How much redundancy pay am I entitled to in Ireland?
In Ireland in 2026, you are legally entitled to 2 weeks’ pay per year of service plus 1 bonus week, capped at €600 per week, and this statutory redundancy payment is 100% tax-free. You need at least 2 years of continuous PRSI-insured employment to qualify. Any enhanced payment above the statutory amount may be partly tax-free using the Basic Exemption (€10,160 + €765 per year of service), the Increased Exemption (+€10,000), or the SCSB formula, whichever gives the highest tax-free amount.
Joe Coyle Financial Consultants, a CBI-regulated financial broker in Donegal and part of the Money Maximising Advisors group, provides specialist redundancy advice for employees and business owners across Ireland. We help you understand your statutory entitlements, structure your termination package for maximum tax efficiency, and make the right pension decisions that follow redundancy. Also see redundancy and financial planning resources at Money Sense Financial Services.
Being made redundant is one of the most financially significant events that can happen to a working adult in Ireland. In the immediate aftermath, there are two traps: acting too quickly on the redundancy package without getting the tax treatment right, and failing to make the critical pension decisions that must be made within specific time windows. This guide covers both.
Step 1: Understand Your Statutory Redundancy Entitlement
The Formula
Statutory redundancy is calculated as:
(2 weeks’ pay × complete years of service) + 1 bonus week’s pay
The weekly pay used in this calculation is capped at €600, regardless of your actual earnings. Even if you earn €2,000 per week, the statutory formula uses €600.
Worked Example
Years of service: 10 complete years
Weekly earnings: €800 (capped at €600 for statutory calculation)
Calculation: (2 × 10) + 1 = 21 weeks × €600 = €12,600 statutory redundancy
Tax treatment: 100% tax-free, no Income Tax, USC or PRSI applies
Qualifying Conditions
Minimum service: 2 years of continuous insurable employment (PRSI Class A)
Age: 16 or over on the date of redundancy
Genuine redundancy: Your position must actually be disappearing, not filled by someone else immediately after your departure
Employment type: Part-time employees are covered, no minimum hours threshold applies
⚠️ Important: If your employer cannot pay and becomes insolvent, you can claim your statutory redundancy from the Social Insurance Fund via the Department of Social Protection. Apply using form RP50 at MyWelfare.ie.
► Get Your Redundancy Package Independently Reviewed — Book a Free Consultation
Step 2: Understand the Tax Treatment of Your Full Redundancy Package
Statutory redundancy is always 100% tax-free. However, if your employer offers an enhanced or ex-gratia payment above the statutory amount, that additional sum may be taxable, unless it falls within one of three available tax exemptions.
The Three Tax Exemptions Use the Highest
1. Basic Exemption
The most straightforward exemption, automatically applied by your employer through payroll:
€10,160 + (€765 × complete years of service)
Example: 15 years service → €10,160 + (€765 × 15) = €10,160 + €11,475 = €21,635 tax-free (on top of the statutory payment).
2. Increased Exemption
An additional €10,000 is available on top of the Basic Exemption if you have not received a tax-free lump sum in the previous 10 years AND you are not entitled to a tax-free pension lump sum from your employer’s scheme. If you are entitled to a pension lump sum, the €10,000 increase is reduced euro-for-euro by the pension lump sum amount.
3. Standard Capital Superannuation Benefit (SCSB)
The SCSB is a more generous relief for employees with high earnings and long service. The formula is:
(Average annual earnings over last 3 years × Years of service ÷ 15) − Tax-free pension lump sum
Example: Average salary €75,000, 20 years service, pension lump sum €20,000 → (€75,000 × 20 ÷ 15) − €20,000 = €100,000 − €20,000 = €80,000 tax-free under SCSB.
💡 The SCSB typically delivers the best result for senior employees with 15+ years service and higher salaries. The lifetime cap across all three exemptions is €200,000. Revenue applies whichever of the three gives the highest tax-free amount.
What About USC and PRSI?
The taxable portion of your redundancy lump sum is subject to Income Tax and USC at your normal rate but is NOT subject to PRSI. Normal payroll items included in your termination package such as pay in lieu of notice or outstanding holiday pay, remain fully taxable through normal payroll.
📷 CONTENT IMAGE 2, SCSB worked example visual salary × years ÷ 15 formula 800×450px
Step 3: The Critical Pension Decisions That Follow Redundancy
This is the area most Irish employees get wrong, because the pension decisions that arise following redundancy are complex, time-sensitive, and the consequences of poor decisions can permanently reduce your retirement income.
What Happens to Your Occupational Pension When You Are Made Redundant?
If you have been a member of your employer’s occupational pension scheme, you have several options on leaving:
Leave it in the scheme: Your deferred benefit remains in the employer scheme, growing until you reach retirement age. Often the default but may not be optimal if the scheme is poorly performing or if you want more control
Transfer to a Personal Retirement Bond (PRB): You take your transfer value out of the employer scheme and into a personal pension policy in your own name, with full control over investment choice. This is often the right decision, especially if moving to a new employer, self-employment, or if the scheme has poor fund performance
Transfer to your new employer’s scheme: Where permitted by the new scheme rules. Only available if the scheme allows transfer-in and accepts the value
The Pension Lump Sum Decision: Timing Matters
The interaction between your redundancy tax exemptions and any pension lump sum you are entitled to can be complex. Specifically, the Increased Exemption and the SCSB are both reduced by any tax-free pension lump sum you receive. In some cases, it is beneficial to waive your right to a future pension tax-free lump sum in order to increase your redundancy tax exemption, particularly if the redundancy payment is large.
