Redundancy can be a challenging experience, both emotionally and financially. For employees in Ireland, understanding your rights and entitlements when facing redundancy is crucial. This blog will explore the concept of redundancy, outline how redundancy payments work in Ireland, and offer guidance on what you can expect if you find yourself in this situation.
What is Redundancy?
Redundancy occurs when an employer needs to reduce their workforce, usually due to economic pressures, restructuring, closure, or the introduction of new technology. It is not a reflection on the employee’s performance. In Ireland, specific laws protect employees who are made redundant, ensuring they receive fair treatment and appropriate redundancy payments.
Who Qualifies for Redundancy Payments?
To qualify for redundancy payments in Ireland, an employee must meet certain criteria:
- Be in employment that is insurable under the Social Welfare Acts
- Have worked continuously for at least two years (104 weeks) with the same employer
- Be aged 16 or over
- The redundancy must be genuine, meaning the role is genuinely ceasing to exist
How Are Redundancy Payments Calculated?
The statutory redundancy payment in Ireland is calculated based on your length of service and weekly pay, with a maximum cap applied to weekly earnings. The formula is:
- Two weeks’ pay for every year of continuous service, plus
- An additional one week’s pay
As of now (November 2025), the maximum weekly pay used to calculate redundancy is €600. Any earnings above this limit are not considered in the redundancy calculation.
How to Apply for Redundancy Payments
Generally, the employer is responsible for paying redundancy. In cases where the employer is unable or unwilling to pay, employees can apply to the Department of Social Protection for payment from the Social Insurance Fund. The application must be made within 52 weeks of the termination of employment.
Tax Implications of Redundancy Payments
The statutory payment is tax free. Ex-gratia payments, golden handshakes, severance payments and other types of lump sum payments that are made in addition to the statutory payment are subject to tax. The amount that is exempt from tax is calculated with reference to one of the following three –
- Basic Exemption
- Increased Basic Exemption
- Standard Capital Superannuation Benefit (SCSB)
The basic exemption is €10,160 plus €765 for every year of service
The increased basic exemption adds €10,000 to the basic exemption but this total amount is then reduced by the pension lump sum receivable
The Standard Capital Superannuation Benefit is calculated based on a formula.
Average annual remuneration for the last 36 months of service to date of termination (A) multiplied by the number of years of complete service (B) divided by 15 and then the amount of any tax-free lump sum received under an approved pension scheme or the current value of any tax-free lump sum receivable in the future under an approved pension scheme. (C)
What to Do After Redundancy?
Being made redundant can be daunting, but there are supports available. You may be entitled to Jobseeker’s Benefit or Allowance, and you can access job-seeking support through your local Intreo Centre. Upskilling and retraining opportunities are also available through government initiatives.
Conclusion
Facing redundancy in Ireland can be stressful, but knowing your rights and entitlements helps you navigate the process with confidence. If you are unsure about your payment or believe you have not received what you are owed, seek advice.
You can read more blog posts here.
