BrightPay Blog


Oct 2017

25

Making an Employee Redundant

A redundancy situation can often arise in the following situations:

  • an employee’s job ceases to exist
  • the employer ceases to carry on the business
  • the requirement for employees has diminished
  • an employee is not skilled for work that is to be done

 

In the event of a redundancy, employees are covered under Redundancy Payments Acts 1967-2014, if they meet the following requirements:

  • aged 16 or over
  • have at least 2 years continuous service (104 weeks)
  • are a full-time employee insurable under PRSI class A, or PRSI Class J for a part-time employee


How to calculate Statutory Redundancy Pay

Statutory Redundancy is payable at a rate of:

  • 2 weeks’ pay for each year of service. If the period of employment is not an exact number of years, the excess days are credited as a portion of a year
  • plus one week’s pay

The term ‘pay’ refers to the employee’s current normal gross weekly pay, including average regular overtime and benefits in kind. The above, however, is based on a maximum earnings limit of €600 per week (before PAYE, PRSI & USC).

An employer may also choose to pay a redundancy payment above the statutory minimum. In such circumstances, the statutory payment element will be tax free but some of the lump sum payment may be taxable.

 


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Posted byMarzena IgnarinEmployee Records