Get to grips with your rights and entitlements after redundancy

Redundancy can leave a long-term impact on an individual, according to Mr Eric Conroy, general secretary of the Irish National Organisation of the Unemployed (INOU), but in the short term it can help to work out what your entitlements are.

Last year the INOU introduced a new chapter on redundancy to its booklet Working to Work, which includes information on benefits, education and training opportunities and the transition from social welfare dependency back to work.

The new edition of Working to Work, due to be launched at the end of June, will include updated information on statutory redundancy payment entitlements, following recent changes in legislation. In general, someone who has been made redundant is entitled to the following:

For all redundancy notices formally conveyed on or after May 25th, 2003, employees between the ages of 16 and 66 who have been working for their employer for at least two years will receive two weeks' pay for every year of service, regardless of age.

This replaces the previous entitlement of a half-week's pay between the ages of 16 and 41 and one week for those over 41. One bonus week is also included. The total is subject to a ceiling of €507.90 for each week's pay.

A redundancy calculator is available on the Department of Enterprise, Trade and Employment's website, www.entemp.ie.

Under the Redundancy Acts, an employee is entitled to a minimum of two weeks' notice or payment in lieu of two weeks' notice. n Employees who are made redundant are entitled to be paid any outstanding holiday leave.

Similarly, where an employee ceases employment during the week before a public holiday and they have worked for the employer during the previous four weeks, they are entitled to be paid for that holiday.

Statutory redundancy payments are exempt from tax. Non-statutory payments are eligible for some relief from tax.

The basic exemption is €10,160, plus €754 for each full year of service; however, this can be increased by up to €10,000 if the person is not a member of an occupational pension scheme. If the employee is in a pension scheme, the increased exemption is reduced by the amount of any tax-free lump sum to which he or she is entitled either immediately or in the future.

People with high earnings and long service may have their exemption calculated as one-fifteenth of their average annual pay for each complete year of service, less any tax-free lump sum.

If part of the lump sum is still taxable after the exemptions have been taken into account, employees who are made redundant may avail of an additional relief called top-slicing relief. This ensures that the lump sum is not taxed at a rate higher than his or her average rate of tax for the five years prior to redundancy.

For example, the taxable part of Ms K's lump sum is €20,000 and is taxed at her marginal rate of 42 per cent. Her average rate of tax for the prior five tax years was 37 per cent.

The top slicing relief is €20,000 x 5 per cent (42 per cent - 37 per cent) or €1,000. The tax payable by Ms K is reduced by €1,000.

People under 66 who have built up sufficient PRSI contributions will be eligible for unemployment benefit, a weekly payment of €124.80 to insured people who are out of work.

Recipients will be asked to show evidence that they are actively seeking work.

People under 55 who receive a redundancy payment of more than around €19,000 will be disqualified from receiving this benefit for up to nine weeks.

Unemployment benefit is payable for 65 weeks before the entitlement runs out.

People who don't qualify or have used up their entitlement to unemployment benefit may qualify for a means-tested weekly payment called unemployment assistance.

Again the rate of payment is €124.80 for each week the person is out of work.