IRISH REDUNDANCY PAYMENTS SCHEME

Redundancy Payments Act 2003 (Commencement) Order 2003

The Minister for Enterprise, Trade and Employment signed the above Commencement Order which brought Sections 1 to 6, 8, 10 and 13 to 17 of the Redundancy Payments Act, 2003 into operation on 25th May, 2003.

Section 10 provided for a new enhanced entitlement of two weeks statutory redundancy payment for every year of service, regardless of age, rather than the previous half week between 16 and 41 and one week over 41. The bonus week and employer 60% rebate continued.

The Department of Enterprise, Trade and Employment outlines the scheme as follows:

The Redundancy Payments Acts, 1967-2003 oblige employers by law to pay redundant employees what is known as " statutory redundancy entitlement". The amount is related to the employee's length of service and normal weekly earnings (gross weekly wage, average regular overtime and payment-in-kind, all added together, up to a maximum wage at of €600 per week regarding Notified Redundancies from 1st of January 2005 onwards ).

A redundancy situation arises where an employee's job ceases to exist, and the employee is not replaced for such reasons as rationalisation/reorganisation, not enough work available, the financial state of the firm, company closures etc.

Exactly who is covered?

  • An employee between the ages of 16 and 66 (Old Age Pension age)
  • with 104 weeks (two years) continuous service
  • You must be in employment that is insurable under the Social Welfare Acts. If you are a full-time employee you must be in employment that is fully insurable for all benefits under the Social Welfare Acts; this does not apply if you are a part time employee. The Department of Social and Family Affairs decide the question of insurability in accordance with the rules and procedures provided for in the Social Welfare Acts. An employee who wishes to appeal such a decision is advised to contact the Scope Section of that Department.

Rebates

Employers who pay the statutory redundancy entitlement and give proper notice of redundancy (at least two weeks) are entitled to a 60% Rebate from the Social Insurance Fund, into which they make regular payments themselves through P.R.S.I. contributions. The Redundancy Payments Section of the Department processes applications for these rebates - see Form RP50.

What happens if an employer fails to pay a redundancy lump sum?

Employers are obliged to make redundancy payments in accordance with the statutory requirements laid down under the Redundancy Payments Acts. In situations where the employer is unable to pay the employees their entitlements, the Department of Enterprise, Trade and Employment pays the full amount direct to the employees from the Social Insurance Fund (S.I.F.). The employee fills in Form RP50 and sends it into the Department (for useful details on this procedure, see section on Redundancy Forms below). The Department usually treats these applications as a priority, and later seeks reimbursement from the employer via its Redundancy Recoveries Section).

Calculation of Lump Sum.

  • Two weeks pay for each year of employment continuous and reckonable between the ages of 16 and 66 years
  • in addition, a bonus week. All excess days should be calculated as a portion of 365 days. i.e 4 years 190 days = 4.52 years
  • Reckonable service is service EXCLUDING ordinary sick leave over and above 26 weeks, occupational injury over and above 52 weeks. All Breaks in Service should be within the last three years prior to the Date of Termination.

Reckonable service also excludes absence from work because of lay-offs or strikes. However, short-time work is reckonable.

All calculations are subject to the ceiling referred to above, which stands at €600 per week with respect to Notified Redundancies from 1st of January 2005 [or €507.90 prior to that date.]

Please note that you can now check a calculation at the online redundancy calculator.

Employment Appeals Tribunal

Disputes concerning redundancy payments can be submitted to the Employment Appeals Tribunal which has the advantage of providing a speedy, fair, inexpensive and informal means for individuals to seek remedies for alleged infringements of their statutory redundancy rights. The Tribunal also deals with disputes under such other labour law areas as the Minimum Notice and Terms of Employment Acts, 1973 to 2001. These cover the right of workers to a minimum period of notice before dismissal, provided they are in continuous service with the same employer for at least 13 weeks and are normally expected to work at least 8 hours per week.

The Tribunal also deals with the Unfair Dismissals Acts, 1977 to 1993 and the Protection of Employees (Employers' Insolvency) Acts, 1984 to 2003 (dealing with such areas, amongst others, as arrears of pay due to an employee, holiday and sick pay etc.) where the employer is insolvent.

IMPORTANT: Please note -

  1. This Layperson's Guide does not purport to be a legal document or to give a legal interpretation of the Redundancy Payments Acts, 1967 to 2003 or of any other Acts referred to.
  2. The Guide should be used as an Introduction to the Department of Enterprise, Trade and Employment's more detailed "Guide to the Redundancy Payments Scheme" and not as an alternative to it.

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