Redundancy

What is Redundancy?

A redundancy is when an employee’s job ceases to exist, and the employee is not replaced. Possible reasons for an employer seeking redundancy include rationalisation/ reorganisation; not enough work available; the financial state of the company and company closures.

 Do I qualify for redundancy?

In order to qualify for redundancy an employee must:

  • Be aged 16 or over
  • Have worked continuously* for the employer for at least 104 weeks
  • Be in employment which is insurable under the Social Welfare Acts. Full-time employees must be paying Class A PRSI. This insurability does not apply to part-time workers. (See below for details of redundancy and part-time workers.)

*An employee’s continuity of service is not broken, up to a maximum period, by such events as holidays, statutory leave, or any leave authorised the employer, i.e., career break. For details of the maximum period of each of the above, see the Department of Employment Affairs & Social Protection’s redundancy calculator on https://www.gov.ie/en/service/redundancy-calculator/

How does illness affect redundancy?

Whether or not a period of illness affects your continuity of service depends on the nature of the illness. ‘Ordinary Illness’ means illnesses which people can get in general e.g., influenza. The first 26 weeks of such leave are allowable in calculating a redundancy lump sum, whereas a full 52 weeks are allowable in respect of an ‘Occupational Injury’, which is work-related (occupational accident or injury). For more information regarding illness and continuity of service, contact your trade union representative.

Can an employer use Last in First Out (LIFO) for selection?

Yes, this is a redundancy selection method that cannot be subject to challenge. Other selection methods should be discussed with the employee and their trade union to determine how the selection process is going to be done and if there are alternatives to you being selected for redundancy.

 What redundancy payment can I expect?

The statutory redundancy payment is the minimum payment received by a person who qualifies for redundancy. However, the CWU frequently negotiates redundancy payments over and above the statutory, legal minimum.

If an employee is eligible for a redundancy payment, the statutory minimum they are entitled to is:

  • Two weeks’ pay for each year they have been employed and
  • A bonus week’s pay

If an employee has worked part of a year, they are entitled to two weeks multiplied by the part of the year they have worked.

A Redundancy calculator is provided by the Department of Employment Affairs & Social Protection. This allows employees to calculate how much statutory redundancy they are entitled to based on their circumstances.

 How are overtime and bonuses used in calculating my weekly wage for redundancy purposes?

The weekly wage for redundancy purposes is your gross weekly pay before tax and PRSI deductions. It is calculated by adding together your gross weekly wage, average regular overtime, and benefits-in-kind up to a maximum of €600 a week.

Average weekly overtime earnings are calculated as follows:

  • First, find the amount of overtime earned in the period of 26 weeks ending 13 weeks before the date of redundancy
  • Then divide the total by 26 to get the average weekly overtime earnings

My weekly wage fluctuates, how is it calculated for redundancy?

Many workers have a different wage each week/month. Below are the different categories of workers and the calculations for redundancy payments.

Pieceworker

A pieceworker is a worker whose pay fluctuates according to the work performed e.g., bonuses & commission etc. To calculate your weekly pay, go back 13 weeks from the date of termination. You then take a 26-week period ending on this date. Total pay for this 26-week period is calculated, with total hours worked. Total pay is divided by total hours to get your pay per hour. Weekly pay for redundancy purposes is calculated by multiplying this hourly rate by the number of hours normally expected to be worked in a week.

 No normal working hours

Where a worker has no normal working hours his/her average weekly pay will be taken to be his/her average weekly pay (including any bonus, pay allowance or commission) over the period of 52 weeks during which he/she was working prior to the date on which he/she was notified of redundancy.

Shift Workers

Calculated in the same way as a pieceworker.

 Is a redundancy lump sum payment taxable?

The statutory redundancy payment is tax-free. Only a payment above and beyond the statutory minimum (known as ex-gratia payment) is liable to tax when it goes above a certain limit. For full details of tax and your redundancy lump sum payment see the website of the Department of Employment Affairs & Social Protection at www.welfare.ie

Will I be offered alternative work?

An employer should consider all alternatives before making an employee redundant. This could include making a reasonable offer of alternative work.

An alternative offer of work which involves a loss of status or worsening of terms and conditions of employment would not be considered reasonable. For example, you may be justified in refusing an offer that involves travelling an unreasonable distance to work. Any offer of alternative work should be given to the employee in writing. An employee is entitled to full information regarding the details of the offer.

