Tánaiste Leo Varadkar has confirmed that from 30 September workers' rights will be restored to trigger redundancies again.
He said the Government was stepping in with a financial package to ensure there is not a financial burden on employers and workers are "not out of pocket" either.
In a statement, the Department of Enterprise said that the measure will ensure workers "won't be left short of their redundancy entitlements".
The rules around employee rights changed during Covid-19 when, in March 2020, the Government introduced emergency measures in response to the pandemic.
It meant workers who were temporarily laid off or put on short time hours because of Covid-19 were not allowed to claim redundancy.
The department said this rule was introduced to "reduce the pressure on employers who were already struggling and to reduce the number of insolvencies and permanent job losses over the course of the pandemic".
That rule will be suspended at the end of this month.
Mr Varadkar said they estimate this redundancy scheme will cost between €30m to €130m over the next three years as it will continue until 2024.
He said every candidate can receive up to €1,860 under this statutory redundancy.
The Tánaiste also said it was impossible to estimate how many redundancies will happen over the coming months following today's decision.
A department stated added: "To support employers, where they are unable to meet their financial obligations in paying statutory redundancy to their employees, the State will fund statutory redundancy payments from the Social Insurance Fund on their behalf.
"A flexible and discretionary approach will be taken in relation to recovery of the redundancy debt and in many cases the debt can be repaid over a number of years."
The Minister for Public Expenditure, Michael McGrath, has said the redundancy payment decision is the "right thing to do" and the right time to do it, as the economy has "essentially fully reopened".
Speaking at a Government briefing this afternoon, he said it is appropriate and fair that the Exchequer funds the contribution for the relevant period, and he acknowledged that it will add some pressure to the Social Insurance Fund.
Minister for Social Protection Heather Humphreys said they hope the redundancy scheme will be in place early next year and she is working with the Tánaiste on the final details of that.
She said the number of people on those on the Pandemic Unemployment Payment has fallen to just over 110,000.
"That is a decrease of almost 500,000 compared to the peak of the virus last year."
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The Irish Congress of Trade Unions has said it is likely there will be a wave of redundancies post-pandemic as sectors of the economy reassess their performance as the economy slowly reopens.
The general secretary of ICTU, Patricia King, said the Government's move to restore the right of workers to claim redundancy payments is a good one, as ICTU had argued it was unfair not to allow claims to proceed.
Speaking on RTÉ's News at One, she said it was noteworthy that the lump sum on offer will include the time lost when workers were out of work as a result of the pandemic.
She said the decision to run the scheme until 2024 is the right one, as the full effect of job losses as a result of the pandemic will not be felt for a number of years.
"It's very difficult to predict how this is going to go", Ms King said, adding that workers should not lose out under the scheme announced today.