Main Provisions

REDUNDANCY PAYMENTS ACT 2003

Main Provisions

The Redundancy Payments Act 2003 which became law on 25 May 2003 changed the obligations of employers to their employees who are being made "redundant".
The Act significantly extends the statutory entitlements of employees in a redundancy situation. The main provisions are:

• A new flat rate of 2 weeks salary for every year of service by an employee, regardless of age
• The government rebate of 60% of the statutory redundancy payment will remain
• The qualifying 2 years service requirement is to remain
• The maximum statutory ceiling of €507.90 per week will remain
• Employees of insolvent companies can now claim minimum notice entitlements under the Insolvency Payments Scheme without first having to get an award from the EAT
• The "contract of employment" will be as defined under the Employment Equality Act 1998
• Removal of the age distinction for service by employees under and over 41 years of age.
• The present bonus week will continue

Redundancy Payments Act 2003 (Commencement Order) 2005

Some changes of the Redundancy Payments Act 2003 came into effect on 25/05/03, and affect all redundancies notified after that date, while other sections of the Act came into force on 10/04/05 with the coming into force of S.I. No. 77 of 2005, Redundancy Payments Act 2003 (Commencement Order) 2005. More specifically, this Commencement Order will bring Sections 7, 11 and 12 of the Act into operation on 10/04/05

1. Section 7 provides for the introduction of a comprehensive new redundancy form, to be known as Form RP50 which combines the existing forms RP 1 (Notice of Redundancy), RP2 (Certificate of Redundancy), RP3 (Rebate Claim) and RP14 (Employee's Application for a Lump Sum from the Social Insurance Fund). Thus, an employee who receives notice of redundancy on or after 10/04/05 will receive his/her notice of redundancy on the Form RP50. This new form will provide the basis for any rebate/lump sum claim made by the affected employee. It will also be used to record receipt by the employee of the statutory redundancy amount from the employer and will be used by the employer to claim a rebate from the Social Insurance Fund. This form can be submitted electronically from 30/05/05 to the Department of Enterprise, Trade and Employment and if the employer is either unwilling or unable to submit the form the employee can do so themselves.

2. Section 11 stipulates the rates of redundancy payments in place since 25/05/03. An employee is now entitled to two week's statutory redundancy payment for each year of employment if aged between 16 and 66, together with one bonus week. There is no longer any distinction made between years of service aged under 41 and over 41. When calculating a redundancy lump sum, the statutory ceiling on wages remains at €507.90 per week, and there continues to be no tax payable on this lump sum. Employees who have worked in a company outside the State and who return to Ireland and were subsequently made redundant in Ireland will now be entitled to a redundancy payment in respect of all their employment with the employer concerned provided that he/she has worked for two years in Ireland immediately prior to the termination of employment. Further, if the total amount of reckonable service is not an exact number of years, the "excess" days will be credited as a proportion of the year. Previously, if the total number of days worked included any part of a year less than 182 days, they were discounted. Now there shall be a payment in respect of that portion of a year. This amendment is found in Section 11 (2).

3. Section 12 deals with the method of calculating continuity of employment and reckonable service for the purposes of assessing the redundancy entitlement of the dismissed employee. As regards reckonable service, all breaks in employment more than three years before the termination date are disregarded. Breaks in the three years immediately before termination ares also disregarded except for the following:
" All lay off periods
" Periods of absence of more than 52 weeks, if the absence is due to occupational injury or disease
" Periods of absence of more than 26 weeks, if the absence is due to any other illness or injury
" Periods of absence of more than 18 weeks for materinity leave
" Career breaks of more than 13 weeks in a 52 week period.

An employer who has paid his/her employee their correct statutory redundancy lump sum can apply to the Department for a 60% rebate of the sum paid within six months of payment of same. This rebate will only apply to employers who pay the statutory redundancy entitlement and give proper notice of redundancy (at least two weeks) to the employee. This 60% rebate to which they are entitled is paid from the Social Insurance Fund, into which they make regular payments themselves through PRSI contributions.

Fines

The Act provides that penalty for offences under the Act is now €3,000 - section 13.