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Redundancy pay

Overview

Employees who are made redundant and meet the requirements on continuous and reckonable service are entitled to receive a redundancy payment calculated in accordance with a statutory formula.

The calculation of continuous and reckonable service is done according to strict rules and it is important not to confuse the two calculations because they are carried out for different purposes.

Entitlement to this payment can be affected by certain factors, for example, an employee taking up alternative employment with the employer after his/her role has been identified as redundant.

Recent developments

Redundancy Payments (Amendment) Bill

On Friday 21 January 2022 the Government published the Redundancy Payments (Amendment) Bill. Employees who have lost out on reckonable service while they were on lay-off due to COVID-19 restrictions, and have subsequently been made redundant, will be able claim a once-off payment of up to a maximum of €1,860 tax-free. This payment is designed to bridge the gap in their redundancy entitlements. A worker does not have to have been in receipt of any form of State payment, such as the PUP or Jobseekers Allowance, during the lay-off period, to qualify for this payment. The criteria for this payment are simply that the person qualifies for redundancy in the standard way and was laid off because of COVID-19 restrictions during the emergency period. This Bill will ensure that people who were made redundant are not out of pocket because of any period during which they were placed on lay-off due to COVID-19 restrictions.

This scheme will be funded and administered by the Government. It is hoped that this payment will help resolve potential disputes between employers and employees in relation to redundancy entitlements. Essentially this payment will ensure that the employee being made redundant will receive the same total redundancy payment as though they had not been laid off during the COVID-19 pandemic. The total amount that an eligible employee will receive will depend on the length of time they were placed on lay-off due to COVID-19, before the date on which they were made redundant.