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'.
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.
Eligibility criteria
For an employee to be eligible for a statutory redundancy payment, the following must apply:
- employee must have worked with their employer for at least 104 weeks (2 years), excluding any period of employment with that employer before the age of 16 years
- employment must be fully insurable under the Social Welfare Acts. In general this means paying Class A PRSI
- the job must no longer exist
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 Redundancy Payments Scheme (gov.ie).
Redundancy calculator
The redundancy calculator on MyWelfare.ie can be used to estimate redundancy entitlements.
For more information, visit redundancy calculator (gov.ie).
Disputes
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.
Collective redundancy
A redundancy arises where an employee loses their job due to circumstances such as the closure of the business or a reduction in the number of staff. Collective redundancies are situations where, during any period of 30 consecutive days, the number of redundancies is:
- 5 or more employees, where 21-49 are normally employed in an establishment
- 10 or more employees where 50-99 are normally employed in an establishment
- 10% or more of the employees where 100-299 are employed in an establishment
- 30 or more employees where 300 or more are employed in an establishment
The Protection of Employment Act 1977 imposes a number of obligations on an employer that proposes a collective redundancy. This includes undertaking a 30-day information and consultation process with the employees’ representatives, and notifying the Minister for Enterprise, Trade and Employment of the proposed redundancies at least 30 days before they take effect.
Further information on employment rights and employer obligations in the event of a collective redundancy: