Redundancy payments will depend on the terms and conditions detailed on your contracts of employment, employee handbook, and policies and procedures, so you will need to refer to these documents.
Statutory redundancy payment entitlement begins when an employee has 2 years continuous service and the statutory redundancy payment is 2 weeks per year of service plus a bonus week.
The payment depends on hours of work and salary but the statutory redundancy payment is capped at €600 per week. There is a redundancy calculator online at https://www.gov.ie/en/service/redundancy-calculator/
The documents mentioned above will detail your company policy with regards to any redundancy payments in addition to the statutory payment. Some employers pay ex-gratia payments in redundancy situation and some do not. In some cases, companies will offer or make ex-gratia payments in exchange for a signed, full and final settlement agreement.
A full and final settlement agreement is a document that an employee signs to say that they have no complaints with the company and that indemnifies the company from any future claims being made against it.
As mentioned in a previous article, the Redundancy Payment Acts changed during Covid-19. Before, if employee was on layoff or short time for 4 weeks or more, or 6 weeks in a 13 week period, the employee could give written notice of their intention to claim redundancy if the employer could not guarantee or return an employee to their previous arrangements in terms of hours of work and/or full employment. This section of the Act was paused until November 30th, 2020 and we’ll have to wait and see what happens after November 30th.
Redundancy Social Insurance Fund
This is in place for employers who can’t afford to pay Redundancy payments. If you are not in a position to pay redundancy payments, the RP50 form must be completed, and both you and the employee will need to sign it before it goes to the DSP to get processed. The employer does have to repay the government, but there is flexibility in terms of timing. If you apply, you have to show accounts and DSP normally look for an audited set of accounts.
EMPLOYER INSOLVENCY PAYMENTS
The Protection of Employees (Employers’ Insolvency) Acts 1984–2012 protect certain outstanding entitlements relating to the pay of employees in the event of their employers becoming insolvent as defined in the Acts.
If you become insolvent these are some areas where the DSP may pay.
- Arrears of pay e.g. if you have no money to pay wages (including arrears of pay due under an Employment Regulation Order).
- Holiday and sick pay.
- Entitlements under the minimum notice and terms of employment, employment equality and unfair dismissals legislation.
- Court orders in respect of wages, holiday pay or damages at common law for wrongful dismissal.
- The Insolvency Payments Scheme also protects employees’ outstanding contributions to occupational pension schemes which an employer may have deducted from wages but not paid into the schemes.
- Unpaid contributions to an occupational pension scheme on an employer’s own account may also be paid from the Fund, subject to certain limits.
The Scheme covers employees who are over 16 years of age and are in employment which is insurable for all benefits under the Social Welfare Acts and includes those over 66 years of age who are in employment which, but for their age, would be insurable for all benefits under the Social Welfare Acts.
The Scheme applies to outstanding pension contributions for up to a year prior to the date of insolvency defined in the Acts.
The Insolvency Payments Scheme also protects employees’ outstanding contributions to occupational pension schemes which an employer may have deducted from wages but not paid into the schemes. Unpaid contributions to an occupational pension scheme on an employer’s own account may also be paid from the Fund, subject to certain limits.
The redundancy payments made to your employees under the Insolvency Payment Scheme must be repaid by the employer when they are able.
EMPLOYEES ON PUP & EWSS
If you have people on PUP and you are looking at redundancy, there is no need to bring employees back on the payroll and take them off PUP for the consultation process. Just bring them in for the meetings and pay them for coming into the meetings through payroll.
If you have Employees on EWSS then the employees are still working.
If you do have people on the EWSS check with your accountant if you are going down the redundancy road and make sure your meeting all the obligations under T&C’s of participating in the EWSS Scheme.
Redundancy payments will be based on employee’s full rate of pay not on any temporary pay they are on right now, so, if you are looking at Redundancy, it’s full rate of pay for redundancy payment calculation.
Next week, I’ll cover Collective Redundancies and Managing Employee Reactions.
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