Redundancy Payments (Amendment) Act 2022 commenced

May 03, 2022

This latest amendment to redundancy payments legislation was introduced to ensure that employees who missed out on reckonable service for statutory redundancy payment entitlement due to Covid-19 related temporary lay-off over the last two years are not disadvantaged.

The Redundancy Payments (Amendment) Act 2022 provides for the Covid-related Lay-off Payment. The Covid-19 Related Lay-off payment is paid by the State to cover periods of lay-off between 13 March 2020 and 31 January 2022 caused by essential Covid-19 related restrictions.

Under statutory redundancy rules, periods spent on lay-off within the final three years of an employee’s service do not count as reckonable service for the purposes of statutory redundancy payments. The Act ensures that employees who are made redundant, are eligible for a statutory redundancy payment and were placed on lay-off due to Covid-19 restrictions are not disadvantaged in the calculation of their redundancy entitlements.

The amount an eligible worker will receive will depend on the length of time they were placed on lay-off due to COVID-19 before the date they were made redundant. The calculation for the payment is based on existing statutory redundancy rules. The maximum to which any employee will be entitled is €2,268 if they earned €600 or more a week and were laid off due to Covid-19 restrictions for the full period from 13 March 2020 to 31 January 2022.

What does this change for the employer?

The scheme will not impact on the employer’s responsibility to pay the normal statutory redundancy payments, which excludes layoff periods due to Covid-19 restrictions. However, as outlined above, the State will provide a payment to employees who lost out who have lost out on reckonable service while they were on lay-off due to Covid-19 restrictions, and have subsequently been made redundant, a special payment of up to a maximum payment of €2,268 tax-free to bridge the gap in their redundancy entitlements.

The lump sum payable under the legislation will continue to be paid by the employer directly to the employee and the amount of said payment is related to the employee’s length of service with that employer and his or her normal earnings.

Guidance from the Department of Social Protection indicates that an employer should apply for the payment on behalf of an employee whose role has become redundant.

Employers and employer representatives can apply online at Welfare Partners. If the employer does not apply, the employee is advised to contact the redundancy payments section in the Department of Social Protection.

Calculation of statutory redundancy

The Department of Social Protection until recently operated an on-line redundancy calculator. This service was decommissioned towards the end of 2021. The Department has provided a new information notice to assist clients to calculate a redundancy entitlement which is available here.

The Department has indicated that a new on-line calculation service will be available in the coming weeks.