Minimum Redundancy Entitlements for all employees by law…?

Minimum Redundancy Entitlements for all employees by law…?
Tuesday December 18, 2012

Last month, (November 2012), a Member’s Bill was introduced into Parliament by Labour’s Sue Moroney which seeks to introduce minimum redundancy entitlements for all employees, the Employment Relations (Statutory Minimum Redundancy Entitlements) Amendment Bill. In addition to providing minimum redundancy entitlements, the Bill also provides a definition of redundancy, which, if enacted will be a legislative first for New Zealand.  The definition is in relation to the part of the Employment Relations Act 2000 that the Bill proposes to amend only, and is as follows (at clause 4): “[R]edundancy means the substantial disappearance of the work performed by an employee, by reason of the restructuring, downsizing, going into receivership or administration, or cessation of operations of the employer.” If the Bill is enacted, redundancy entitlements will only be available to employees who have a minimum of one calendar years’ service with a single employer.  The minimum redundancy entitlements proposed in the Bill are:

  1. notice of dismissal of at least four weeks; and
  2. compensation for redundancy in the amount of four weeks’ remuneration for the first full year of the employee’s continuous employment with the employer; and
  3. further compensation for redundancy in the amount of two weeks remuneration for each subsequent full or partial year of the employee’s continuous employment with the employer, up to a maximum entitlement of 26 weeks’ remuneration.

Note that the maximum entitlement of 26 weeks’ remuneration relates only to point 3 above, and as such, the actual maximum entitlement employees’ will be entitled to should the Bill be enacted is 30 weeks (although it would take 14 years of continuous service to achieve that). The Bill is based on the recommendations of the Public Advisory Group on Restructuring and Redundancy 2008 report.  The report concluded with the recommendation of statutory minimum redundancy compensation and a minimum notice period, which the Bill seeks to provide. This Bill is only at a very early stage, there are no supplementary order papers relating to it at this stage and a quick Google search shows that it hasn’t even been picked up by the media.   Of course it is not the first time that such a Bill has been introduced to Parliament.  There was an almost identical Bill in 2009 introduced by Labour’s Darien Fenton which was negatived at its first reading in May 2010.   Based on the Government in power at present, the dismal failure of the 2009 Bill and the lack of attention this Bill has received – I would be rather surprised if it gets very far through the House.


By Chris Patterson