Redundancy payments

Introduction

Where you lose your job because your employer is closing the business or reducing the number of staff, this is known as redundancy.

You have a minimum entitlement to a redundancy payment after you have two years’ service. This is known as a statutory redundancy. The statutory redundancy payment is based on a calculation using your pay and your length of service. The Redundancy Payments Acts 1967–2014 is the law covering statutory redundancy.  

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 you and your employer must follow in order to comply with the legislation.

You and your employer may agree a redundancy payment above the statutory minimum. You may also receive a payment, even if you have not reached the statutory minimum period of service. For example, statutory redundancy only applies if you have two years' service. However, your employer might agree to pay a lump sum if you have less than two years' service.

In these cases, the payment arises through agreement between you and your employer and not through a statutory entitlement. The Redundancy Payments Acts 1967–2014 provides a minimum right to a redundancy payment. However, parties are allowed to agree more substantial rights.

How much is the statutory redundancy payment?

The statutory redundancy payment is a lump-sum payment based on your pay and length of service. If you are eligible, you are entitled to:

  • Two weeks' pay for every year of service they have since you were 16 and
  • One additional week's pay

The maximum weekly amount used to calculate redundancy pay is €600 a week (or €31,200 a year), even if your pay is more per week.

You can use this redundancy calculator to estimate how much statutory redundancy pay you might be entitled to.

You can see examples of redundancy calculations on gov.ie.

Do I pay tax on the statutory redundancy payment?

The statutory redundancy payment is tax-free. If you receive a lump sum in compensation for the loss of employment, part of it may be tax-free.

Read more about taxation of lump-sum payments on redundancy/retirement. There is more information about taxation and redundancy on the Revenue website.

How is my gross weekly pay calculated?

For the purpose of your calculating your redundancy payment, pay means your gross pay before tax and PRSI deductions. It includes:

  • Your current normal weekly pay
  • Average regular overtime
  • Benefits-in-kind

If you are paid monthly, your normal monthly pay is divided by 4.33 to calculate the weekly pay.

My wages vary from week to week

Where you do not have regular hours or regular pay, an average of the last 52 weeks worked is used.

How is average regular overtime calculated?

Average weekly overtime is calculated as follows:

  • Overtime for the 13 weeks before the date of redundancy is excluded
  • Find the total amount of overtime earned in the previous period of 26 weeks (excluding the 13 weeks before the date of redundancy)
  • If there was any weeks in the 26 week period not worked then the 26 week period may be extended back for every week not worked
  • Divide the total by 26 to get the average weekly overtime

This average overtime is added to the normal weekly pay.

I was earning less than the minimum wage

If you were earning less than the minimum wage you may be entitled to payment based on the minimum wage. There are exceptions for any period you were in a statutory apprenticeship or under 20 years of age.

You can read more about how gross weekly pay is calculated on gov.ie.

How is my length of service calculated?

Reckonable service is the length of time you have been continuously employed in your job that is taken into account when calculating a redundancy payment.

Reckonable service does not mean how many weeks you were employed for. It means how long you were actually in work doing the work. So reckonable service does not include certain absences from work.

Absences from work over the last 3 years are taken into account in calculating of the length of your service. Any absences outside of this 3-year period are not counted. The 3-year period ends on the date your employment ends.

Reckonable service

The following periods are included as reckonable service, (called reckonable absences):

  • The period you were actually in work
  • Any absence from work due to holidays
  • Any absence from work due to illness (see below for non-reckonable periods of illness)
  • Any period where you were absent from work by agreement with your employer (typically career break)
  • Any period of basic and additional maternity leave allowed under the legislation
  • Any period of basic adoptive, paternity, parental, parent’s or carer's leave
  • Any period of lock-out from your employment
  • Any period where the continuity of your employment is preserved under the Unfair Dismissals Acts.

Non-reckonable service

The following periods over the last 3 years are not counted as service, (called non-reckonable absences):

  • Any period over 52 consecutive weeks where you were off work due to an injury at work
  • Any period over 26 consecutive weeks where you were off work due to illness
  • Any period on strike
  • Any period of lay off from work

You can see examples of redundancy calculations on gov.ie. Example 4 covers reckonable absences included in the calculation and Example 5 covers non reckonable absences excluded from the calculation.

Lay off from work due to COVID-19 and reckonable service

Any period of layoff over the course of the pandemic is not counted as reckonable service. If you were on the Temporary COVID-19 Wage Subsidy Scheme (TWSS) or Employment Wage Subsidy Scheme (EWSS), this period is counted as reckonable service for calculating statutory redundancy.

