October 14, 2021
Budget 2022 was announced on the 12th October, 2021. It is Minister for Finance, Paschal Donohoe’s fifth budget and the second of the coalition government between Fianna Fáil, Fine Gael...
Severance Pay Advice for Employees
If you have been made redundant, advised your role is ‘at risk’, or if you have been approached to consider voluntarily departing your role, Lavelle Partners can assist you in ensuring your best interests are protected. Within Ireland, the Redundancy Payments Act of 1967-1991 defines the minimum entitlement to a redundancy payment based on the number of weeks service with your employer (two years). As such, not all employees are entitled to a redundancy/severance package in Ireland.
For information on your employer’s legal obligations with regard to redundancy, click here.
For those who have been approached to depart their role voluntarily, voluntary severance pay may be owed.
With the necessary legal advice and expertise at your disposal, you can negotiate a package which works in your favour, in your interests, and those of your family.
As a minimum, you must, provided you have completed at least two years’ service be paid a statutory severance payment, which is calculated as two week’s pay for every year of service, and one further week’s pay. This is paid tax-free but is capped at €600 per week.
Your employer may, however, agree to pay you more than the statutory amount, perhaps in the form of a lump sum, or ex-gratis payment which may in part be free of taxation.
When calculating your total length of service, there may be an adjustment made for absences from work, but this only applies to time off work in the last three years and should only reflect non-reckonable service, including:
No other absences can be included to reduce your length of tenure, and hence your redundancy payment.
Voluntary severance pay differs from redundancy pay as outlined above, in that it reflects compensation for voluntarily leaving your position – i.e. it is mutually agreed between you and your employer. Some employers rather than impose redundancy on some members of staff will ask for volunteers to leave the organisation given a financial incentive.
Unlike redundancy payments, voluntary severance pay is taxable and you may not be entitled to Jobseeker’s allowance – as in essence, you chose to leave your paid position.
Lavelle Partners work with Talbot Pierce to provide a seamless service in respect of Human Resource Management. Talbot Pierce are a team of specialist HR professionals who work with us on a range of matters including advice on and delivery of conflict/dispute resolution solutions, best-practice HR strategies, policies and procedures.
For further information on severance packages in Ireland, please contact Lavelle Partners in confidence on (01) 644 5800*.
*Please note that fees apply to all consultations.
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