Losing your job: Redundancy versus being fired - why it matters

There's a big difference between being fired and being laid off. Photo / Getty Images

Losing your job is tough regardless of whether you are fired or laid off but the recovery, if you are sacked, is tougher financially, professionally, and socially.

Being made redundant is usually because of changes within a company because there is not enough work, company closure, and not the fault of the employee.

The fallout from Covid-19 has resulted in thousands of New Zealanders losing their jobs through no fault of their own.

With large-scale lay-offs, the stigma of redundancy has been removed and there is more financial support and redeployment offers than ever before.

In the past few weeks, there have also been numerous cases where high-profile people have been dismissed - all publicly.

So how is being fired so different from being laid off:

Redundancy

When you are laid off, the financial blow is often softened with a redundancy package.

There is no legal right to redundancy in New Zealand but some companies, usually governmental or union-based, offer some sort of redundancy clause in the employee's contract.

It depends how long you have been with a company, but when you are laid off there is often some type of redundancy package.

On average, companies offer packages such as four weeks' pay for the first year of service and two weeks pay for every year after that - capped at six months.

Based on the median wage of $52,000 this would be a package of around $24,000 less tax.

There is also payment of unpaid wages and holiday pay.

Employment advocate Alex Kersjes said if someone was fired for serious misconduct, there was no notice period paid. Just holiday pay.

Unemployment benefits

Another important distinction between getting laid off and being fired is the ability to receive unemployment benefits.

Because of Covid-19, there is currently no wait time between being made redundant and receiving financial support from the Government.

Kay Reid, at the Ministry of Social Development, said people who were laid off or lost their job through no fault of their own would usually go through a one or two week stand-down period.

Because of Covid-19, the stand-down period has been scrapped and assistance is available immediately.

People who have been fired for misconduct or leave their job without good reason have a 13-week non-entitlement period before being able to receive benefits.

Reid pointed out each case was assessed on its merits and encouraged anyone in financial difficulty and needing assistance to get in contact.

What it means to be fired

Employers will always ask about previous employment and good recruiters will do their due diligence when placing a candidate.

This means ensuring the reasons behind the dismissal, redundancy, or resignation are substantiated by all parties.

Emma Scott, at Tribe Recruitment, there was often a bias toward the reason for someone leaving previous employment but said it was "incredibly important to understand the reasons why the dismissal has happened".

She said transparency about career history was important and reference checking was always robust.

"If people are not upfront initially then most often they will be found out," she said.

"This reflects badly on the candidate, so my top tip for people who do find themselves in the situation of being dismissed is to be upfront and provide context initially."