It is possible for a company to arrange for the Department of Social Protection to directly pay employees their redundancy monies. For further information click on the following link:
In many cases employee claims will form the largest category of Preferential Creditor.
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.