The term redundancy refers to losing your professional position due to closure or a reduction in the number of employees. This can be a common occurrence for struggling businesses. 

A redundancy payment can be made to people who find themselves out of work as a result of this. Professionals who have worked for two years in a role are entitled to a redundancy payment. 

Persons who have worked below this period of time will not be entitled to the payment.

Redundancy payment will differ based on your own situation. The factors that decide how much redundancy payment you get are the income you had, and the length of service you provided. 

People who are in service within a company for longer will likely be entitled to a bigger payment. 

The maximum redundancy pay amount is €600 per week. Even if you were earning above this number, this is the maximum cap. 

The redundancy payment is paid to individuals in a lump-sum. 

Persons receiving redundancy payment will receive two weeks of pay for every year they worked under the company. For example, if you worked in a company for four years before losing your position, you would be entitled to eight week’s pay. 

You are also entitled to one week’s additional pay. This is also capped at €600. 

There are situations in which your employer can increase the amount of redundancy payment you get. They can choose to contribute to a top-up payment. 

Employers are not entitled to provide you a voluntary top-up payment. 

An example of redundancy would be similar to the following case study: 

Peter runs a plumbing business. He currently has five employees, additional to himself.

Four of his employees are full time and fully qualified, while one is an apprentice. 

Due to recent changes, Peter is required to make some cost cuts in his business. 

With a lack of work, Peter no longer requires the use of five additional employees. Based on his recent work trends, he only needs himself and three others. 

This means that Peter will look to let go of two members of his staff. 

As the apprentice is new, not fully qualified and not on a full time wage, Peter decides to let him go. 

The apprentice only worked for Peter for 6 months, this means he is not entitled to any redundancy payment. 

Looking at his remaining four employees, Peter must decide who to let go based on certain factors. They are all fully qualified and have worked for the company for between 5-20 years. 

Peter makes the decision to let go of his oldest and longest serving employee, Bill. Bill is only one year away from retirement and has worked under Peter for 20 years. 

Due to Bill working at the company for over two years, he is entitled to the redundancy payment. 

Bill was on a wage of €1,000 per week, or €52,000 per year. Despite this, Bill’s redundancy payment will be capped at €600 per week. 

Bill will be entitled for two weeks payment for every year that he worked at Peter’s company. As well as this, he will receive one additional week’s pay. 

Two weeks of pay for 20 years means that Bill will receive 40 weeks of pay at €600. This means he will receive €24,000. 

He will also receive one additional week’s pay, totaling to €24,600. 

Bill will receive this redundancy payment in a lump-sum. 

Bill and Peter also came to an agreement of a top-up payment for his redundancy. This means Peter will make a voluntary payment of an additional €1,000 to Bill. 

This means that between his statutory redundancy payment and voluntary payment, Bill will receive €25,600.

You will not have to pay tax on your statutory redundancy payment. This payment is tax free. 

The full lump sum payment will be paid in full to you.

You must be over the age of 16 in order to receive redundancy payment. 

The employment that you had must have been fully insurable in regards to social welfare acts. 

You must have completed at least two years of continuous employment to be eligible for redundancy payment. Any less and you will not be permitted the payment. 

Your employment must be with the same employer for the duration of a minimum of two years.

You can receive the redundancy payment whether you are working full-time or part-time. 

You must have been made redundant. This means that your employer is releasing you from your professional position. 

Valid reasoning for this would be reduction in staff or closure of business. 

You cannot be replaced by another professional in regards to your role within the company. 

Other reasons for termination of contract may not be eligible for redundancy payment. 

Your employer must be able to show evidence that your employment has been terminated at the company. This is the case whether you were given a notice of leave or not.

You are entitled to redundancy legally should you meet the necessary requirements. If you do not meet the requirements, then you are not permitted to receive the payment. 

You are not legally required to receive the payment. You will have to contact the National Redundancy Helpline or apply for the payment yourself should you wish to receive it. 

If you do not wish to receive the payment, then you are legally not obligated to do so. 

Your employer has no legal obligation to contribute to your payment. This means they do not have to make a top-up payment. 

The employer top-up payment is considered ‘voluntary’. Employers and their redundant employees may come to an agreement about their top-up payment, although it is not a legal necessity.

You will receive your redundancy payment in a lump-sum. 

Your employer should make the redundancy payment on your final day of employment. This means you should receive the payment on your next due payday, based on your employment. 

Your payment will be made into your bank account, or where you normally receive payment from your employer. 

Your redundancy payment should not take any longer than a regular paycheck. If it does, be sure to contract the Redundancy Helpline. 

A written statement should be provided to you by your employer to confirm that the payment will be made. 

If your employer will not pay your redundancy payment, then you may need to seek advice and help regarding the situation.