When a redundancy is genuinely a redundancy
The test is that the job is disappearing, not the person. A redundancy arises where the business is closing, the role is no longer needed, the work is being done differently, or fewer people are required for the same work.
If you replace the person afterwards, it was not a redundancy, and you are exposed to an unfair dismissal claim. That is the single most common way an Irish employer turns a manageable cost into an expensive one.
Who qualifies
- Aged 16 or over.
- At least 104 weeks of continuous service with you.
- In fully insurable employment.
Calculating the statutory payment
| Component | Amount |
|---|---|
| Per year of continuous service | Two weeks' gross pay |
| Plus | One additional week's gross pay |
| Ceiling on gross weekly pay | €600 |
| Tax treatment | Tax-free |
The €600 ceiling applies to the whole calculation, so an employee earning €1,200 a week is treated as earning €600 for this purpose. That caps the maximum statutory cost at a level most employers find lower than expected — which is precisely why ex gratia payments are so common.
Ten years' service at or above the ceiling produces 21 weeks at €600, which is €12,600, tax-free. That is the statutory floor. Whether you pay more is a commercial and reputational decision, not a legal one.
Notice you must give
You must give at least two weeks' notice of redundancy, and the employee's statutory minimum notice under the Minimum Notice and Terms of Employment Acts applies in addition, running from one week up to eight depending on length of service. Contractual notice, where it is longer, takes precedence.
Employees are also entitled to reasonable paid time off during the notice period to look for new work.
Paying more than the statutory minimum
Ex gratia payments are common and they are taxed differently from the statutory lump sum. Three reliefs may apply, and the employee takes whichever is most favourable.
- The basic exemption, currently €10,160 plus €765 for each complete year of service.
- The increased exemption, which adds a further amount where the employee is not in an occupational pension scheme or waives the right to a lump sum from it, subject to conditions and not available if the relief was used in the previous ten years.
- The Standard Capital Superannuation Benefit, which is usually the most valuable for long-serving, higher-paid employees and is calculated from average pay and service.
Collective redundancies change the process
Once you cross the collective redundancy thresholds, an entirely separate consultation regime applies and the timing is no longer yours to set.
| Employees in the establishment | Redundancies that trigger the rules |
|---|---|
| 21 to 49 | 5 |
| 50 to 99 | 10 |
| 100 to 299 | 10% of the workforce |
| 300 or more | 30 |
Where the thresholds are met you must consult employee representatives at least 30 days before the first dismissal takes effect, and notify the Minister. Proceeding with dismissals inside that 30-day window is an offence.
What it costs you, in full
- The statutory lump sum, tax-free to the employee and a deductible expense for the business.
- Any ex gratia payment on top.
- Notice pay, or pay in lieu of notice.
- Accrued but untaken annual leave, and any public holiday entitlement.
- Employer PRSI on the taxable elements.
Get the calculation and the tax treatment right before you make an offer. Reopening a figure after the employee has accepted it is where redundancies become disputes.