Redundancy - Rights and Obligations
Employers must be aware of their responsibilities when a redundancy situation arises and also employees should be satisfied that they receive their minimum statutory entitlements if they find themselves in an unfortunate redundancy situation. We regularly advise both employers and employees in this area and can be contacted on a confidential basis to discuss your concerns without obligation.
A short summary of the law can be set out as follows:
The Redundancy Payments Acts obliges 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, up to a maximum wage of €600 per week.
A redundancy situation arises where an employee’s job ceases to exist and the employee is not replaced. There may be many reasons for this such as rationalisation/reorganisation/not enough work available/the financial state of the firm/company closures etc.
The law applies to employees over the age of 16 with 104 weeks continuous service. The employee 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 but 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.
Employers are obliged to make redundancy payments in accordance with the statutory requirements laid down under the Redundancy Payments Acts. Employers who pay the statutory redundancy entitlement and give proper notice of redundancy, that is at least two weeks, are entitled to a 60% rebate from the Social Insurance Fund.
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 and later seeks reimbursement from the employer via its Redundancy Recoveries Section.
The rate of statutory redundancy payment is two weeks pay for each year of continuous and reckonable employment plus a bonus week subject to the ceiling of €600 per week. Employers may choose to pay above this rate but are not obliged to do so unless contracted to pay at a higher rate.
You can access the Department of Enterprise Trade and Employment online redundancy calculator here.
30 August 08