Under the Redundancy Payments Acts, an employee is taken to be dismissed by reason of redundancy if the job in which he had been employed is to cease to exist. Redundancy mainly covers situations where there is a reduction in the number of employees. It may, however, include circumstances where a restructuring is taking place, with job functions being undertaken by other employees. In all cases of redundancy, it is vital that the circumstances should not solely satisfy one of the definitions of redundancy, but also that a fair selection should take place. Generally speaking, the practice by which the last employee to have been employed in the particular function that is ceasing or being altered, should be the first one selected for redundancy is regarded as fairest. However, this is not necessarily the only basis to be applied, and other relevant considerations may on occasions justify the selection of particular employees for redundancy.
Subject to the above, an employee whose position is being made redundant is entitled, provided that he has had two years' continuous service, is aged between 16 and 66 years, and PRSI has been properly discharged in relation to the employment, to receive a statutory lump sum payment. Subject to a statutory ceiling of IRo300 per week (IRo15,600 per annum), the lump sum is calculated at half a week's pay for each year of employment under the age of 41, together with one week's pay for each year of employment over the age of 41, together with a further week's pay. Particular notice must be given to the employee and to the Minister for Enterprise & Employment, and if that is given, the employer may be able to recover a proportion (currently 60%) of the lump sum from the State.
It is the practice in many redundancies for the employer to make a severance payment greater than the statutory level. Such sum may depend upon previous practice, any collective agreement with a trade union, and the strength or weakness (as applicable) of the employer in the particular circumstances.
Whilst the statutory lump sum payable is receivable by the employee free of tax, tax considerations arise in relation to additional payments.
The legislation sets out conditions where employees are not entitled to receive a redundancy payment, for example, where the business of one employer is being transferred to another, and the employee is being offered a contract of employment by the new employer on identical or similar terms.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
Subject to the above, an employee whose position is being made redundant is entitled, provided that he has had two years' continuous service, is aged between 16 and 66 years, and PRSI has been properly discharged in relation to the employment, to receive a statutory lump sum payment. Subject to a statutory ceiling of IRo300 per week (IRo15,600 per annum), the lump sum is calculated at half a week's pay for each year of employment under the age of 41, together with one week's pay for each year of employment over the age of 41, together with a further week's pay. Particular notice must be given to the employee and to the Minister for Enterprise & Employment, and if that is given, the employer may be able to recover a proportion (currently 60%) of the lump sum from the State.
It is the practice in many redundancies for the employer to make a severance payment greater than the statutory level. Such sum may depend upon previous practice, any collective agreement with a trade union, and the strength or weakness (as applicable) of the employer in the particular circumstances.
Whilst the statutory lump sum payable is receivable by the employee free of tax, tax considerations arise in relation to additional payments.
The legislation sets out conditions where employees are not entitled to receive a redundancy payment, for example, where the business of one employer is being transferred to another, and the employee is being offered a contract of employment by the new employer on identical or similar terms.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
