Background

When employees are made redundant by virtue of a company going into liquidation, they may be entitled to receive certain payments from the Department of Social Protection. A summary of these entitlements is set out below.

Redundancy Monies

The relevant legislation provides that an employee with 104 weeks continuous service with the same employer, aged between 16 and 66, and employees who have reached 66 years of age and whose date of termination is on or after 8th May 2007 are now eligible, and whose employment was terminated because of redundancy may be entitled to a redundancy lump sum payment.

Where a notice of redundancy has been formally conveyed to the employee on or after 10 April 2005 by reason of the employee receiving a notice of redundancy in the prescribed form i.e. the RP50 Form, the employee is entitled to receive two weeks’ pay for each year of service, regardless of age.

The redundancy lump sum payment is calculated as two weeks’ pay for each year of employment plus a bonus week. This is a tax free lump sum. When processed, the Department pays the employee directly. It is not necessary for the company to have entered a formal insolvency process for redundancy claims to be processed.

It should be noted that there is a statutory ceiling of €600 per week applied when calculating the lump sum.

There is a useful redundancy calculator on the Department’s web site at www.welfare.ie.

Minimum Notice Payments

The relevant legislation provides that an employee who has continuous employment with the same employer for a minimum period of 13 weeks is entitled to a minimum period of notice before his dismissal. The amount of notice entitlement depends on the length of service. The amount of notice entitlement is set out below:
Length of Service Minimum Notice

Thirteen weeks to two years One week
Two years to five years Two weeks
Five years to ten years Four weeks
Ten years to fifteen years Six weeks
More than fifteen years Eight weeks

If an employee does not receive the statutory minimum notice period , then the employee may be entitled to receive a payment from the Department of Social Protection. This is a tax free lump sum. When processed, the Insolvency Practitioner pays the employee directly.

Arrears of Wages and Holiday Pay

The relevant legislation provides that an employee who is in employment which is insurable for all benefits under the Social Welfare Acts (in general terms this means employees who pay full PRSI contributions) is entitled to receive payment for arrears of wages and holiday pay from the Department of Social Protection. This is subject to PAYE/PRSI and universal social charge.

Some limitations and conditions apply to payments made under the Scheme. All entitlements based on pay are limited to a maximum weekly rate which is revised periodically. The current limit is €600 per week. There is also a limit of eight weeks for arrears of pay, sick pay, holiday pay and pay in lieu of statutory notice. In most cases, the Scheme covers entitlements relating to the period of eighteen months prior to the date of the insolvency of the employer or the termination of employment. In the case of an award made to an employee – for example, an unfair dismissal award – the eighteen-month period applies to the date of the award. An award may also have a date that is later than the date of insolvency.

When processed, the Insolvency Practitioner pays the employee directly.

How to make a claim?

The appropriate forms should be completed and returned to the company’s Insolvency Practitioner.

The Insolvency Practitioner will process the forms and forward them to the Department of Social Protection.

Have you received notice of a creditors meeting pursuant to Section 587 of the Companies Act 2014?

We provide a service of attending creditors’ meetings convened pursuant to Section 587 of the Companies Act 2014 (which is a meeting convened to allow, inter alia, creditors to appoint their own choice of liquidator) so that we may ensure that employees’ claims are properly recorded.  We do not charge to attend creditors’ meetings held within Dublin City Centre.  We  may also not charge to attend other meetings held across the country provided there are a number of creditors seeking representation at the creditors’ meeting.  (The reason we provide such a service is because it provides us an opportunity to be appointed as liquidator.)

For further information please contact Jim Stafford, Tom Murray or Andrew Hendrick on 01 661 4066 or jim.stafford@frielstafford.ie tom.murray@frielstafford.ie or andrew.hendrick@frielstafford.ie