A special payment up to a maximum of €1,860, may be available if you lost out on reckonable service while temporarily laid off during the pandemic and are made redundant.

The payment will apply to employees who:

  • Have been, or who will be made redundant in the next 3 years
  • Have lost reckonable service due to layoffs caused by Covid-19 restrictions
  • Have 104 weeks continuous employment with the same employer
  • Were in receipt of the PUP or equivalent Jobseeker’s payment

It is expected that the application process will open in the first half of 2022, and details on how to apply will be announced closer to the time. This page will be updated once more information is available.

I was made redundant after being on reduced hours or pay

How your payment will be calculated depends on whether you are made redundant:

  • Within a year of being put on reduced hours or pay, or
  • After working reduced hours for more than a year

You are made redundant within a year of being put on reduced hours or pay

If you are made redundant within a year of being put on reduced hours or pay, your redundancy payment is based on your earnings for a full week.

You are made redundant after working reduced hours for more than a year

If you are made redundant after working reduced hours for more than a year, how your payment is calculated depends on whether you accepted being on reduced hours or not.

Your situation How your payment is calculated
You fully accepted the reduced hours Your redundancy payment is based on your gross pay for the reduced working hours if :
  • You fully accepted the reduced working hours as your normal week
  • You never asked to return to full-time work
You never accepted the reduced hours Your payment is based on your normal weekly earnings if:
  • You never accepted the reduced working hours as your normal hours
  • You continually asked to be put back on full-time working

If you have a dispute about this with your employer you could make a claim to the Workplace Relations Commission.

My employer is insolvent

It is up to the employer to pay the statutory redundancy lump sum to all eligible employees. If your employer is unable to pay, refuses or fails to pay, you can apply for direct payment from the Social Insurance Fund - see 'How do I apply for my redundancy lump sum?' below.

Where your employment has ended because your employer is insolvent (your employer's business is wound up by the court), your entitlement to certain outstanding pay is protected by law. Under the Insolvency Payments Scheme these may be paid by the Department of Social Protection out of the Social Insurance Fund.

How do I apply for my redundancy lump sum?

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).

Your employer is unable to pay

If your employer is unable to pay your redundancy lump sum, they should follow the steps below:

  1. Log on to the new Welfare Partners service. To access the service, the employer will need a Department of Social Protection Sub-Cert from Revenue (pdf).
  2. Complete and submit an online application form (previously the RP50 form)
  3. Download the completed Employee Declaration Form and send it to the employee by either email or post.
  4. Upload confirmation from the employee that the Employee Declaration Form is correct. This should be a physical or digital signature or an email from the employee confirming the information is correct.
  5. Upload the ‘Required’ documents and ‘Optional’ documents.
  6. Review the declaration in the ‘Application summary’ and ‘Submit application’.

Employers can get detailed information on how to access Welfare Partners and use this service in the Employers Guide (pdf). You can see a sample of the Employee Declaration Form at Appendix B of the guide (on page 50).

Your employer is insolvent

If the company has been liquidated or is in receivership, the liquidator or receiver should complete and submit an online application on behalf of the employees. They do this using the new Welfare Partners service. There is detailed information on how to access Welfare Partners and use this service in the Employer Representative Guide (pdf).

Your employer refuses to pay or there is a dispute about redundancy

If your employer refuses to pay your redundancy lump sum or if there is a dispute about redundancy you can bring a claim to the Workplace Relations Commission.

You must complete the following steps:

  1. Complete and submit the online complaint form available on workplacerelations.ie. This must be done within one year of your dismissal.
  2. If the WRC has made an award, apply to the DSP for your lump sum. Email redundancypayments@welfare.ie to request an application form (RP50).
  3. Complete the RP50 form and sign it.
  4. Send the signed RP50 form to the Redundancy and Insolvency Section of the DSP along with a copy of the Workplace Relations Commission decision. (Claims accompanied by a Workplace decision must be submitted within 52 weeks of a decision being made).
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'.

Further information

The application for payment from the Social Insurance Fund should be sent to:

Redundancy Payments Section

Department of Social Protection

Ground Floor
Gandon House
Amiens Street
Dublin 1
D01 A361

Tel: (01) 673 4500 or 0818 800 699

For further information about the Redundancy Payments Scheme contact:

Workplace Relations Commission - Information and Customer Service

O'Brien Road
Carlow
R93 E920

Opening Hours: Mon. to Fri. 9.30am to 1pm, 2pm to 5pm
Tel: (059) 917 8990
Locall: 0818 80 80 90
Page edited: 30 November 2021