Redundancy pay in Ireland: the amount set by law and the tax-free limits

Redundancy pay set by law is two weeks' pay a year plus one week, on pay up to €600 a week, and is tax-free. Extra payments get their own exemptions.

If your job ends because your employer is closing or cutting staff, you can get statutory redundancy (the amount set by law). You need two years' (104 weeks') service. Many employers pay more on top, known as an ex-gratia payment. The two are taxed differently.

Statutory redundancy

• 2 weeks' pay for each year of service, plus 1 extra week
• weekly pay counts up to €600, including regular overtime and benefits in kind
• service is counted in years and days, so part-years count
• tax-free, with no USC or PRSI

Monthly pay is divided by 4.33 to get a weekly figure; irregular pay is averaged over the last 52 weeks worked. Long periods of lay-off, strike or sick leave in the last three years may not count as service. If your employer can't pay because it is insolvent, you can apply to the Department of Social Protection.

Payments above the statutory amount

An ex-gratia payment is taxable, but part of it is exempt. You get the highest of three amounts, subject to a lifetime limit of €200,000:

• Basic exemption: €10,160 plus €765 for each complete year of service
• Increased exemption: up to €10,000 more, less any tax-free pension lump sum due to you. Only if you haven't claimed it in the last ten years
• SCSB (Standard Capital Superannuation Benefit): your average yearly pay over the last three years, divided by 15, times complete years of service. Take off any tax-free pension lump sum

Anything above the exemption is taxed through payroll with income tax and USC, but no PRSI. Pay you are owed anyway, such as salary, holiday pay and notice pay under your contract, is ordinary pay. It isn't part of the lump sum.

An example

An employee starts on 1 March 2012 and leaves on 31 August 2026, on €900 a week. Their total pay over the last three years is €135,000. They have earned €30,000 in 2026 before leaving, and receive an ex-gratia payment of €60,000.

Here the basic and increased exemptions together come to €30,870, and SCSB to €42,000, so SCSB applies. SCSB tends to win for long-serving, well-paid employees.

After you leave

• Your employer deducts the tax on the taxable part when paying you, using your Revenue Payroll Notification.
• The taxable part counts as income of the year you leave. If you earn less for the rest of the year, you may be due a refund.
• If your employer refuses to pay statutory redundancy, you can bring a claim to the Workplace Relations Commission within one year of your dismissal.

Work it out

• Redundancy pay and tax →
• PAYE calculator →

Sources

• Citizens Information: How much redundancy pay will I get? (checked 25/10/2026)
• Department of Social Protection: Redundancy Calculation Examples (checked 16/10/2026)
• Revenue: Lump sum payments: basic exemption (checked 25/10/2026)
• Revenue: Lump sum payments: increased exemption (checked 25/10/2026)
• Revenue: Standard Capital Superannuation Benefit (SCSB) (checked 25/10/2026)
• Revenue: Tax and Duty Manual Part 05-05-19: Taxation of termination payments (worked examples) (checked 25/10/2026)
• Revenue: How USC affects redundancy payments (checked 25/10/2026)

General information, not tax advice. HeyPenny is not a tax agent.