You may take up an alternative on trial for up to 4 weeks. Where the alternative involves a reduction of 50% or more in hours or pay, working under the new arrangements for up to 52 weeks will not count as an acceptance. However, if you refuse a reasonable offer of alternative work, you will not be entitled to claim redundancy.

How much notice will I get?

An employee is entitled to a minimum* of 2 weeks’ notice of redundancy. This notice period increases depending on the amount of service the employee has.

Period of service Notice required
Between 2-5 years 2 weeks
Between 5-10 years 4 weeks
Between 10-15 years 6 weeks
Over 15 years 8 weeks

 

*Your contract of employment may provide for a longer period of notice.

Can I leave work before the notice period expires?

Between receiving your notice of redundancy and the date your employment ends, you may give your employer notice that you wish to leave before the end of your notice period. You do this by downloading the RP6 from www.workplacerelations.ie and giving it to your employer. Your employer has discretion as to whether to grant your request or not. You should note that leaving during the notice period without your employer’s agreement may affect your entitlement to a redundancy payment.

What documents will I receive when I leave work?

Since 1 January 2019, employers have to report details of their employees’ pay, income tax, PRSI and USC to Revenue every time they pay their employees. Employers must also give details of any employees leaving their job. An end of year statement will be available to you through Revenue’s my Account service.    An end of year statement includes details of all your pay and deductions from all employments for that tax year.

Your end of year statement will be available for 2022 after 31 December 2022 using Revenue’s my Account service. This contains details of your pay as well as the income tax, PRSI and Universal Social Charge (USC) that has been deducted by your employer and paid to Revenue. It is an important statement, as it is a record of your PRSI contributions. You can request a paper version of the statement by contacting your local tax office.

You will no longer get a P45 if you leave your job. Instead, your employer will enter your leaving date and details of your final pay and deductions into Revenue’s online system and you can access these details through Revenue’s my Account service.

If your employer is paying you the redundancy lump sum, they do not have to submit an RP50 form. However, your employer should get proof that they paid your lump sum to you and give you a copy of the proof of payment.

Will I get time off to look for other work?

An employee being made redundant is entitled to be allowed reasonable time off work by his/ her employer, during the final 2 weeks of notice, in order to look for new employment or to arrange training for new employment.

 How are workers selected for redundancy?

As with any dismissal, an employer must act reasonably when dismissing an employee in a redundancy situation.

Selection for redundancy based on specific grounds is considered unfair as follows:

  • An employee’s trade union activity
  • Pregnancy
  • Religious or political opinions.
  • Equality legislation also prohibits selection on the following nine grounds- Gender, civil status, family status, age, disability, religious belief, race, sexual orientation, membership of the Travelling Community.

 What about unfair dismissal?

You are entitled to bring a claim for unfair dismissal if you consider that you were unfairly selected for redundancy or consider that a genuine redundancy situation did not exist. Examples may include where the custom and practice in your workplace has been last in, first out and your selection did not follow this procedure.

Another example may be where your contract of employment sets out criteria for selection which were not subsequently followed. If you believe that you have been unfairly selected for redundancy, contact your trade union representative immediately. You may have a claim under the Unfair Dismissals Acts and could take your claim to Workplace Relations Commission.

Can I be made redundant if I am on sick leave?

If your employer decides to make you redundant while you are on sick leave, you may qualify to bring a claim for unfair dismissal. Unless your employer can prove that there is a genuine redundancy situation and that fair procedures were followed, your dismissal may be found to be unfair. Even if a genuine redundancy situation exists, you may bring a claim for unfair dismissal if you consider that you were unfairly selected for redundancy.

 Can I be made redundant if I am on carer’s leave?

If you are dismissed on the grounds of redundancy while on carer’s leave, under the Carer’s Leave Act 2001 it would be considered unfair dismissal. If your employer does not allow you to return to work at the end of your carer’s leave you may qualify to bring a claim for unfair dismissal. However, you may be made redundant after you have returned to work.

 Can I be made redundant while on maternity leave?

You cannot be made redundant while on maternity leave or additional maternity leave. You may be made redundant when you return to work or while you are pregnant before you go on maternity leave. However, if you are selected for redundancy because you are pregnant, you may qualify to bring a claim for unfair dismissal.

How are part-time employees affected by redundancy?

The Protection of Employees (Part-time work) Act 2001 states that part-time employees cannot be treated less favourably than ‘comparable’ full-time workers. This, together with the Redundancy Payments Act 2003, secured the rights of part-time workers to a statutory redundancy payment.

It is important to note that if you have chosen to change from full-time to part-time hours, redundancy calculations will be based on part-time salary.

