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What is a typical redundancy formula?

A common formula is 4 weeks' pay per year of service, though this varies. Some contracts provide a lump sum, others use a formula based on years of service. Check your employment agreement for the specific terms.

Can I negotiate a better redundancy package?

Yes. If your contract doesn't provide redundancy pay, or if you believe the offer is unfair, you can negotiate with your employer. An employment lawyer can advise on what's reasonable and help with negotiations.

What about notice period and holiday pay?

You're entitled to be paid out any unused annual leave. Your notice period (or pay in lieu of notice) is separate from redundancy pay and is taxed at normal rates, not the special redundancy rate.

Can I challenge a redundancy?

Yes. If you believe the redundancy is not genuine (e.g., the role still exists, or the selection process was unfair), you can raise a personal grievance within 90 days. An employment lawyer can assess your situation.

Business Tools/Redundancy Calculator

Tax-Free $5,858 · 6% Rate

Redundancy Calculator

Calculate your redundancy payout and the tax treatment — the first $5,858 is tax-free, with a reduced 6% rate on the next portion.

Tax treatment & payout

Annual salary

Years of service

Weeks pay per year

Weekly pay

$0.00

Gross redundancy

$0.00

Tax on redundancy (0.0%)

$0.00

Net redundancy payment

$0.00

Rates valid for 2025/26 tax year · Last reviewed August 2025

IRD — Calculate PAYE for a lump sum

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Redundancy in New Zealand

Unlike some countries, New Zealand does not have a statutory redundancy entitlement. Whether you receive redundancy pay depends on your employment agreement or company policy. Check your contract first.

If your contract provides for redundancy, a common formula is 4 weeks' pay per year of service, though this varies. Some contracts provide a lump sum, others a formula based on years of service and age.

Redundancy payments receive special tax treatment. The first $5,858 is tax-free. The portion between $5,858 and $64,438 is taxed at a reduced rate of 6%. Amounts above $64,438 are taxed at your normal marginal tax rate.

This calculator uses a standard formula (weeks per year × years of service × weekly pay) and applies the correct tax treatment. If your contract uses a different formula, adjust the 'weeks per year' field accordingly.

Redundancy Calculator frequently asked questions

No. New Zealand does not have a statutory redundancy entitlement. Whether you receive redundancy pay depends on your employment agreement or company policy. Check your contract or talk to your employer.