Independent Information on Redundancy in Ireland

Text Box: Redundancy Payments Overview

A redundancy situation arises where an employee's job ceases to exist, and the employee is not replaced for reasons such as rationalisation / reorganization.  

The Redundancy Payments Acts, 1967-2007 oblige employers to pay employees being made redundant a ‘statutory redundancy entitlement’. The amount to be paid is based on the employee's length of service and normal weekly earnings (gross weekly wage, average regular overtime and payment-in-kind), up to a ceiling of €600 per week.

Who is Covered?
- Traditionally, only employees between the ages of 16 and 66. However employees who have reached 66 years of age and whose date of termination is on or after the 8th of May 2007 are now also eligible for a redundancy payment 
- With 104 weeks (two years) continuous service 
- In employment that is insurable under the Social Welfare Acts, if someone is a full-time employee; this does not apply if the person is a part time employee. In these circumstances, the Department of Social and Family Affairs decide the question of insurability in accordance with the rules and procedures provided for in the Social Welfare Acts.  

Calculation of Lump Sum.
* Two weeks pay for each year of employment continuous and reckonable between the ages of 16 and 66 years. 
* In addition, a bonus week. 
Based on
- Excess days are calculated as a portion of 365 days. i.e. 4 years 190 days = 4.52 years 
- Reckonable service is service excluding ordinary sick leave over and above 26 weeks and occupational injury over and above 52 weeks. All breaks in service should be within the last 3 years prior to the date of termination. 
- Reckonable service also excludes absence from work because of lay-offs or strikes but short-time work is reckonable. 
- Calculations are subject to the ceiling which is at €600 per week with respect to Notified Redundancies from 1st of January 2005 and €507.90 prior to that date. 

Employment Appeals Tribunal
Disputes concerning redundancy payments can be submitted to the Employment Appeals Tribunal. The Tribunal also deals with disputes under other labour law such as the Minimum Notice and Terms of Employment Acts, the Unfair Dismissals Acts, and the Protection of Employees (Employer’s Insolvency) Acts.

Employers who pay the statutory redundancy entitlement and give proper notice of redundancy (at least two weeks) are entitled to a 60% Rebate from the Social Insurance Fund, into which they make regular payments themselves through P.R.S.I. contributions. The Redundancy Payments Section of the Department processes applications for these rebates.

Should an Employer Fail to Pay a Redundancy Lump Sum
In situations where the employer is unable to pay the employees their entitlements, the Department of Enterprise, Trade and Employment pays the full amount direct to the employees from the Social Insurance Fund (S.I.F).

Procedures & Documentation
The employer needs to give the employee a Redundancy Form RP50 on the date of payment, showing the basis on which the sum was calculated, and confirming receipt of lump sum. Copy containing an original signature of both employee and employer should also be sent to the Department. 

The RP50 form must be provided by the employer to the employee at least two weeks before date of termination of employment as notice of termination.

A completed RP50 should be forwarded to the Department by the employer to claim 60% rebate from the S.I.F. It may also be used by the employee to claim redundancy payment from the S.I.F. in situations where the employer cannot or will not pay. 

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