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Termination Pay Vs Severance Pay

The Employment Relations Authority in New Zealand has introduced a new regulation into the New Zealand employment laws that has some employees very confused. The regulations state that an employer must offer different types of employment terms to employees before and during any redundancy or exit-out of employment. This is known as’Termination Pay vs severance pay and is one of the most controversial issues currently being enmeshed in the Employment Relations Act in New Zealand. There have been many cases where large numbers of employees have applied for severance pay or termination pay (or both) when their employment terms had expired, only to be denied or compromised on several grounds.

In instances where employees have been offered termination pay or severance pay (or both) they have always been offered the same type of employment terms which had expired prior to the redundancy or exit-out. The employer may choose to offer a new employment agreement which has been adapted to incorporate the employees request for more severance pay or a new employment agreement. However in this instance both terms would need to be approved by the Employment Relations Authority in New Zealand prior to them being put into effect. The latest regulation changes mean that this may no longer be the case.

As previously mentioned, this new regulation was introduced by the Employment Relations Authority in New Zealand in response to claims from some employees who claimed that they had been unfairly selected for dismissal or redundancy. The principle reason for introducing these regulations is to ensure that all employees have a fair and reasonable opportunity to request further employment after notice of dismissal or redundancy. It is recognised that every employee has the right to ‘concerte’ with their employer to negotiate for more favourable terms and conditions of employment following notice of dismissal or redundancy. However, in certain instances where an employee has not been given the opportunity to ‘concerte’, the employment terms offered by the employer must still be reasonable and competitive and comply with the laws of the employer and the employment authority. In addition, this decision does not take into account the employee’s own right to bring an unfair contract or other action against the employer.

Termination Pay Vs Severance Pay – How Long Does a Common Law Notice Period Apply?

Under the regulations from the Employment Relations Authority, an employee will be entitled to continued continuation of employment following the date of dismissal or redundancy. If the employee requests continuation of employment then this entitlement is extended to up to 26 weeks after the date of dismissal or redundancy. Therefore, an employee could ask for continued employment up to 26 weeks after the date of dismissal or redundancy if they are unable to find other employment. This would include an extension of severance pay.

It is important to note that continued employment after the date of dismissal or redundancy may not necessarily mean continuation of employment according to your contractual duties. For example, if you were employed as a property technician and you became pregnant. The termination notice stated that you could not continue to work as a property technician until you gave birth to a child. The first pregnancy and birth of the baby would be considered employment for the time being, however if you were to continue working as a property technician after the birth of the child then you would likely have to issue a termination notice stating that you had been put on maternity leave and that you would need to return to work for the aforementioned reason.

The Employment Relations Authority now provides a common law notice period of up to one year. It was formerly a common law notice period of six months. However, this is now changing to one year. The new standard is to have at least one year from the date of dismissal or redundancy for an employee to claim continued employment based on a continuous period of employment.

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