Workers made redundant after Covid lay-off in line for €1,860

Tax-free payment is to bridge gap where people could not work due to pandemic

Minister for Employment Leo Varadkar published the Redundancy Payments (Amendment) Bill on Friday

Minister for Employment Leo Varadkar published the Redundancy Payments (Amendment) Bill on Friday


Workers who missed out on reckonable service while they were laid off due to Covid-19 restrictions and were subsequently made redundant are in line for a special tax-free payment of €1,860 from the State.

“Reckonable service” is the length of time a worker has been continuously employed in their job that is taken into account when calculating a redundancy payment.

Minister for Employment Leo Varadkar published the Redundancy Payments (Amendment) Bill on Friday.

The payment of up to a maximum payment of €1,860 tax-free is designed to bridge the gap in their redundancy entitlements.

A worker does not have to have been in receipt of any form of State payment, such as the Pandemic Unemployment Payment or jobseekers allowance, during the lay-off period, although they can have been.

The criteria simply states that the person qualifies for redundancy in the usual way and was laid off because of Covid restrictions during the emergency period.

Under the existing Redundancy Payments Acts, periods of lay-off in the final three years of service do not count as reckonable service.

This means that in the case of redundancies now arising, where the qualified employee may have been on Covid-19 related lay-off for protracted periods, through no fault of their own or of their employer’s, their redundancy entitlement will not factor in those periods.

The provisions of the Redundancy Payments (Amendment) Bill will plug that gap, through a direct payment from the Social Insurance Fund.

The payment will ensure that the employee being made redundant will receive the same total redundancy payment as though they had not been laid off during the pandemic.

“This Bill will make sure that people made redundant are not out of pocket because of the period during which they were placed on lay-off due to Covid-19 restrictions,” said Mr Varadkar.

“The Government will step in and provide a special payment of up to a maximum of €1,860 tax-free to compensate for a person’s break in service due to necessary closures to protect public health.

“Throughout the pandemic, we have aimed to save as many jobs and businesses as possible. Part of that was suspending an employee’s right to trigger redundancy, to ensure already struggling businesses weren’t overwhelmed with costs.

“That provision has now been lifted, and employees can if they wish, seek redundancy if they have been laid off.

“We want to make sure workers don’t lose out on payments and on the other hand, business owners aren’t faced with a flood of additional redundancy costs, just when they’re trying to get back on their feet.”

Minister for Social Protection Heather Humphreys said that even with the improved economic and employment outlook, some workers “will lose jobs in the coming period”.

“This Bill will ensure that redundancy payments are not adversely affected by periods of time laid off due to Covid public health restrictions, when workers’ ability to trigger redundancy was suspended,” she said.

“This new scheme, which will potentially add up to €1,860 to a worker’s redundancy payment, will be administered by my department.

“In addition, Government’s employment services strategy Pathways to Work provides a range of employment supports, training and re-skilling opportunities for people who wish to find new job opportunities post-Covid.”