Calculating your redundancy entitlements is pretty straightforward with the redundancy calculator provided online by the Department of Social Protection.
But first, lets take a look at what a redundancy actually is..
What is redundancy?
The definition of redundancy in Ireland is set out in the Redundancy Payments Act 1967 and amended by the Redundancy Payments Act 1971 and 2003-
an employee who is dismissed shall be taken to be dismissed by reason of redundancy if for one or more reasons not related to the employee concerned the dismissal is attributable wholly or mainly to—
(a) the fact that his employer has ceased, or intends to cease, to carry on the business for the purposes of which the employee was employed by him, or has ceased or intends to cease, to carry on that business in the place where the employee was so employed, or
(b) the fact that the requirements of that business for employees to carry out work of a particular kind in the place where he was so employed have ceased or diminished or are expected to cease or diminish, or
(c) the fact that his employer has decided to carry on the business with fewer or no employees, whether by requiring the work for which the employee had been employed (or had been doing before his dismissal) to be done by other employees or otherwise, or
(d) the fact that his employer has decided that the work for which the employee had been employed (or had been doing before his dismissal) should henceforward be done in a different manner for which the employee is not sufficiently qualified or trained, or
(e) the fact that his employer has decided that the work for which the employee had been employed (or had been doing before his dismissal) should henceforward be done by a person who is also capable of doing other work for which the employee is not sufficiently qualified or trained.
Key factors in redundancy
There are two critical factors to be gleaned from this definition-
- The redundancy should arise from the doing away with the job, not the person. This feature of impersonality is necessary in a genuine redundancy situation.
- Change-the change must arise as a result of change in the workplace which might range from a closing down of the business to a simple reduction in number of employees.
Redundancy payment entitlement
To be entitled to a redundancy payment you must have the requisite period of service served which is:
- 104 weeks of continuous employment attained after the age of 16 years.
- Dismissal
To be entitled to redundancy you will need to have been dismissed from your job; if you are given a new contract of employment or your old contract is renewed you will not be entitled to redundancy.
Where an employee resigns from the position does not give rise to an entitlement to redundancy payments either.
Short time/lay offs
You can be placed on short time or laid off where the employer is unable to provide work but only where the employer reasonably believes that the lay off will not be permanent.
Short time is the situation where the employee’s pay is less than one half of his normal wee pay or his hours of work are reduced to less than half his normal weekly hours.
The employer is generally obliged to pay the employed during this time although there are exceptions to this general rule depending on custom and practice in specific situations.
There is no general right to lay off employees and not pay them; in fact, without an implied or express term in the employment allowing lay off the employer may well be in breach of contract.
The right to lay off without pay may be permissible in pretty limited circumstances established through custom and practice.
An employee who has been laid off for 4 or more consecutive weeks can give a written notice to his employer indicating his intention to claim redundancy. The employer can then give the employee a counter notice which must inform the employee that their employment will recommence not later than four weeks after the notice and this period of employment will be at least 13 weeks without lay off or short time.
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The employer is generally obliged to pay the employed during this time although there are exceptions to this general rule depending on custom and practice in specific situations.
Disentitlement to Redundancy
Where an employer offers to renew the employee’s contract of employment or re-engage him under a new contract, no redundancy entitlement arises.
However, the offer or renewal or re-engagement must be on the same terms and conditions as the “old contract”.
If there is a difference as to terms and conditions or the place of work, the question of the reasonableness of the employee arises-if the employee unreasonably refuses the new contract, no redundancy will be payable.
All of these cases are judged on the merits of the particular case as to whether the employee has acted reasonably or not.
Redundancy payments
Redundancy payment entitlements are calculated by reference to weeks per year of service and is basically calculated as follows:
- 2 weeks’ pay for each year of continuous employment over the age of 16 years
- An additional one week’s normal earnings.
All earnings over €600 per week are disregarded though in calculating statutory redundancy payments and redundancy payments are tax free.
(Continuous employment is not broken by layoffs, holidays or sickness.)
An employee who is being made redundant is entitled to two weeks’ notice and must be given a redundancy certificate by the employer. The employer is entitled to a rebate from the Irish government of 60% of the statutory element of each lump sum payment, provided he has given the requisite two weeks’ notice.
Collective redundancies place specific statutory obligations on the employer, for example the requirement to consult with employees. Failure to do so or advise the government of a collective redundancy situation can lead to a criminal conviction and hefty fines of up to €5,000.
The upper age limit of 66 years for entitlement to redundancy was removed by the Protection of Employment Act 2007.
Redundancy calculator
You can access a redundancy calculator on the website of the Department of Social Protection to calculate your redundancy entitlements and learn about non collective redundancies here.