I work for an agency and the agency is under contract to a company then who is my employer with regard to redundancy?

Generally speaking, whoever pays the wages is considered to be the employer. Therefore, if you are paid by the agency then the agency is responsible for making any redundancy payment.

 I have been working on a fixed-term contract for the last 2 years. Am I entitled to a redundancy payment when my contract ends?

If you are employed under a fixed-term or a specified-purpose contract, and you have worked continuously for your employer for at least 104 weeks, when your contract ends, you may qualify for a redundancy payment.

 What is the difference between collective redundancy and an ordinary redundancy?

A collective redundancy generally means a large-scale redundancy. At the very minimum, there must be at least 20 people employed, with at least 5 of them being made redundant. This can rise to an entire workforce of hundreds of people being made redundant.

Collective redundancies are dealt with under separate legislation, The Protection of

Employment Act. This legislation requires that both the Minister for Trade, Enterprise and Employment and employees’ representatives must be consulted at least 30 days in advance of people being made redundant.

If you believe a collective redundancy situation exists, contact your trade union representative immediately.

 My company went under a transfer of undertaking last year. Business is slow now, what happens if I am made redundant?

Under the European Communities (protection of Employees on Transfer of Undertakings) Regulations 2003, your new employer is legally obliged to take on the existing employees of the business. The terms and conditions and your employer’s obligations in your contract of employment are automatically transferred to your new employer.

Neither the previous nor the new employer can use the fact of the sale as a justification for dismissing employees unless there are valid economic, technical, or organisational grounds that justify changes in the workforce. Dismissal on economic, technical, or organisational grounds constitutes a redundancy and, if you qualify, you may be entitled to a redundancy payment.

If you are made redundant, continuous service is based on service with your new employer and your previous employer.

What if I’m on lay-off or short time working?

If a lay-off or short time situation exists and has continued for over 4 weeks or more, or for 6 weeks of the last 13 weeks, you may be able to give your employer notice, in writing, of your intention to claim redundancy. You can do this by completing form RP9, available on workplacerelations.ie. You must do this no later than 4 weeks after the period of lay-off or short time has ended.

It is important to note that if you are made redundant within one year of being put on reduced hours or pay, your redundancy payment would be based on your earnings for a full week. If, however, you are made redundant after working reduced hours for more than a year, how a redundancy payment will be calculated depends on whether or not you accepted being on reduced hours.

If you fully accepted the reduced working hours as your normal week and never asked to return to full-time work, then your redundancy payment will be based on your gross pay for the reduced working hours. If, on the other hand, you never accepted the reduced working hours as your normal hours and continuously asked to be returned to full-time working, your payment would be based on your normal weekly earnings.

If you do not wish to claim redundancy but the lay-off or short-time situation continues, the question arises as to whether it is a temporary situation. If it becomes apparent that it is no longer temporary, then the situation is now a redundancy rather than a lay-off or short-time working. It is the employer who initially decides whether or not there is a redundancy situation.  If there is a dispute about this or other aspects of lay-off or short-time working, it should be referred to the Workplace Relations Commission to make a decision.

 What if my employer can’t/ won’t pay the redundancy lump sum?

If your employer is unable to pay your redundancy lump sum, you can apply to the Department of Employment Affairs & Social Protection for direct payment from the Social Insurance Fund by completing for RP50, to be found on welfare.ie. However, if you employer refuses to pay your redundancy lump sum you should first complete form RP77 from Revenue’s my Account service and submit this to your employer. If there is still no payment, you can bring a claim to the Workplace Relations Commission. This must be done within one year of your dismissal.

 What about holidays?

When you leave work, you are entitled to receive a payment for annual leave which you have earned but have not taken.

I am a member of the Communications Workers’ Union (CWU). What happens to my benefits if I leave?

Members of the CWU who hold policies with Halligan Insurance are able to continue those policies once they are in benefit at the time of retirement/ leaving.

Access to other funds (including Medical Fund/ Orphans Fund/ Sickness Benefit etc.) cease when membership ends.

What Social Welfare entitlements will I be able to claim?

For independent, impartial, and confidential advice regarding redundancy and Social Welfare entitlements, contact the Irish National Organisation for the Unemployed (INOU) on 01 8560088 or visit their website at inou.ie

If a person loses their job, they should immediately contact their local Social Welfare Office where they can apply for the two main unemployment benefits — Jobseeker’s Benefit or Jobseeker’s Allowance. This is important, as any delay in making a claim could result in a loss of payment.