With the ending of the Pandemic Unemployment Payments (PUP) on 25 February 2022, plus the Employers Wage Subsidy Scheme (EWSS) later this year, there will be unfortunately and inevitably businesses closing down and redundancies arising.

Do not panic. For some, it is the yellow brick road, a potential new challenge that could work out very well for you and your family. Embrace the opportunity but know all the facts and figures on entitlements so you start on the right footing.

John Lowe of MoneyDoctors.ie has all the details to share.

There are various circumstances in which people receive compensation for loss of employment. The most common is where you are made redundant and you get a settlement, which may include the statutory redundancy lump sum, and a further sum negotiated by you or your trade union with the employer.

A lump sum that is payable as part of your pension arrangements when you retire is not in the same category.
The statutory redundancy payment is a lump-sum payment based on the pay of the employee. All eligible employees are entitled to:

  • Two weeks' pay for every year of service over the age of 16 and
  • One further week's pay

The amount of statutory redundancy is subject to a maximum earnings limit of €600 per week (€31,200 per year).

Pay refers to your current normal weekly pay including average regular overtime and benefits-in-kind, but before tax and PRSI deductions, that is your gross pay.

On the date of the termination of employment your employer must give you a "Redundancy Certificate" - section B of form RP50 - and should pay the redundancy lump sum due to you.

If you receive a lump sum in compensation for the loss of employment, part of it may be tax free. The statutory redundancy lump sum is always tax free. The lump sum that you receive in compensation for loss of employment could include:

  • The statutory redundancy lump sum, which is non-taxable
  • Payment in lieu of notice. This qualifies for some tax relief, see 'Basic Exemption' below, except in the case where a contract provides for the payment of a lump sum at the end of the contract period.
  • Other compensation negotiated with your employer or ordered by a court or the Employment Appeals Tribunal.

Tax-free entitlements

On a redundancy or retirement payment, you are entitled to the higher of the following which is then exempt from tax:

  • Basic Exemption

The basic exemption due is €10,160 plus €765 for each complete year of service. (This does not include statutory redundancy which is tax free.)

  • Basic Exemption plus Increased Exemption

An additional €10,000 called the Increased Exemption is also available in the following certain circumstances:
If you haven't received a tax-free lump sum in the last 10 years and you are not getting a lump sum pension payment now or in the future.

If you are in an occupational pension scheme, the Increased Exemption is reduced by any tax-free lump sum from the pension scheme you may be entitled to receive.

Standard Capital Superannuation Benefit (SCSB)

This is an additional relief due that normally benefits those with high earnings and long service. It can be used if the following formula gives an amount greater than either basic exemption or Basic Exemption plus Increased Exemption.

The formula for SCSB: Take the average annual earnings over the previous 3 years, multiply this figure by the number of years' service; divide by 15 and subtract the lump sum superannuation payment received or that may be receivable.

Jobseeker's Benefit

To qualify for Jobseeker's Benefit you must:

  • Be unemployed (you must be fully unemployed or unemployed for at least 3 days out of 6)
  • Be under 66 years of age
  • Have enough social insurance (PRSI) contributions
  • Be capable of work
  • Be available for and genuinely seeking work
  • Have had a substantial loss of employment and as a result be unemployed for at least 3 days out of 6.

Redundancy

If you are under 55 and get a redundancy payment of more than €50,000 you are disqualified from claiming Jobseeker's Benefit. The table below shows how long you may be disqualified for.

The length of the disqualification is at the discretion of the deciding officer (who can take your circumstances into account). Any period of disqualification is subtracted from your total Jobseeker's Benefit entitlement. So if you are disqualified for three weeks (which is 18 days payment) your JB claim starts on day 19.

Amount of redundancy payment Period of disqualification

  • €50,000.00 - €55,000 1 week
  • €55,000.01 - €60,000 2 weeks
  • €60,000.01 - €65,000 3 weeks
  • €65,000.01 - €70,000 4 weeks
  • €70,000.01 - €75,000 5 weeks
  • €75,000.01 - €80,000 6 weeks
  • €80,000.01 - €85,000 7 weeks
  • €85,000.01 - €90,000 8 weeks
  • €90,000.01 and over 9 weeks

How to apply

You should apply for Jobseeker's Benefit the first day you become unemployed.

It is important to apply on the first day you become unemployed because you will not get paid for the first three days of your claim.

Jobseeker's Benefit application forms are now available online. You can also get an application form at your Social Welfare Local Office.

Documentation needed

If you lose your job or are made redundant

  • If you lose your job or are made redundant you should bring your P45 or a letter from your employer confirming the last day you worked.
  • If you don’t have your P45 or a letter from your employer you should still apply. However, it is important to bring either your P45 or a letter from your employer as soon as possible to your Social Welfare Local Office.
  • If you have difficulty getting your P45 from your employer, tell the member of staff dealing with your claim at your Social Welfare Local Office.

If you are made redundant you will also need to bring documentation showing how much redundancy you have received. If you are getting only statutory redundancy you need to bring your RP 50. If you are getting more than statutory redundancy you should bring a letter from your employer stating how much redundancy you have been given.

If your claim for redundancy hasn’t yet been settled you should still apply for Jobseeker’s Benefit. When you get your redundancy payment you must inform your Social Welfare Local Office.

You will need to bring the following documents with you when you apply for Jobseeker’s Benefit (JB):

  • Your Personal Public Service Number (PPS #) and details of your income
  • Details of your availability for work and any efforts you have made to get work. For example, letters you have written to employers and any responses you have received

You will need to bring the following documents with you when you apply for Jobseeker’s Benefit (JB):

  • Your Personal Public Service Number and details of your income
  • Details of your availability for work and any efforts you have made to get work. For example, letters you have written to employers and any responses you have received
  • Proof of your identity and proof of address – see below for more information

Evidence of identity

  • You can provide evidence of your identity by showing your passport or your driver’s license. If you do not have either a passport or driver’s license, you should bring any other document that you may have, particularly one that has your photograph on it.

Evidence of address

You may be asked to show evidence of your address. You should bring any of the following documents:

  • Recent bills from utility companies such as electricity, telephone (landline or mobile), gas, cable television, waste charges etc.
  • Recent statements/letters from banks, building societies, credit unions, credit card companies or other financial institutions

All the details are there for you if you are in a redundancy position but remember there is plenty of advice and support available. You will not be alone.

For more information click on John Lowe's profile above or on his website.

The views expressed here are those of the author and do not represent or reflect the views of RTÉ.