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News & Events

Tánaiste publishes Redundancy Payments (Amendment) Bill

Special State payment for workers made redundant who have lost reckonable service

The Tánaiste and Minister for Enterprise, Trade and Employment Leo Varadkar today published the Redundancy Payments (Amendment) Bill, which gives employees who have lost out on reckonable service while they were on lay-off due to COVID-19 restrictions, and have subsequently been made redundant, a special payment of up to a maximum payment of €1,860 tax-free to bridge the gap in their redundancy entitlements.

A worker does not have to have been in receipt of any form of State payment, such as the PUP or jobseekers, during the lay-off period, although they could have been. The criteria are simply that the person qualifies for redundancy in the usual way and was laid off because of Covid restrictions during the emergency period.

The Tánaiste said:

“This Bill will make sure that people made redundant are not out of pocket because of the period during which they were placed on lay-off due to COVID-19 restrictions. The Government will step in and provide a special payment of up to a maximum of €1,860 tax-free to compensate for a person’s break in service due to necessary closures to protect public health.

“Throughout the pandemic, we have aimed to save as many jobs and businesses as possible. Part of that was suspending an employee’s right to trigger redundancy, to ensure already struggling businesses weren’t overwhelmed with costs. That provision has now been lifted, and employees can if they wish, seek redundancy if they have been laid off. We want to make sure workers don’t lose out on payments and on the other hand, business owners aren’t faced with a flood of additional redundancy costs, just when they’re trying to get back on their feet. This Bill provides the best outcome for both employers and their employees.”

Under the existing Redundancy Payments Acts, periods of lay-off in the final three years of service do not count as reckonable service. This means that in the case of redundancies now arising, where the qualified employee may have been on COVID-19 related lay-off for protracted periods, through no fault of their own or of their employer’s, their redundancy entitlement will not factor in those periods.

The provisions of the Redundancy Payments (Amendment) Bill will plug that gap, through a direct payment from the Social Insurance Fund. The payment will ensure that the employee being made redundant will receive the same total redundancy payment as though they had not been laid off during the pandemic.

Minister for Social Protection Heather Humphreys TD said:

“This Bill is a further example of Government’s support for employees. Even with the improved economic and employment outlook, some workers will lose jobs in the coming period. This Bill will ensure that redundancy payments are not adversely affected by periods of time laid off due to COVID public health restrictions, when workers’ ability to trigger redundancy was suspended.   

“This new scheme, which will potentially add up to €1,860 to a worker’s redundancy payment, will be administered by my Department. In addition, Government’s employment services strategy Pathways to Work provides a range of employment supports, training and re-skilling opportunities for people who wish to find new job opportunities post-COVID.”

Minister of State for Business, Employment and Retail, Damien English TD said:

“The Government worked to support people during the challenging times of the pandemic. The EWSS kept thousands of employees attached to their livelihoods, while the PUP helped alleviate some of the financial strains experienced by those who lost their job owing to COVID.

“Now, as society and the economy emerge from the pandemic, this Bill is an important measure to have in place to provide certainty to some of those workers who may become redundant and will ensure they do not face an undue penalty in such a redundancy situation”.

The amount an eligible worker will receive will depend on the length of time they were placed on lay-off due to COVID-19 before the date they were made redundant. The calculation for the payment is based on existing statutory redundancy provisions. The maximum to which any employee will be entitled is €1,860 if they earned in €600 or more a week and were laid off for the full emergency period.

The Department of Social Protection is working on the necessary administrative systems to provide for the application and payment processes. It is expected payments will become operational in the first half of this year.

In the normal course of events, employers are liable for the cost of lump sums on statutory redundancy, and this continues to be the case. However, the cost of this additional payment covering COVID-19 related lay-off periods will not be imposed on employers, because the pandemic-related restrictions were outside of their control. Furthermore, if the cost were imposed on them, that could endanger the viability of some businesses which would otherwise be able to recover.