Managing redundancies for employees on parental leave: NZ legal requirements

According to the Australian Human Rights Commission, 1 in 5 mothers reported being made redundant, restructured, dismissed, or not renewed during pregnancy, parental leave, or on return to work. There is no equivalent data in New Zealand, but the stories are out there.

Managing redundancies that affect employees on parental leave involves navigating specific legal requirements that go beyond standard redundancy processes. New Zealand employers must understand these obligations to ensure compliance with employment law.

These protections apply to all employees on parental leave, including fathers and partners. While they may face different challenges than mothers, the legal protections are equally applicable regardless of gender, and employers should be mindful that discrimination can affect all parents.

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The higher threshold for redundancy during parental leave

While making an employee on parental leave redundant is legally possible, the law establishes a significantly higher threshold. Employers must demonstrate:

• There is "no reasonable prospect" of appointing the employee to a comparable position

• The redundancy is based on genuine business reasons, not related to the employee's pregnancy or parental leave

• All alternative options, including redeployment, have been thoroughly explored

• The decision would have been the same regardless of the employee's parental leave status

This higher threshold reflects the law's intent to protect employees from being disadvantaged due to taking parental leave.

Consultation requirements for employees on parental leave

You must include employees who are on parental leave in any restructure or redundancy consultation process:

1. Provide the complete proposal documentation to the employee

2. Supply sufficient information for them to understand and respond meaningfully to the proposal

3. Allow adequate time for them to consider the information and provide feedback

4. Consider their feedback genuinely before making final decisions

5. Accommodate their circumstances when arranging consultation meetings or feedback methods

Managing the redundancy process fairly

To ensure a fair redundancy process for employees on parental leave:

• Document the genuine business reasons necessitating the redundancy

• Demonstrate that the selection criteria for redundancy are objective and non-discriminatory

• Consider whether temporary arrangements could be made until the employee returns

• Explore all possible redeployment options

• Maintain clear communication throughout the process

• Seek expert advice to ensure compliance with legal requirements

Common pitfalls to avoid

Employers often make mistakes in these situations that can lead to legal challenges:

• Failing to include employees on leave in the consultation process

• Not providing enough information or time for meaningful feedback

• Using the employee's absence as a factor in selection criteria

• Assuming the employee won't be interested in alternative roles

• Not documenting the decision-making process thoroughly

• Implementing changes before proper consultation is complete

Legal consequences of improper redundancy processes

Non-compliant redundancy processes involving employees on parental leave may result in:

• Personal grievance claims alleging unjustified dismissal

• Claims of discrimination under the Human Rights Act

• Significant compensation payments, including for hurt and humiliation

• Reinstatement orders in some cases

• Damage to organisational reputation and employee relations

Post-redundancy obligations: The period of preference

Even if redundancy is justified, you must still honour the "period of preference" requirement:

• For 26 weeks after the employee's parental leave ends, you must offer them any position that becomes available that is substantially similar to their previous role

• The position must be offered before considering other candidates

• The terms and conditions must be no less favourable than their previous position

How Crayon can help

At Crayon, we specialise in helping employees reduce financial stress in the moments that matter. We're adapting our proven Financial Baby Prep Program to support employees through redundancy.

Contact the Crayon team to discuss implementing a pilot program that provides practical financial guidance for employees affected by redundancy.

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Now for the important legal part: This article provides general information only and should not be relied upon as legal advice. For specific guidance related to your organisation's circumstances, please consult with a qualified employment law professional. The information in this article is current as at 11 April 2025.

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Stephanie Pow

Founder & CEO of Crayon

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