01 May 2015

Updated May 2015

Gives introductory guidance on redundancy law. Defines redundancy and explains employees' rights including the notice of redundancy, redundancy pay and time off. Also covers Redundancy Certificates, redundancy top-up payments, collective redundancies including notifying the Minister and employees' representatives and consultation requirements, taxation, and challenging a redundancy related dismissal.

Redundancy is defined by section 7(2) of the Redundancy Payments Act 1967 which provides that an employee shall be taken to be dismissed by reason of redundancy if the dismissal is attributable wholly or mainly to:

  • the fact that their employer has ceased or intends to cease to carry on the business for the purposes of which the employee was employed by them, or has ceased or intends to cease to carry on that business in the place where the employee was so employed, or
  • the fact that the requirements of that business for employees to carry out work of a particular kind in the place where they were so employed have ceased or diminished or are expected to cease or diminish, or
  • the fact that their employer has decided to carry on the business with fewer or no employees whether by requiring the work for which the employee has been employed (or had been doing before their dismissal) to be done by other employees or otherwise, or
  • the fact that their employer had decided that the work for which the employee has been employed (or had been doing before their dismissal) should in the future be done in a different manner for which the employee is not sufficiently qualified or trained, or
  • the fact that their employer has decided that the work for which the employee has been employed (or had been doing before their dismissal) should in the future be done by a person who is capable of doing other work for which the employee is not sufficiently qualified or trained.

Any dismissal on the basis of redundancy must satisfy one of these definitions.

In addition, the employer must show that fair procedures were followed in carrying out any redundancies.

There is no redundancy if the employee’s contract:

  • is renewed, or
  • if the employee is re-engaged under a new contract by the same employer and the new arrangement is to take effect immediately, or
  • if the renewal or re-engagement follows an offer in writing made by the employer before the ending of the current contract and the new contract takes effect immediately or no later than four weeks from the end of the previous contract.

The Redundancy Payments Acts 1967 to 2012 provide three main rights to employees who have at least two years of continuous service. These relate to:

  • notice of redundancy
  • redundancy pay
  • paid time off to look for alternative employment or arrange for training.

Notice of redundancy

The Redundancy Payments Acts provide that an employee who is being made redundant and who has at least 104 weeks continuous service must be given notice in writing at least two weeks before the date on which the dismissal is due to take effect.

Employees will be entitled to longer notice periods if their contracts of employment provide for it or if their service warrants such longer notice under the Minimum Notice and Terms of Employment Act 1973 as amended.

The 1973 Act provides that if an employee has been in continuous service with the same employer for at least 13 weeks, they are entitled to a minimum period of notice. This notice period depends on the length of their service with the employer. The appropriate minimum periods of notice are set out in the table below.

Length of serviceMinimum notice
13 weeks to 2 years1 week
2 to 5 years2 weeks
5 to 10 years4 weeks
10 to 15 years6 weeks
15 years or more8 weeks

Redundancy pay

The amount of the statutory minimum lump sum payment is calculated as follows:

  • two weeks pay for each year of continuous and reckonable employment over the age of 16 years, plus
  • one additional weeks pay.

The statutory redundancy lump sum is subject to a maximum cap of €600.00 per week based on a ceiling on annual reckonable earnings of €31,200 per year. If the total amount of reckonable service is not an exact amount of years, the excess days shall be credited as a proportion of a year. For example, where an employee has worked for 4 years and 190 days the calculation of statutory redundancy should be based on 4.52 years' service.  

The Department of Social Protection has a redundancy calculator, which works out the amount due using employment start and finish dates.

Time off

The Redundancy Payments Acts provide that during the statutory two week redundancy notice period (which may run concurrently with the last two weeks of contractual notice if necessary), an employee is entitled to reasonable paid time off to look for new employment or to make arrangements for training for future employment. The employer may ask the employee to provide evidence of such arrangements.

The completion of Form RP50 is no longer a legislative requirement since the abolition of the employer's redundancy rebate for dates of dismissal falling on or after 1 January 2013. However, employers may find it useful to continue using the RP50 at a practical level given that it contains all of the information relevant to an employees' statutory redundancy payment and their receipt of it.

