Facing redundancy in Ireland can be one of the most stressful moments in your working life. Beyond the emotional impact, there are immediate financial questions:
This comprehensive 2026 guide explains:
Redundancy occurs when your employer eliminates your role for genuine business reasons, not because of performance or misconduct.
Redundancy law in Ireland is governed by the Redundancy Payments Act 1967, which sets out:
A redundancy must be genuine. Typical reasons include:
If your position continues to exist and someone else fills it, the redundancy may not be genuine.
This is where confusion often arises.
Redundancy = The termination of your employment for business reasons.
Statutory redundancy = The minimum legal payment your employer must pay (if you qualify).
Many employers offer more than the statutory amount. The additional payment is often called:
Statutory redundancy is only the starting point.
To qualify for statutory redundancy in Ireland, you must:
Yes. The following generally do not break continuous service:
Part-time employees are also eligible if they meet the two-year requirement.
Statutory redundancy is calculated using the following formula:
(2 weeks’ pay × years of service) + 1 additional week’s pay
However, weekly earnings used in the calculation are capped at €600 per week.
Example 1: Basic Calculation
Calculation:
(2 × €500 × 8) + €500
= €8,500
Example 2: Above the Weekly Cap
Because of the €600 cap, calculation becomes:
(2 × €600 × 10) + €600
= €12,600
Even if you earn more than €600 per week, the statutory calculation cannot exceed the cap.
You can estimate your statutory entitlement in three steps:
Quick Reference Table (At €600 Cap)
There is no limit on years of service, but the weekly cap always applies.
Enhanced redundancy is not set by law.
It is at the discretion of the employer and may be based on:
In many senior cases, the statutory amount represents only a small percentage of the total termination payment.
Statutory redundancy payments are:
The excess over statutory redundancy may qualify for tax relief under:
The lifetime tax-free cap on redundancy payments is €200,000.
Split into:
Calculated using the €600 weekly cap:
(2 × €600 × 16) + €600 = €19,800
✔ Fully tax-free
✔ Does not count toward the €200,000 lifetime limit
This may qualify for tax relief under SCSB.
The SCSB calculation (based on service, salary and pension rights) produces a tax-free entitlement above €200,000.
However, Ireland has a lifetime tax-free cap of:
€200,000
So:
| Component | Amount |
| Statutory redundancy | €19,800 |
| Tax-free ex-gratia | €200,000 |
| Taxable balance | €39,800 |
After tax on the €39,800, the net termination payment is approximately:
€210,400
(Exact figure depends on marginal tax rate.)
For senior earners in Ireland:
Where termination payments exceed approximately €219,800, a tax liability may arise.
In some cases, an employee may agree a capped termination payment.
This can:
• Increase pension funding
• Improve long-term retirement outcomes
• Support overall financial planning following redundancy
This level of structuring is particularly relevant for executives and high earners.
Yes. The statutory cap is:
There is no cap on years of service.
Employees are entitled to statutory minimum notice depending on length of service:
Your employment contract may provide longer notice terms.
Redundancy often triggers important pension decisions.
Options may include:
Poor decisions at this stage can permanently reduce retirement income.
At Fairstone Ireland, our regulated advisors help clients:
You are legally entitled to two weeks’ pay per year of service plus one additional week, capped at €600 per week. Employers may offer enhanced payments above this amount.
No. Statutory redundancy is the legal minimum. Enhanced redundancy is any payment above the statutory amount and is at the employer’s discretion.
Yes. The excess over statutory redundancy may be taxable, although relief may apply under Basic Exemption, Increased Basic Exemption or SCSB. A €200,000 lifetime tax-free cap applies.
In some cases, yes. Pension redirection strategies and correct application of SCSB can significantly reduce tax exposure.
Understanding redundancy in Ireland requires more than knowing the statutory formula. While statutory redundancy provides a baseline level of protection, the enhanced or ex-gratia element, and how it is structured, determines the real financial outcome.
For senior professionals in particular, redundancy is a major financial event. With proper structuring, tax planning and pension strategy, the difference in net outcome can be substantial.
If you are facing redundancy or considering voluntary redundancy, professional advice can help ensure you make informed, confident decisions at a critical moment.
Book your no-obligation redundancy consultation with Fairstone and transform uncertainty into opportunity.
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