Redundancy Payments – Rights & Obligations

Redundancy – What are my entitlements/obligations?

In the current harsh economic climate it is an unfortunate reality that more employees are finding themselves in a position where they are being made redundant and more employers are being left with little option but to make staff redundant. Both employers and employees are sometimes unsure of their rights and obligations in these situations and we can advise on all of the relevant issues involved.

Redundancy payments in Ireland are governed by the Redundancy Payments Acts, 1963 -2007. All employees who are over sixteen years of age and in continuous full time employment for the same employer for at least 104 weeks are entitled to statutory redundancy payments under the Acts. The statutory redundancy payment is two week’s gross pay per year of service up to a ceiling of €600 per week plus one week’s pay, which is also subject to the ceiling of €600. This payment is tax-free.

In certain circumstances employers may pay employees an ex gratia payment in addition to the statutory redundancy payment however there is no legal obligation on them to do so and any payment in addition to statutory redundancy may be taxable. If a number of employees are being made redundant the rules for collective redundancies and consultation may apply and employers should take legal advice.

Employers can obtain a rebate of up to 60% of the redundancy payment by submitting the relevant forms to the Social Insurance Fund.

Is the redundancy legitimate?

Redundancy is where an employment of a person is terminated for one of the following reasons:

  • Where an employer has ceased, or intends to cease to carry on the business for the purpose of which the employee was employed by him;
  • Where the requirements of that business for the employee to carry out work have ceased or diminished or
  • Where the employer has decided to carry out the business with fewer or no employees;
  • Where an employer has decided that the work for which an employee was been employed should now be done in a different manner for which the employee is not sufficiently qualified or trained;

Any employee meeting the qualifications highlighted earlier relating to age and length of service is entitled to a statutory redundancy payment in these situations. Where an employee feels that they have been unfairly selected for redundancy or that one of the above situations do not arise then they may have a claim for unfair dismissal. Employers should note that employees must be selected for redundancy using fair and objective criteria. Simply saying first in, last out may not be sufficient. In the event of a dispute and subsequent claim for unfair dismissal the onus will be on the employer to prove that a genuine redundancy situation existed.

What can I do if my employer is insolvent?

If your employer is insolvent and is not in a position to pay any redundancy payments or outstanding wages then the Department of Enterprise Trade and Employment can administer payments through the Insolvency Payments Scheme. Claims should firstly be directed to the liquidator or receiver who will then forward the claim on your behalf.

Duncan Grehan & Partners can advise on all aspects of redundancy payments and claims arising from same. Please contact Conor Griffin for further information.

Every effort has been made to ensure that the information above is accurate and up-to-date however we accept no liability for any errors or omissions. The information provided on this site is of a general nature and may not address your specific circumstances.