Employers are not legally obliged to pay anything on top of the normal statutory entitlements to employees who are to be made redundant, that is, notice and statutory redundancy. Employers may, however, wish to make some voluntary top-up payment on the basis that this is the industry norm. Indeed, an employee may have a contractual right to such a top-up payment which derives from their contract of employment, a collective agreement or from the custom and practice of their employer.

The Protection of Employment Acts 1977 as amended impose a number of obligations in relation to information and consultation on an employer where it is effecting a collective redundancy. A collective redundancy is one that involves making a specified number of employees redundant within a 30 day period.

The specified number of employees varies depending on the size of the employer’s workforce. The statutory thresholds are set out in the table below.

Total workforceThreshold number of redundancies
21 to 495 or more
50 to 9910 or more
100 to 29910% or more of the workforce
300 or more30 or more

Notification to the Minister

Employers who are making collective redundancies must give written notice of the proposed redundancies to the Minister for Jobs, Enterprise and Innovation. A copy of this notice must be sent to the employees’ representatives who may make observations to the Minister. The Minister has power to make further enquiries about the situation and to carry out investigations if necessary. The Minister should be notified at the earliest opportunity and, in any event, at least 30 days before the first dismissal takes effect. Where collective redundancies are effected by an employer before the expiry of the 30 day period, the employer is guilty of an offence and liable on conviction or indictment to a fine not exceeding €250,000.

In addition, the employer must consult with the Minister, or an authorised officer of the Minister, if requested to do so. Such consultations are intended to seek solutions to any problems caused by the proposed redundancies. For the purposes of such consultations, the employer must supply the Minister with as much information about the proposed redundancies as the Minister may reasonably require.

Notification to employees' representatives

The 1977 Act as amended requires the employer to give the employees' representatives written details of:

  • the reasons for the proposed redundancies
  • the number and descriptions of categories of employees to be made redundant
  • the number and descriptions of categories of employees normally employed
  • the period during which the redundancies are to be made
  • the criteria proposed for the selection of workers to be made redundant
  • the method proposed for calculating redundancy payments.
  • Under the Protection of Employees (Temporary Agency Work) Act 2012, the employer must also give details of the number of any agency workers engaged by the employer and their place and type of work.

The same information should be supplied to the Minister as soon as possible

Consultation requirements

The legislation obliges the employer to consult with employees’ representatives on the proposed redundancies to try to reach an agreement. The employees’ representatives are their trade unions or staff associations or, where there is no trade union or staff association, persons chosen by the employees to represent them.

The consultation must include discussions on:

  • The possibility of avoiding the proposed redundancies or reducing the numbers of employees affected. For example, by re-deploying or re-training employees.
  • The basis on which employees are to be selected for redundancy.

Consultations should be initiated at the earliest reasonable opportunity and at least 30 days before the first notice of dismissal is given. The obligation to consult is triggered where strategic decisions or changes in activities occur which compel the employer to contemplate or plan for redundancies.

Failure to initiate consultation with the employees' representatives, or to notify the Minister, is an offence and an employer is liable on summary conviction to a fine not exceeding €5,000.

For more information on informing and consulting employees, see our factsheet on the topic.

  • Statutory redundancy payments are paid tax-free.
  • Payments in lieu of untaken holidays are taxable.
  • Payments in lieu of notice are taxable if the employee’s contract provides for the possibility of such payments.
  • Redundancy top-up payments are taxable as termination payments by virtue of Section 123 of the Taxes Consolidation Act 1997.

Section 6(4)(c) of the Unfair Dismissals Acts says that a dismissal is fair if it results wholly or mainly from the redundancy of an employee. The employer, however, bears the burden of proof in establishing the legitimacy of any redundancy dismissal. In addition to this, the employer must also bear the burden of establishing that the employee was fairly selected for redundancy and that fair procedures were followed in carrying out any redundancies.

This factsheet was written by A&L Goodbody, Solicitors, IFSC, North Wall Quay, Dublin 1.

© A&L Goodbody Solicitors. The material is not intended to provide, and does not constitute, legal or any other advice on any particular matter, and is provided for general information purposes only.