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Redundancy

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What is Redundancy?

Redundancy occurs when a person loses their job due to closure of a company or a reduction in staff levels. The key element of redundancy is that the job ceases and the person is not replaced by another person. This situation may arise due to lack of work, financial limitations, dismantling of the corporate structure etc.

Who is eligible for statutory redundancy payment?

Redundancy may be covered in your contract of employment. If it is, then employers are obliged to pay the amount contracted for. If it is not provided for in your contract or your contract provides for less in the statutory minimum then you are covered by the aforementioned Acts. The statutory redundancy entitlement is related to the employee's length of service and normal weekly earnings i.e. gross weekly wage, average regular overtime and payment in kind, all added together, up to a maximum wage of €600 per week.

You are only covered if:-

  1. You are aged between 16 and 66;
  2. You have 104 weeks (two years) continuous service.
  3. You are in employment that is insurable under the Social Welfare Acts.
  4. Full-time workers, part-time workers, agency workers and apprentices are covered under the Redundancy legislation; however they must fulfil the criteria listed above.

How is the statutory lump sum (which is tax free) calculated?

  1. Two weeks pay per each year of employment continuous and reckonable between the ages of 16 and 66 years. Maternity leave and additional maternity leave are fully reckonable for redundancy calculation purposes though only for the 3 year period ending on the date of termination of employment.
  2. In addition a bonus week.

See www.entemp.ie/employment/redundancy/calculator.htmfor an online statutory redundancy payment calculator provided by the Department of Enterprise Trade and Employment

If your employer is unable to pay you your entitlement, the Department of Enterprise Trade and Employment pays the full amount directly to you from the social insurance fund.

Disputes concerning redundancy payments can be submitted to the Employment Appeals Tribunal.

Under what conditions is redundancy selection permitted?


A valid redundancy situation is deemed to have occurred where a dismissal occurs due to one of the following reasons:

  1. An employer has ceased (or intends to cease) to carry on the business for the purposes that the employee was originally employed
  2. An employer has ceased (or intends to cease) to carry on that particular business in the place where the employee was employed.
  3. The business no longer requires an employee to carry out the particular work that the employee was originally employed to do so.
  4. An employer has decided to carry on the business with fewer or no employees. (The employer may require the work for which the employee had been employed to be done by other employees or otherwise.
  5. Where an employer has decided that the work for which the employee has been employed should henceforth be done in a different manner for which the employee is not sufficiently qualified or trained.
  6. Where an employer has decided that the work for which the employee has been employed (or had been doing before his dismissal) should henceforth be done by a person who is also capable of doing other work, for which the employee is not sufficiently qualified or trained.

When is redundancy selection prohibited? (Unfair Selection for Redundancy)

Although a redundancy situation exists, you may have grounds for complaint if the manner of your selection for redundancy was unfair.


In selecting a particular employee for redundancy, an employer should apply selection criteria that are reasonable and are applied in a fair manner. You are entitled to bring a claim for unfair dismissal if you consider that you were unfairly selected for redundancy or consider that a genuine redundancy situation did not exist. Examples of these situations might include where the custom and practice in your workplace has been last in, first out and your selection did not follow this procedure. Another example may be where your contract of employment sets out criteria for selection which were not subsequently followed.


If an employee can establish that a redundancy was as a result of any of the following conditions then it is automatically deemed as unfair selection for redundancy i.e. Redundancy on the basis of:

  1. Trade Union Activity
  2. Pregnancy
  3. Religious or political opinion

In addition, according to the Employment Equality legislation, selection for redundancy may not be due to any of the following grounds:

  1. Gender
  2. Marital status
  3. Family status
  4. Age
  5. Disability
  6. Religious belief
  7. Race
  8. Sexual orientation
  9. Membership of the travelling community

Remedies available:

If an individual is successful in establishing a claim for unfair selection for redundancy, then the following remedies are available before the Rights Commissioner or the Employment Appeals Tribunal (or the Equality Tribunal if it relates to a breach of the Employment Equality Acts):

  1. Reinstatement: This involves being reinstated to your position as if you had never been dismissed. You are entitled to all Lost Earnings from the date of the dismissal to the date of the hearing and also entitled to any favourable changes in the interim period, such as pay rises.
  2. Re-engagement: This involves being restored to your prior position but only from a particular date, for example from the date of the decision in your favour. You are not entitled to compensation for lost earnings.
  3. Compensation: This is the most common remedy. The Employment Appeals Tribunal are entitled to award compensation up to a maximum of two years lost remuneration and will reference their awards to earnings which have been lost during the period spent attempting to secure alternative employment. In that regard it is important that an applicant has documentation to evidence continual attempts to secure employment as there is also a duty at law to mitigate or reduce the loss of earnings claim by obtaining or endeavouring to obtain alternative employment.

Time Limit- Statute of Limitations

The time limit imposed for submitting a claim in relation to Unfair Dismissal to the EAT is 6 months from the date the notice period expires; however it may be extended to 12 months if there are exceptional circumstances. It should be noted that this extension is rarely given.


The time limit imposed for submitting a claim to the Equality Tribunal in relation to discriminatory dismissal is also 6 months; however it may be extended to 12 months if "reasonable cause" for the delay can be shown.

Seeking Employment Law Advice

If you would like to set up a consultation with an Employment Law Solicitor please contact Malcomson Law by calling 01 8744422.