Redundancy Supports and Entitlements

What is Redundancy? Redundancy is what happens when you lose your job because your employer is either closing the business or reducing the number of staff. A redundancy occurs where your job no longer exists, you are let go and not replaced. It is the responsibility of the employer to pay statutory redundancy pay in the first instance to all its eligible employees. Redundancy applies in these circumstances:

• An employer ceases to carry on business; or

• An employer's requirements for employees has ceased or diminished; or

• An employer has decided to carry on the business with fewer or no staff. In this case, close members of the employer's family are not taken into account.

• An employer has decided the work is to be done in a different manner in future and the employee is not sufficiently qualified or trained to do the work in the required manner.

Redundancy – Statutary Redundancy Payments: Not all employees are entitled to a statutory redundancy payment even where a redundancy situation may exist. There are some relevant conditions:

• 104 weeks of continuous employment with the same employer

• employment is fully insurable under the Social Welfare Acts (usually this means

• an employee who pays Class “A” PRSI)

• the job must no longer exist

Redundancy – Apprentices: An apprentice may qualify for redundancy during the period of their

apprenticeship or if dismissed after one month of completing the apprenticeship.

Redundancy – Minimum Notice: Employees in continuous service with the same employer for at least 13 weeks are entitled to a minimum period of notice before an employer can dismiss them. Length of Service Notice Required:

• 13 weeks to less than 2 years - 1 week

• 2 years to less than 5 years - 2 weeks

• 5 years to less than 10 years - 4 weeks

• 10 years to less than 15 years - 6 weeks

• More than 15 years - 8 weeks

Redundancy – Written Notice: Employers must give written notice of dismissal of at least two weeks, the minimum period, to the employee. During this period, an employee should be given reasonable time-off to look for other work or to make arrangements for training for future employment. An employer may decide to make a payment instead of giving notice.

Redundancy – Lay-off or Short-time: Where an employer wishes to put an employee on lay-off or short-time the employer must give notice to the employee in writing that the lay-off or short time

working is temporary in nature. If a lay-off or a short-time situation exists and has continued for 4 weeks or more, or for 6 weeks in the last 13 weeks, you may give your employer a notice in writing of your intention to claim redundancy under the Redundancy Payments Acts.

Redundancy – How Redundancy payments are calculated: Under the Redundancy Payments Act 1967 as amended, an eligible employee is entitled to:

• Two weeks’ pay for each year of service (up to a maximum of €600 per week irrespective of any weekly wage above €600).

• A one additional bonus week’s pay.

The payment is normally calculated on earnings at the time of the redundancy.

There is a redundancy calculator on MyWelfare.ie which can be used to estimate your statutory redundancy entitlement.

Redundancy – Redundancy Payments and Tax: The basic statutory redundancy payment, the amount you are entitled to by law, is not subject to tax. However, any additional amount over the basic statutory redundancy payment, or ex-gratia lump sum, may be subject to tax and may affect your underlying entitlement to claim a Jobseeker’s payment.

Redundancy Payment Scheme: Where an employer is unable to pay this statutory redundancy lump sum payment, an application may be submitted online by the Employer on behalf of an employee to the Department of Social Protection under the Redundancy Payment Scheme. All eligible payments are made from the Social Insurance Fund (SIF) and are paid directly to an employee. The Employer must prove to the satisfaction of the Department that they are financially unable to pay the statutory redundancy to an employee. As part of the application process for this scheme you will be required as an employee to verify and sign an employee declaration form. This form will contain all the relevant information needed and it is important to check that all your information and details are correct. This document is also signed by the employer.

Insolvency: Insolvency is what happens when a company can no longer pay its debts as they fall due or when it has more liabilities than assets on its balance sheet. When a company is insolvent, a person known as a liquidator is usually appointed to help wind up the company. If your employer is insolvent, you are likely to be made redundant. You may be owed outstanding wages or other entitlements like holiday pay.

The Insolvency Payments scheme protects the former employees of companies that have become legally insolvent. Employees may claim, through an employer representative, such as the official liquidator or receiver, various outstanding wage related debts including:

• Arrears of wages and sick pay

• Outstanding holiday pay

• Unpaid statutory minimum notice

• Certain arrears of pension contributions

• Various statutory awards made by the Workplace Relations Commission (WRC)

The maximum payment for arrears of wages or holiday pay or minimum notice is €4,800.

Redundancy – Voluntary Redundancy: Voluntary Redundancy occurs when an employer, faced with a situation where they require a smaller workforce, asks for volunteers for redundancy. The people who then volunteer for redundancy are, if they fulfil the normal conditions, eligible for a statutory redundancy payment. There must be a genuine redundancy situation in the first place. Persons who take a voluntary redundancy are entitled to make a claim for Jobseeker’s Benefit, and cannot be disqualified from seeking to claim Jobseeker’s Benefit because they volunteered for redundancy.

Redundancy – Voluntary Redundancy refused: If you have been offered voluntary redundancy and refuse to accept it, you could be made compulsorily redundant at a later stage. If this occurs you may only have a legal entitlement to receive the statutory redundancy payment, without any additional or ex-gratia payment that may have been paid to those who accepted voluntary redundancy.

Voluntary Severance / Voluntary Separation: Voluntary Severance occurs when an employer asks for staff to voluntarily depart from or leave the employment of a company. It can be a financial incentive offered by an employer to employees where a business is downsizing or restructuring. You should be very clear if your employer is making you statutorily redundant, offering voluntary redundancy or offering voluntary severance / voluntary separation.

A voluntary severance / voluntary separation does not constitute a redundancy. This is because that job may continue to exist even after the person who accepted the voluntary severance has left the company. Accepting a voluntary severance does not prevent the employee from being re-hired to do the same job under different working conditions, terms or rates of pay. However, forcing an employee to accept a voluntary severance in order to re-hire them under less favourable circumstances could constitute Constructive Dismissal

Voluntary Severance payments are not tax-free payments. You will not automatically qualify for a Jobseeker’s Benefit / Jobseeker’s Allowance payment if you accept voluntary severance. This is because you will have in effect ‘voluntarily’ made yourself unemployed. This could result in disqualification of a Jobseeker’s payment for up to 9 weeks.

If you qualify for Jobseeker’s Benefit or Jobseeker’s Allowance after a voluntary severance you may be able to access the Back to Work Enterprise Allowance (BTWEA) or the Back to Education Allowance (BTEA).