Where you lose your job due to circumstances such as the closure of the business or a reduction in the number of staff this is known as redundancy.
The Redundancy Payments Acts 1967–2014 provide a minimum entitlement to a redundancy payment for employees who have a set period of service with the employer. Not all employees are entitled to the statutory redundancy payment, even where a redundancy situation exists. If you do qualify for redundancy there are specific redundancy procedures which employers and employees must follow in order to comply with the legislation.
However, you and your employer may agree a redundancy payment above the statutory minimum, and in such circumstances, employees who have not reached the statutory minimum period of service may also receive a payment. For example, statutory redundancy only applies to employees with two years' service. However, an employer might agree to pay a lump sum to employees with less than two years' service. This payment arises through agreement and not through a statutory entitlement. As so often in employment law, the legislation is concerned with ensuring minimum rights, while allowing the parties to agree more substantial rights.
Employer rebate abolition: There will be no statutory redundancy employer rebate where the date of dismissal due to redundancy is on or after 1 January 2013.
The statutory redundancy payment is a lump-sum payment based on the pay of the employee. All eligible employees are entitled to:
The amount of statutory redundancy is subject to a maximum earnings limit of €600 per week (€31,200 per year).
Pay refers to your current normal weekly pay including average regular overtime and benefits-in-kind, but before tax and PRSI deductions, that is your gross pay.
The statutory redundancy payment is tax-free.
All redundancies notified after 10 April 2005 take account of absences from
work only over the last 3 years of service. Any absences outside of this 3-year
period which ends on the date of termination of employment are disregarded.
When reckoning or calculating the actual length of your service for redundancy payment purposes, the following are regarded as reckonable service, (the absences listed here are called reckonable absences):
However, in making the calculation of the length of your service, the following periods over the last 3 years will not be taken into account as service, (these are called non-reckonable absences):
You can use this online redundancy calculator to help you to calculate your statutory redundancy entitlement. You should note that the online redundancy calculator does not purport to give a legal entitlement to any statutory redundancy amount.
If you were made redundant within a year of being put on reduced hours or pay, your redundancy payment would be based on your earnings for a full week. If you are made redundant after working reduced hours for more than a year, how your payment will be calculated depends on whether you accepted being on reduced hours or not. If you fully accepted the reduced working hours as your normal week and never asked to return to full-time work, then your redundancy payment will be based on your gross pay for the reduced working hours. If, on the other hand, you never accepted the reduced working hours as your normal hours and continually asked to be put back on full-time working, your payment would be based on your normal weekly earnings.
If you have been put on short time and then are made redundant your redundancy payment may be based on your pay for a full week.
If you have a dispute about this with your employer you could make a claim to the Workplace Relations Commission.
If you receive a lump sum in compensation for the loss of employment, part of it may be tax-free. The statutory redundancy lump sum is always tax-free. Read more about taxation of lump-sum payments on redundancy/retirement. The Revenue Commissioners have published a leaflet on taxation and redundancy.
In the first instance it is up to the employer to pay the statutory redundancy lump sum to all eligible employees. However, where the employer is unable to pay or refuses or fails to pay, the employee can apply for direct payment from the Social Insurance Fund - see 'How to apply' below.
Where your employment has been terminated due to the insolvency of your employer legislation provides for the payment of certain outstanding entitlements in relation to your pay. Under the Insolvency Payments Scheme these may be paid by the Department of Social Protection out of the Social Insurance Fund. There are more details about employers' insolvency legislation in 'Further information' below.
Since 1 January 2005 the maximum earnings taken into account in the calculation of statutory redundancy lump sum payments are €600 per week (€31,200 per year).
On the date of the termination of employment your employer should pay the redundancy lump sum due to you.
If your employer has not paid your redundancy lump sum, you should apply to your employer for it using form RP77 (pdf). If your employer still refuses to pay it, you can apply to the Department of Social Protection for direct payment from the Social Insurance Fund. This must be done online using form RP50* as follows:
Insolvency: If the company has been liquidated or is in receivership, the completed form RP50,which has been signed by the employee, should be sent in by the liquidator or receiver on behalf of the employees.
*As the RP50 form is a legal document it must be signed by the employee even though they have not yet received the redundancy payment. The Department is aware that the employee has not received their payment. If they wish, the employee may insert zeros in the form instead of the amount they are due.
You can read a list of frequently asked questions about redundancy.
For further information about the Redundancy Payments Scheme contact the Workplace Relations Commission's Information and Customer Services. For information on the status of a claim for a redundancy lump sum or rebate which has been submitted for payment you can contact the Redundancy Payments section directly - see 'Where to apply below'.
The application for payment from the Social Insurance Fund should be sent to:
Department of Social Protection
Floor 2, Block C
The Earlsfort Centre
Lower Hatch Street
Tel:(01) 673 4500
Locall:1890 800 699
For further information about the Redundancy Payments Scheme contact:
Information and Customer Service
Opening Hours: Mon. to Fri. 9.30am to 5pm
Tel: (059) 917 8990
Locall: 1890 80 80 90
Fax:(059) 917 8909
The Protection of Employees (Employers' Insolvency) Acts 1984–2012 protect certain outstanding entitlements relating to the pay of employees in the event of their employers becoming insolvent as defined in the Acts.
Subject to certain limits and conditions (including statutory time limits), money due to employees in a range of situations may be paid by the Department of Social Protection out of the Social Insurance Fund. Instances where the Department may pay from this fund include circumstances where money due as a result of:
The Insolvency Payments Scheme also protects employees' outstanding contributions to occupational pension schemes which an employer may have deducted from wages but not paid into the schemes. Unpaid contributions to an occupational pension scheme on an employer's own account may also be paid from the Fund, subject to certain limits. The Scheme applies to outstanding pension contributions for up to a year prior to the date of insolvency.
The Scheme covers employees who are over 16 years of age and are in employment which is insurable for all benefits under the Social Welfare Acts and includes those over 66 years of age who are in employment which, but for their age, would be insurable for all benefits under the Social Welfare Acts.
Employees should claim from the employer representative (usually the liquidator or receiver) for payment of outstanding entitlements. The employer representative can claim an insolvency payment online.
There is further information in the Employee Guide to the Insolvency Payments Scheme.
The European Communities (Protection of Employees (Employers' Insolvency) Regulations SI 630/2005 amend the Protection of Employees (Employers' Insolvency) Act 1984 by including a provision to cover employees who are employed by an employer who has become insolvent under the laws, regulations and administrative procedures of another member state. The Regulations apply to insolvencies occurring from 8 October 2005.
If you have a question relating to this topic you can contact the Citizens Information Phone Service on 0761 07 4000. The Phone Service will operate Monday to Friday, 9am to 6pm during January 2017. You can also visit your local Citizens Information Centre.