Making an Employee Redundant

A redundancy situation can often arise in the following situations:

• an employee’s job ceases to exist
• the employer ceases to carry on the business
• the requirement for employees has diminished
• an employee is not skilled for work that is to be done

In the event of a redundancy, employees are covered under Redundancy Payments Acts 1967-2014, if they meet the following requirements:

• aged 16 or over
• have at least 2 years continuous service (104 weeks)
• are a full-time employee insurable under PRSI class A, or PRSI Class J for a part-time employee

How to calculate Statutory Redundancy Pay

Statutory Redundancy is payable at a rate of:

• 2 weeks’ pay for each year of service. If the period of employment is not an exact number of years, the excess days are credited as a portion of a year
• plus one week’s pay

The term ‘pay’ refers to the employee’s current normal gross weekly pay, including average regular overtime and benefits in kind. The above, however, is based on a maximum earnings limit of €600 per week (before PAYE, PRSI & USC).

An employer may also choose to pay a redundancy payment above the statutory minimum. In such circumstances, the statutory payment element will be tax free but some of the lump sum payment may be taxable.

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Posted byMarzena IgnarinEmployee Records

New Illness, Maternity and Paternity Benefits rates in effect

Almost all welfare benefits and state pensions are to be increased in 2017.

The maximum weekly Illness Benefit payment will increase by €5.00 from €188 to €193 per week from week commencing 13 March 2017.

Illness benefit is considered as income for tax purposes and thus needs to be taken into account for PAYE purposes by an employer. It remains exempt from USC & PRSI.

No payment is made for the first six days of illness and for any Sunday.

Thesaurus Payroll Manager will automatically apply the increased rate of €193 per week as soon as Week 12 is reached in the software, which users should be aware of. Further information on how to process illness benefit in Payroll Manager can be found here:

In addition, standard Maternity and Paternity payments will increase from €230 to €235 per week from 13 March 2017. These are both taxable sources of income but aren’t liable to USC or PRSI. Unlike illness benefit, however, an employer must not tax these benefits through payroll. Instead, the Revenue will tax Maternity and Paternity Benefit via the employee’s tax credit Certificate by reducing the employee's SRCOP and tax credit on receipt of information from the Department of Social Protection.

Posted byMarzena IgnarinPay/WagePAYEPayroll