Employers must follow certain procedures when an employee is made redundant. Redundancy occurs where an employee loses their job due to circumstances such as the closure of the business or a reduction in the number of staff. 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 this statutory redundancy payment, even where a redundancy situation exists.
Notice from the employer
An employee is entitled to a minimum of 2 weeks’ written notice of redundancy. This notice period goes up depending on the period of service.
|Period of service||Notice required|
|Between 2-5 years||2 weeks|
|Between 5-10 years||4 weeks|
|Between 10-15 years||6 weeks|
|Over 15 years||8 weeks|
The Redundancy Payments Act 2003 amended the insurability requirements for redundancy to ensure the rights of part-time workers to statutory redundancy. This amendment brings them into line with the Protection of Employees (Part-Time Work) Act 2001 which provides that part-time employees cannot be treated in a less favourable manner than comparable full-time employees in relation to conditions of employment.
It means that the right of certain part-time workers (such as those in casual employment or in employment of inconsiderable extent) to statutory redundancy is recognised. They must still meet the requirement for 2 years’ continuous service as described below.
The statutory redundancy payment is a lump-sum payment based on the pay of the employee. All eligible employees are entitled to:
- Two weeks’ pay for every year of service they have since they were 16 and
- One further week’s pay
- The amount of statutory redundancy is subject to a maximum earnings limit of €600 per week (€31,200 per year).
- Pay refers to current normal weekly pay including average regular overtime and benefits-in-kind, but before tax and PRSI deductions, that is gross pay.
- The statutory redundancy payment is tax-free.
Employees eligibility for a redundancy payment
- Must be aged 16 or over. (Since 8th May 2007 there is no upper age limit of 66.)
- Must be in employment that is insurable under the Social Welfare Acts. Full-time employees under the age of 66 must be paying Class A PRSI. (This insurability requirement does not apply to part-time workers)
- Must have worked continuously for the employer for at least 104 weeks over the age of 16.
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.
An employer must give an employee at least 2 weeks’ written notice of the redundancy. On the date of the termination of employment the employer should pay the redundancy lump sum due to the employee.
If an employer is paying the redundancy lump sum, they do not have to submit an RP50 form. However, employers should provide proof that they paid the lump sum and give a copy of the proof of payment.