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Redundancy Pay Calculator

Calculates redundancy compensation, notice pay, and outstanding holiday pay for employees in New Zealand based on their employment agreement.

Your details

The first day you started working for this employer.

Your last day of employment (last day of notice period).

Your regular gross pay for a standard week. If you are paid hourly, multiply your hourly rate by your regular weekly hours.

The number of weeks' pay per year of service specified in your employment agreement or collective agreement. Common values are 2, 3, or 4.

If your agreement caps the number of years used in the redundancy calculation (e.g., only the first 10 years count), enter that number. If there is no cap, leave blank or enter a very high number.

The notice period required by your employment agreement, in weeks.

Tick if you will be paid for the notice period instead of working it.

The number of weeks of annual leave you have accrued but not yet taken. You can find this on your final payslip.

Result

Total Gross Payment (NZD) NZ$32,250.00

Your total redundancy package before tax (PAYE) and other deductions.

How it is calculated

Years of Service Full years of employment.
5 years
Years Used in Redundancy Calculation Years of service, capped if your agreement has a limit.
5 years
Redundancy Entitlement (Weeks) Total weeks of pay for redundancy.
15
Gross Redundancy Pay Redundancy compensation before tax.
NZ$22,500.00
Gross Notice Pay Payment for the notice period if paid in lieu.
NZ$6,000.00
Gross Holiday Pay Payment for accrued but untaken annual leave.
NZ$3,750.00
Keep in mind
  • This calculator provides an estimate. Your final payment may be subject to PAYE tax and other deductions.
  • In New Zealand, there is no statutory entitlement to redundancy pay. Your entitlement depends entirely on your employment agreement or collective agreement.
  • Employers must follow a fair process, including consultation, before making a redundancy decision.
  • If your employment agreement specifies a different formula (e.g., a lump sum or a different calculation for part-years), this calculator may not be accurate.

Indicative result, calculated from the details and the rules listed below. It does not replace an official calculation or advice from a professional.

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The editor opens with the calculator details already entered.

Redundancy Notice
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Redundancy Pay in New Zealand

Redundancy occurs when an employer no longer requires a particular role to be performed. Unlike some countries, New Zealand law does not provide a statutory right to redundancy compensation. Your entitlement depends on what is written in your individual employment agreement (IEA) or applicable collective agreement.

This calculator helps you estimate your redundancy package, which typically consists of three components: redundancy compensation (if provided for in your agreement), payment for your notice period if you are paid in lieu of working it, and payment for any accrued but untaken annual leave.

How Redundancy Pay is Calculated

The most common formula found in employment agreements is a number of weeks' pay for each full year of service. For example, an agreement might state "3 weeks' pay per year of service." Some agreements also cap the number of years that count towards this calculation, such as "up to a maximum of 10 years."

Step 1: Calculate Years of Service
Your full years of service are counted from your start date to your termination date.

Step 2: Apply Any Cap
If your agreement has a maximum year cap, only those years are used.

Step 3: Calculate Redundancy Weeks
Multiply the eligible years of service by the number of weeks per year specified in your agreement.

Step 4: Calculate Redundancy Pay
Multiply the total redundancy weeks by your gross weekly pay.

Notice Pay and Holiday Pay

Your employment agreement will specify a notice period. If your employer pays you for this period instead of requiring you to work it ("payment in lieu of notice"), you are entitled to your normal pay for that period.

Under the Holidays Act 2003, you must be paid out for any annual leave you have accrued but not taken by your final day of employment. This is calculated at your ordinary weekly rate of pay.

Example Calculation

Maria started work on 1 April 2020 and was made redundant, with her last day being 1 April 2025. Her gross weekly pay is $1,500. Her employment agreement provides for 3 weeks' pay per year of service, with no cap, a 4-week notice period (paid in lieu), and she has 2.5 weeks of untaken leave.

  • Years of Service: 2025 - 2020 = 5 years.
  • Redundancy Weeks: 5 years × 3 weeks/year = 15 weeks.
  • Redundancy Pay: 15 weeks × $1,500 = $22,500.
  • Notice Pay: 4 weeks × $1,500 = $6,000.
  • Holiday Pay: 2.5 weeks × $1,500 = $3,750.
  • Total Gross Payment: $22,500 + $6,000 + $3,750 = $32,250.

This amount would be subject to income tax (PAYE) before Maria receives it.

Frequently Asked Questions

Is my employer required to pay me redundancy compensation?
Only if it is provided for in your employment agreement or collective agreement. There is no automatic legal entitlement.

What is a fair redundancy process?
Your employer should consult with you about the proposed redundancy, explore redeployment options if possible, and provide you with sufficient information and time to provide feedback.

Is redundancy pay taxable?
Yes, redundancy payments are subject to PAYE, just like regular salary or wages.

Next Steps: Preparing Your Documents

Once you have calculated your estimated entitlements, you may need to formalise the redundancy. A Redundancy Notice is the formal document an employer uses to advise an employee of the termination of their employment due to redundancy. It outlines the reasons, the process followed, and a summary of the final payments.

You can also review your Individual Employment Agreement to confirm the exact clauses governing redundancy, notice periods, and annual leave.

Frequently asked questions

Is redundancy pay mandatory in New Zealand?

No. There is no law that forces employers to pay redundancy compensation. You are only entitled to it if your employment agreement or collective agreement specifically includes a redundancy clause.

How is the notice period paid?

Your employment agreement states a notice period. Your employer can either require you to work through this period or pay you in lieu of notice. If paid in lieu, you receive your normal pay for that period without having to work.

What happens to my annual leave when I'm made redundant?

Any annual leave you have accrued but not taken must be paid out in your final pay. This is a legal requirement under the Holidays Act 2003.

Can my employer cap my redundancy pay?

Yes, if your employment agreement says so. A common cap limits the number of years of service that count towards the calculation, for example, 'a maximum of 10 years of service will be recognised'.

Is the redundancy payment calculator result the amount I will receive in my bank account?

No. The result is the gross amount before tax. Like regular salary, redundancy pay is subject to PAYE deductions, so the net amount you receive will be lower.

What should I do if my employer doesn't follow a fair process?

If you believe the redundancy was not genuine or the process was unfair, you may have a personal grievance claim. You should seek advice from an employment lawyer or contact Employment New Zealand.

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