Free Redundancy Entitlement Calculator for New Zealanders
NZ has no statutory redundancy pay. Entitlement comes from your employment agreement. The calculator adds up notice, contractual redundancy weeks, and unused leave to estimate the gross termination payment and the after-tax figure.
Your termination
Based on 4 weeks notice, 0 redundancy and 3 weeks leave at $1,500/week.
About our Redundancy Entitlement Calculator
NZ employment law requires fair process and reasonable notice on redundancy, but it does not require a redundancy lump sum. Whatever your employment agreement specifies is what applies; some contracts include 4 weeks plus 2 weeks per year of service, others include nothing beyond notice.
The calculator combines the three components of a typical termination payment: notice pay, contractual redundancy weeks, and unused-leave payout. It then applies the lump-sum extra-pay PAYE method to estimate the after-tax landing figure.
How to use it
Enter your salary, years of service, the notice period your contract specifies, and the contractual redundancy formula (often weeks per year of service). The calculator returns the gross figure plus the estimated PAYE under the lump-sum method.
Why use it
Redundancy lump sums often arrive with little notice; knowing roughly what to expect ahead of any conversation helps with budget planning and any negotiation around the terms. The calculator is a starting point; the specific figure depends on the employment agreement and the redundancy process.
The maths behind it
Gross redundancy = Notice pay + Contractual redundancy weeks × weekly pay + Unused leave NZ has no statutory redundancy pay. Each component comes from your employment agreement: the notice period (4 weeks is common), the contractual redundancy formula (often 4 weeks for the first year plus 2 weeks per additional year, capped), and the unused-leave payout (accrued annual leave at OWP/AWE, plus 8% holiday pay on partial-year earnings since the last anniversary).
Worked example
Carmen, made redundant from her Levin manufacturing role after 7 years on $68,000.
Carmen’s employment agreement provides 4 weeks notice plus 4 weeks redundancy for the first year and 2 weeks per additional year. Total redundancy weeks: 4 + (6 × 2) = 16 weeks. Notice: 4 weeks.
Weekly pay at $68,000 ÷ 52 = $1,308. Notice + redundancy: 20 × $1,308 = $26,160. Plus accrued leave (3 weeks unused) at $1,308 = $3,924. Plus partial-year holiday pay accrued since last anniversary: about $1,500.
Gross termination payment: $31,584. PAYE applies via the lump-sum extra-pay method, with the tax based on Carmen's annualised income plus the lump sum. After-tax landing: roughly $22,000-$24,000 depending on the bracket the lump-sum slice falls into.
Things to keep in mind
- NZ has no statutory redundancy pay. Entitlement comes from your employment agreement, not from NZ law. Some industries (public sector, banking) have generous schemes; others (smaller private employers) often have only the statutory minimum notice and no redundancy formula.
- Notice period is usually statutory. NZ employment law requires "reasonable" notice; the employment agreement specifies the actual period, often 2-4 weeks. Senior roles typically have longer notice (8-12 weeks).
- Lump-sum tax method. Redundancy lump sumsLump-sum taxOne-off PAYE on a bonus, redundancy, or back-pay, calculated as if added to ordinary income.View in glossary → use the lump-sum extra-pay method, taxed at the marginal rate of the bracket your annualised-income-plus-lump-sum sits in. The bonus calculator covers the same method.
- Hardship and redundancy support. Redundancy can affect Working for Families, KiwiSaver, mortgage servicing, and benefit eligibility. The $5,000 IRD redundancy tax credit was abolished in 2010 and has not been replaced.
NZ-specific notes
FAQs
Does NZ law guarantee redundancy pay?
No. The Employment Relations Act 2000 requires fair process and reasonable notice but does not specify a minimum redundancy payment. Whatever your contract says is what applies. Read the employment agreement carefully; some contain no redundancy provision at all.
How is redundancy taxed?
Using the lump-sum extra-pay method. The lump sum is added to annualised regular income and the resulting bracket(s) determine the tax rate. The total can land at 33% or 39% on the slice above $78,100 or $180,000 respectively.
Is the IRD $5,000 redundancy tax credit still available?
No. The credit was abolished in 2010 and has not been replaced. All redundancy is now taxed under the lump-sum method without offset.
What happens with KiwiSaver?
Employee KiwiSaver contributions and the employer match apply to the regular wage portion of the final pay (notice and accrued leave). The contractual redundancy lump sum is not subject to KiwiSaver deductions.
Can I claim Jobseeker Support straight away?
A redundancy lump sum can trigger a stand-down period before Jobseeker Support starts. The stand-down is roughly the number of weeks of pay the lump sum represents. MSD calculates the specific period when applying.
References & sources
- Employment NZ, "Redundancy". employment.govt.nz
- Inland Revenue, "Extra pays and lump sums". ird.govt.nz
- Work and Income, "Jobseeker support". workandincome.govt.nz
- Employment NZ, "Final pay". employment.govt.nz