⚠️ Important: The decision about whether to take your tax-free pension lump sum at the same time as your redundancy, or defer it, has significant tax implications. This is a complex area where professional advice can save thousands of euros. Joe Coyle Financial Consultants reviews this analysis for every redundancy client as part of our standard consultation.
Pension Contributions Using Your Redundancy Lump Sum
One option that many redundancy recipients do not consider is using a portion of their ex-gratia payment (after statutory redundancy) to make a large pension contribution, claiming income tax relief on that contribution and boosting their retirement fund at the same time. The amount eligible depends on your age-related contribution limit and previous pension funding. Joe Coyle Financial Consultants will calculate the maximum pension funding available in your situation.
Step 4: Practical Steps After Being Made Redundant in Ireland
Immediate Steps (First 2 Weeks)
Verify your statutory entitlement: Use the Redundancy Calculator on gov.ie/en/service/ca9d26-redundancy-calculator/ to confirm the statutory amount you should receive
Request a written breakdown: Your employer must provide form RP50 (Redundancy Certificate) and a written statement of how the payment was calculated
Do not sign a settlement quickly: Once you sign, you typically waive further claims. Get the package reviewed independently first
Register for Jobseeker’s Benefit: Apply immediately at your local Intreo centre or via MyWelfare.ie, claim begins from the day after redundancy
Medium Term (Weeks 3–12)
Get your pension options reviewed: Contact Joe Coyle Financial Consultants to assess PRB vs scheme options and pension lump sum timing
Review your income protection: If you had income protection through your employer, this typically ceases on redundancy — consider independent cover
Check your PRSI contribution record: Request a PRSI statement from the Department of Social Protection to understand your State Pension entitlement
Update your tax credits: Notify Revenue of your change in employment status through myAccount to ensure correct tax treatment
Redundancy and Your Rights: Key Legal Protections
Irish redundancy law is governed by the Redundancy Payments Acts 1967–2022. Key protections include:
Minimum notice: Depends on length of service: 1 week (13 weeks to 2 years), rising to 8 weeks for 15+ years
Counter-claim rights: If your employer does not pay statutory redundancy, you can apply to the Workplace Relations Commission (WRC)
Suitable alternative work: If you refuse a genuine offer of suitable alternative employment, you may lose your right to statutory redundancy — take legal advice before refusing
Part-time and fixed-term workers: Are entitled to the same redundancy rights as full-time permanent employees, subject to minimum service requirements
Frequently Asked Questions: Redundancy Advice Ireland 2026
How much redundancy pay am I entitled to in Ireland?
Statutory redundancy is 2 weeks’ pay per complete year of service plus 1 bonus week, capped at €600 per week regardless of actual earnings. You need at least 2 years of continuous PRSI-insured service. The statutory payment is always 100% tax-free. Your employer may offer an enhanced payment above this statutory minimum.
Is redundancy pay taxable in Ireland?
Statutory redundancy is 100% tax-free. Enhanced or ex-gratia payments above the statutory amount may be taxable, but up to €200,000 can be sheltered from income tax using the Basic Exemption (€10,160 + €765 per year), the Increased Exemption (+€10,000), or the SCSB formula, whichever gives the highest tax-free amount.
What is the SCSB in Irish redundancy?
The Standard Capital Superannuation Benefit (SCSB) is a tax relief formula that benefits employees with longer service and higher earnings. It is calculated as: average annual earnings over the last 3 years × years of service ÷ 15, minus any tax-free pension lump sum. For senior employees, it typically delivers more tax relief than the Basic or Increased Exemption.
What happens to my pension when I am made redundant?
Your options are: leave your deferred benefit in the employer scheme; transfer to a Personal Retirement Bond (PRB) in your own name; or transfer to a new employer’s scheme. The right decision depends on your age, retirement plans, and the performance of the existing scheme. This is an area where professional advice from Joe Coyle Financial Consultants can make a significant long-term difference.
How long do I have to make a redundancy claim in Ireland?
You must submit a claim for redundancy pay within 52 weeks of the date of redundancy. After 52 weeks, you may lose your entitlement, though the WRC can extend this in certain circumstances. Do not delay, if your employer refuses to pay, contact the WRC through workplacerelations.ie.
Can I contribute my redundancy payment to my pension?
Yes, in certain circumstances, and this can be a very tax-efficient strategy. Using part of your ex-gratia payment to make a pension contribution (subject to age-related limits) allows you to claim income tax relief at your marginal rate. However, this must be carefully coordinated with your redundancy tax exemptions to avoid reducing your available SCSB or Increased Exemption. Joe Coyle Financial Consultants calculates the optimal approach for your specific situation.
► Facing Redundancy? Get Independent Expert Advice Before You Sign Anything
Important Information
This article is for general information purposes only and does not constitute financial or legal advice. Redundancy entitlement, tax exemption, and PRSI figures are correct as at July 2026 and may change. Joe Coyle Financial Consultants Ltd is regulated by the Central Bank of Ireland (C54725), part of the Money Maximising Advisors group (C154250). Always seek personalised advice from a Qualified Financial Advisor before making financial decisions.
Joe Coyle Financial Consultants Ltd | jcfc.ie | info@jcfc.ie | +353 091 342596
Part of Money Maximising Advisors Group | mmadvisors.ie | moneysense.ie
