The Redundancy Payments Act 1967, as amended, sets out the obligations and rights of employers and employees in situations where an employee is made redundant.
Statutory redundancy entitlement
A redundancy situation can arise for a number of reasons, such as the employer has ceased trading or the employer has decided to carry on the business with fewer staff. It is the employer’s legal responsibility to make statutory redundancy payments to eligible employees.
An employer who proposes to dismiss an employee by reason of redundancy must give that employee notice of the redundancy at least 2 weeks before the date of dismissal. Employees may also be entitled to longer periods of notice under the Minimum Notice and Terms of Employment Act 1973, depending on their length of service.
The Act prescribes the minimum redundancy lump sum for eligible employees, generally referred to as 'statutory redundancy'.
In order to qualify for a statutory redundancy payment, an employee must have 104 weeks continuous employment, be an employed contributor in employment which was insurable for all benefits under the Social Welfare Acts and be over the age of 16.
An eligible employee is entitled to two weeks normal weekly remuneration for every year of service, plus a bonus week. The redundancy lump sum calculation is based on the worker’s length of reckonable service and weekly remuneration, which is subject to a ceiling of €600 per week.
Redundancy Payments Scheme
In situations where an employer is genuinely unable to pay statutory redundancy entitlements due to financial difficulties or insolvency the State provides a safety net for employees to ensure they receive their statutory entitlements. An application for payment under the Redundancy Payments Scheme may be submitted to the Department of Social Protection. When such a redundancy payment is made from the Social Insurance Fund, a debt is raised against the employer.
For more information, visit gov.ie - Redundancy Payments Scheme.
In the event of a dispute between the employer and employee in relation to redundancy, the employee’s recourse is to refer a complaint to the Workplace Relations Commission for a determination by an adjudication officer.