Redundancy Advice Ireland: What You Need to Know Before You Sign Anything

Losing your job is never easy. Whether you saw it coming or it arrived completely out of the blue, redundancy triggers a flood of questions — about money, about what comes next, and about whether you’re being treated fairly. At Money Maximising Advisors Limited, we’ve helped countless individuals across Ireland navigate this exact situation, and one thing is clear: the decisions you make in the first few weeks after redundancy can shape your financial future for years to come.

This guide is designed to give you straightforward, plain-English advice on your rights, your entitlements, and the smart financial moves to make right now.

What Exactly Is Redundancy?

In Ireland, redundancy occurs when an employer needs to reduce the number of employees due to business reasons — such as restructuring, company closure, a reduction in work, or the introduction of new technology. Under the Redundancy Payments Acts 1967–2014, if you’ve been in continuous employment for at least two years, you are legally entitled to a statutory redundancy payment.

It’s important to note: redundancy must relate to the job, not the person. If an employer selects employees for redundancy based on personal reasons or protected characteristics such as age, gender, or disability, that may constitute unfair dismissal rather than genuine redundancy.

What Is the Statutory Redundancy Payment in Ireland?

The statutory redundancy entitlement in Ireland is calculated as follows:

• Two weeks’ pay for every year of service, plus
• One additional bonus week’s pay

This is capped at a weekly earnings ceiling of €600 per week (as of current legislation). So, if you’ve been with an employer for 10 years, you’d typically be entitled to 21 weeks’ pay (10 × 2 + 1 bonus week), capped accordingly.

Crucially, statutory redundancy payments are entirely tax-free. Any enhanced or ex-gratia redundancy payment above the statutory amount may also qualify for certain tax exemptions — but this is where many people miss out significantly by not seeking proper advice.

Tax Exemptions You May Not Know About

This is where the real financial planning begins. Beyond the statutory payment, you may be entitled to additional tax-free reliefs when receiving a lump sum from your employer:

Basic Exemption: Up to €10,160, plus €765 for each full year of service, is exempt from income tax. This is available to everyone, regardless of whether they’ve previously claimed it.

Increased Exemption: If you haven’t made any pension lump sum claims in the previous 10 years, the basic exemption can increase by up to €10,000.

Standard Capital Superannuation Benefit (SCSB): If you’ve been a long-serving employee with a high salary, this formula — which takes 1/15th of your average annual pay over the last three years, multiplied by your years of service, minus any tax-free pension lump sum — could be more beneficial than the basic exemption.

Choosing the wrong relief can cost you thousands. A financial advisor can run the numbers for your specific circumstances and ensure you claim the most advantageous option.

Your Redundancy Checklist: Steps to Take Immediately

If you’ve just been made redundant — or have been told redundancy is coming — here’s what to focus on:

1. Confirm your entitlement in writing. Your employer must give you a completed RP50 form (or equivalent documentation) confirming the statutory redundancy amount. Do not accept verbal assurances alone.

2. Review your employment contract. Many contracts include enhanced redundancy terms — sometimes far above the statutory minimum. Check what you’re actually owed before accepting any offer.

3. Understand the tax position on your full package. If you’re receiving any ex-gratia payment, share options, payment in lieu of notice, or holiday pay, these are treated differently for tax purposes. Get clarity before signing.

4. Assess your pension situation. Redundancy is one of the most overlooked opportunities to make significant pension contributions. In the year of redundancy, you may be able to contribute a substantial lump sum into a pension and claim income tax relief — which could dramatically reduce your overall tax liability. This is particularly powerful if you’ve received a large redundancy package.

5. Apply for Jobseeker’s Benefit promptly. If you’re not moving into immediate employment, apply to the Department of Social Protection for Jobseeker’s Benefit without delay. There is typically a waiting period, so start the process early.

6. Don’t sign anything under pressure. Employers sometimes present settlement agreements with tight turnaround windows. You are entitled to take time to seek independent advice — and in most cases, your employer is legally required to allow it.

Redundancy and Your Pension: The Hidden Opportunity

One area where people consistently leave money on the table is the intersection of redundancy and pension planning.

If you are aged 50 or over, you may be able to draw down your pension early (subject to scheme rules) under what’s known as an early retirement option. This can be particularly beneficial if you’re moving to lower-paid work or taking a career break.

Alternatively, if you’re a PAYE worker, you can make an Additional Voluntary Contribution (AVC) in the same tax year as your redundancy, using part of your redundancy proceeds. This can offset a large portion of your income tax bill for that year — effectively allowing the Revenue to fund part of your retirement savings.

The age-related contribution limits (ranging from 15% of net relevant earnings for under-30s to 40% for those aged 60 and over) make this particularly powerful for older workers — which is often exactly when redundancy strikes.

What If Your Redundancy Is Unfair?

Not every redundancy is genuine. You may have grounds to challenge your redundancy through the Workplace Relations Commission (WRC) if:

• You were selected unfairly compared to colleagues in similar roles
• Your employer failed to consider suitable alternative employment within the company
• The correct procedures were not followed
• The redundancy was used as a cover for dismissal on discriminatory or personal grounds

There are strict time limits for lodging a complaint — generally six months from the date of dismissal, extendable to 12 months in exceptional circumstances. Do not delay.

Why Independent Financial Advice Matters

When redundancy hits, your employer’s HR department and legal team are there to protect the company’s interests, not yours. Independent financial advice ensures someone is firmly in your corner.

At Money Maximising Advisors Limited, we work with individuals across Ireland to:

• Calculate the most tax-efficient way to receive your redundancy package
• Review pension options and AVC strategies
• Plan for income replacement during any career transition period
• Provide holistic financial planning to stabilise and grow your position long-term

We take a clear, transparent approach — no jargon, no pressure, just practical advice tailored to your specific situation.

Speak to a Redundancy Financial Advisor Today

Whether you’ve already received your redundancy notice or are planning ahead, the right advice at the right time makes an enormous difference to the outcome.

Money Maximising Advisors Limited offers a confidential initial consultation to help you understand where you stand and what your options are.

📞 Contact us today at mmadvisors.ie to arrange your consultation.