The number of redundancies in Ireland and around the world is increasing at a record rate with the global financial crisis.
Losing your job is one of the most stressful financial times in a person's life and if you've been made redundant it's important you know your rights to make sure you end up in the best financial position possible.
Ireland's Statutory Redundancy Payments
If you are made redundant there are minimum statutory redundancy payments that your employer must pay you. This amount will be determined by the length of time you have worked for that employer and your gross weekly pay. You are entitled to:
- Two weeks' pay for every year of continuous employment with that employer.
- An additional one week's pay. Your gross weekly pay is your basic wage before tax and deductions and includes the average amount of any other benefits such as overtime.
Note that this payment is subject to a maximum of €600 per week.
What about tax?
Your lump sum redundancy payment is treated as income and will be taxed according to Ireland income tax rates for the tax year in which you receive it. However there are provisions in place to reduce the amount of tax you will pay on your redundancy. If you are made redundant in Ireland you will be entitled to claim tax relief on your redundancy payment under one of the following three exemptions:
- Basic exemption: You can receive up to €10,160 tax-free as a lump sum payment plus an additional €765 for each complete year of service.
- Increased exemption: You may be able to increase your tax-free exemption payment to up to €20,160 (plus the €765 for each year of service) if you haven't claimed for an increased exemption payment in the last 10 years or received a tax-free lump sum payment under an approved pension scheme.
- Standard capital superannuation benefit: This benefit allows people with a long-service record to receive a higher tax-free sum.