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 or dismissed during pregnancy, parental leave, or upon return to work. New Zealand has no equivalent data, but the stories are out there.
Managing redundancies affecting employees on parental leave, including partners and fathers, involves navigating specific legal requirements beyond standard redundancy processes.
A higher threshold for redundancy during parental leave
While we’ve provided a summary below, we strongly recommend that you seek expert legal advice if you are considering making an employee on parental leave redundant to ensure compliance with NZ employment law.
The normal test
In any situation, whether or not an employee is on parental leave, employers must meet two requirements before making a role redundant.
1. Have a genuine business reason for the restructure
Redundancy is about the role, not the person. You can’t make someone redundant because you’re unhappy with their performance, attitude, or behaviour — that’s a different process altogether.
Valid reasons for a redundancy include reducing costs, shifting your strategy, or changing how work is organised.
2. Engage in meaningful consultation
Even if you strongly believe changes are needed, you must consult with affected employees before making a final decision. That means keeping an open mind, sharing the reasons for the proposed change, and giving the employee an opportunity to provide feedback, which might include alternative solutions you hadn’t considered.
For the consultation to be meaningful, the employee needs access to the same information you are relying on as the employer to justify the change.
Redundancy during parental leave requires extra care
New Zealand’s Parental Leave and Employment Protection Act protects employees from being disadvantaged due to taking parental leave.
Protections when an employee applies for parental leave
If a potential redundancy is already on the table when an employee applies for parental leave, you must inform the employee within 21 days that their role may not be kept open.
In this case, the employee is entitled to a 26-week period of preference once their parental leave ends. If a similar role becomes available during that time, you must offer it to them first.
Protections when an employee is on parental leave
There is a legal presumption that the employee’s role will be kept open for them until their return from parental leave. You can’t make an employee on parental leave redundant unless two conditions are met:
The reason for the redundancy arose after you approved their parental leave, and
There is no similar vacant role you could reasonably redeploy them into.
If a role becomes redundant while someone is on leave, you must still follow a fair and transparent process.
Consultation requirements for employees on parental leave
When an employee is on parental leave, they’re naturally more disconnected from the day-to-day flow of work. They may be harder to reach, juggling newborn care and operating on very little sleep. This makes clear, thoughtful communication even more critical.
The law requires a fair and genuine consultation process, including keeping the employee informed and giving them the chance to respond. However, it takes more than the legal minimum in practice to make the process feel respectful and humane. Here are the steps to creating a consultation experience grounded in empathy.
Be flexible in how you meet
Start with a 1-on-1 conversation. You’d be surprised how often employees hear about their role being disestablished via company-wide comms or a formal letter (or not at all). Always start with a respectful, direct conversation.
Offer meetings at times and formats that work for them. A phone or video meeting might be easier for the employee than coming into the workplace. You can also suggest meeting in a location that’s comfortable and convenient for them. Be flexible about timing to fit around their caregiving responsibilities.
Pay keeping-in-touch hours. If you’re asking them to join a consultation meeting while on parental leave, it’s best practice to compensate them for their time.
Support their ability to participate
Follow up with a written summary. New parents are often sleep-deprived and stretched. A written summary gives them space to reflect and respond more thoughtfully.
Give extra time for feedback. Employees on leave don’t have the same access to business updates or support from colleagues. They may need more time to digest the proposal, ask questions, and consider their options.
Invite them to bring a support person. Someone to take notes or provide emotional support can make a tough conversation feel more manageable.
Make it clear there’s no pressure to respond on the spot. Let them know when you’ll next contact them and where they should direct any questions.
Keep them in the loop
Send all communication directly to their personal email. Don’t rely on internal channels they may no longer access or check regularly.
Ensure they have the full picture. If information has been shared in meetings or team documents, provide it separately so they’re not left in the dark.
At the end of the day, redundancy during parental leave is challenging for everyone involved. Simply acknowledging that reality — and expressing your intent to handle the process with care and fairness — can go a long way in building trust, even in tough moments.
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 the 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
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 and damage to your organisation’s reputation.
Post-redundancy obligations: The period of preference
The 26-week period of preference only applies if you were aware of the redundancy before the employee’s parental leave was approved. A period of preference means that for 26 weeks after the employee's parental leave ends, you must offer them first any position that becomes available that is substantially similar to their previous role.
You do not have to offer a period of preference if the reason for redundancy arose after the employee applied for parental leave.
For further enquiries
While we work to keep our information current, the last word lies with the relevant government agencies:
Contact Inland Revenue (IRD) for information on government-paid parental leave.
For everything else related to parental leave entitlements, including redundancy, contact the Ministry of Business, Innovation and Employment (MBIE) through Employment New Zealand.
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.
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 22 May 2025.
Stephanie Pow
Founder & CEO of Crayon
