues.
Many employers also offer outplacement to employees during redundancy. This is a service designed to help you move into your next job more smoothly and often includes career coaching, resume support and other resources to help with the transition. You may be able to access Employee Assistance Programs or government services for job seekers – and even tap into career coaches or psychologists for personalised support, if you’re in the position to.
Practical next steps
When you’re going through a redundancy, it’s important to look after yourself and your mental wellbeing. Here are some tips and practical steps that can help transition towards your next role:
- Review your finances. Take stock of your redundancy pay and any savings, and budget for future expenses while you’re out of work. You can also reach out to Work and Income New Zealand (WINZ) to see if you’re entitled to any support payments.
- Update your resume. When searching for a new role, review and update your resume with your latest experience, skills and qualifications.
- Search for new opportunities as soon as you can. Start looking for your next role through a variety of channels, such as searching via SEEK and talking to your network. “The hidden job market is real,” says Pizer. “The first job I got after redundancy came through my favourite lecturer from university.”
- Use the time to upskill. Build on your skills, including in AI, if it’s relevant to your industry, which will have a huge impact on many workplaces in the coming years. There are free and low-cost courses available online and in person.
Remember, redundancy doesn't define you, says Pizer. “It's one chapter, not your whole story. And while it may not feel like it now, there is life on the other side of it. You still have value, skills and potential that no redundancy can take away.”
