Additional information

Please provide additional information to help the Department understand more about the usage of this tool.

Business size

Please select the size of your business in terms of number of employees: 1-19 (SME)
20-50
50-100
100+

Type of industry

Please select the type of industry you work in:

Restructuring and Redundancy

12.1 Rights in contracting out situations

If this agreement is for an employee performing the following services in the following industries, certain rights apply.

cleaning services, food catering services, caretaking, or laundry services for the education sector (being the public and private pre-school, primary, secondary, and tertiary educational institutions):
cleaning services, food catering services, orderly services, or laundry services for the health sector (being any hospital, as defined by the Hospitals Act 1957 and any hospital within the meaning of the Mental Health (Compulsory Assessment and Treatment) Act 1992):
cleaning services, food catering services, orderly services, or laundry services in the age-related residential care sector:
cleaning services or food catering services in the public service (as defined in Schedule 1 of the State Sector Act 1988) or local government sector:
cleaning services or food catering services in relation to any airport facility or for the aviation sector:
cleaning services or food catering services in relation to any other place of work (within the meaning of the Health and Safety in Employment Act 1992).

When in the builder (but NOT this guide), choosing one of the options below determines whether the law already covers your employees (option 1) or if you need to include clauses about restructuring (option 2). The affected clauses are 12.1, 12.2 and 12.3

Employed in industry listed above

Not employed in industry listed above

12.2 Restructuring due to transfer

The following clauses all begin with this text.

In the event that all or part of the work undertaken by the employee will be affected by the employer entering into an arrangement whereby a new employer will undertake the work currently undertaken by the employee, the employer will:

In the builder you are asked to choose one of the following to complete this clause:

Employer to provide information and consider comments in restructuring situations

In the event that all or part of the work undertaken by the employee will be affected by the employer entering into an arrangement whereby a new employer will undertake the work currently undertaken by the employee, the employer will meet with the employee, providing information about the proposed arrangement and an opportunity for the employee to comment on the proposal, consider and respond to their comments.

Employer to establish group of affected employees, provide information and consider comments in restructuring situations

In the event that all or part of the work undertaken by the employee will be affected by the employer entering into an arrangement whereby a new employer will undertake the work currently undertaken by the employee, the employer will establish a group to represent employees who may be affected by the changes, meet with that group to provide information on the proposed arrangement and consider and respond to their comments.

Employer to use redundancy clause process in restructuring situations

12.3 Negotiations with new employer

The following clauses all begin with this text:

The employer will negotiate with the new employer, including whether the affected employees will transfer to the new employer on the same terms and conditions, and will:

In the builder you are asked to choose one of the following to complete this clause:

Employer to require offer of similar position in restructuring situations

The employer will negotiate with the new employer, including whether the affected employees will transfer to the new employer on the same terms and conditions, and will include in the agreement reached with the new employer a requirement that the employee be offered a position with the new employer at the same or similar terms of employment.

Employer to require offer of negotiable position in restructuring situations

Employer to use best endeavours to secure offer in restructuring situations

The employer will negotiate with the new employer, including whether the affected employees will transfer to the new employer on the same terms and conditions, and will use best endeavours to secure the new employer's agreement to offer employment to the employee.

Employer to provide employee opportunity to discuss options with new employer in restructuring situations

The employer will negotiate with the new employer, including whether the affected employees will transfer to the new employer on the same terms and conditions, and will provide the employee with opportunities to meet and discuss their employment options with a new employer.

12.4 No transfer or employment

The following clauses all begin with this text.

Where the employee either chooses not to transfer to the new employer, or is not offered employment by the new employer, the employer will:

In the builder you are asked to choose one of the following to complete this clause:

Employer to activate redundancy provisions if employee not transferred to the new employer

Where the employee either chooses not to transfer to the new employer, or is not offered employment by the new employer, the employer will activate the redundancy provisions of this agreement.

Employer to give employee priority access to other positions if employee not transferred to the new employer

Where the employee either chooses not to transfer to the new employer, or is not offered employment by the new employer, the employer will give the employee priority in accessing other positions within the workplace.

Employer to provide access to counselling if employee not transferred to the new employer

Where the employee either chooses not to transfer to the new employer, or is not offered employment by the new employer, the employer will during their period of notice provide the employee with access to employment counselling.

Employer to allow paid absence for job search and job interviews if employee not transferred to the new employer

Where the employee either chooses not to transfer to the new employer, or is not offered employment by the new employer, the employer will allow the employee absence from work on pay to undertake a job search or attend job interviews.

Employer to provide retraining allowance if employee not transferred to the new employer

Where the employee either chooses not to transfer to the new employer, or is not offered employment by the new employer, the employer will allow provide a retraining allowance of [insert amount].

12.5 Definition

There are no statutory rights to redundancy in New Zealand law. However, it is worthwhile to establish how a redundancy situation will be managed when the employment relationship commences, rather than at a later time which may be stressful both for the employer and employee.

Definition of Redundancy

Redundancy is a situation where the position of employment of an employee is or will become surplus to the requirements of the Employer's business.

12.6 Redundancy Process

The content of these clauses is not prescribed by law. This builder recommends clauses which fulfil the requirements of the law, each of which places different burdens on the employer. Choose the clause you believe is the most appropriate to your workplace from the options available. If you choose not to use a listed option, you must fulfill the requirements of the law and include a clause which outlines the process to be taken where all or part of an employer's business is transferred to a new employer, resulting in the loss or potential loss of an employer's job, including the conditions on which an employee might transfer to a new employer.

Redundancy Process

In the event the Employer considers that the Employee's position of employment could be affected by redundancy or could be made redundant, the Employer shall, except in exceptional circumstances, consult with the Employee regarding the possibility of redundancy and, before a decision to proceed with redundancy is made, whether there are any alternatives to dismissal (such as redeployment to another role). In the course of this consultation the Employer shall provide to the Employee sufficient information to enable understanding and meaningful consultation, and shall consider the views of the Employee with an open mind before making a decision as to whether to make the Employee's position of employment redundant. Nothing in this clause limits the legal rights and obligations of the parties.

12.7 Notice of termination due to redundancy

Notice of Termination due to redundancy

In the event the Employee's employment is to be terminated by reason of redundancy, the Employee shall be provided with [insert period] notice in writing. This notice is in substitution for and not in addition to the notice set out in the general termination clause.

12.8 Redundancy compensation

Compensation - Fixed Amount

In the event the Employee's employment is terminated on the basis of redundancy, the Employee shall be entitled to redundancy compensation in the sum of [insert amount].

Compensation - Formula based on years of service

In the event the Employee's employment is terminated on the basis of redundancy, the Employee shall be entitled to redundancy compensation on the basis of the following formula: [insert formula].

No Redundancy Compensation Payable

In the event the Employee's employment is terminated on the basis of redundancy, the Employee shall be entitled to notice of termination of employment as specified in the termination clause, but shall not be entitled to any additional payment, whether by way of redundancy compensation or otherwise.

12.9 Technical redundancy

In establishing a process for consultation it is important that both the employer and employee have a similar commitment to working through the options in the event of a proposed redundancy. Inclusion of a process that is not followed in good faith can lead to claims for personal grievance.

Technical Redundancy

Where the Employee's position of employment is redundant by reason of the sale or outsourcing or merger or transfer of any part of the Employer's business or operations, the Employee shall not be entitled to redundancy compensation if they are offered similar employment by the purchaser, transferee or merged entity, on terms of employment which are no less favourable than the Employee's terms of employment at the time of the sale or outsourcing.

Employment agreement guide