On 19 April 2022, the commencement of the Redundancy Payments (Amendment) Act 2022 (“the Act”) was announced by Tánaiste Leo Varadkar. The Act legislates for a COVID-19-related Lay-off payment scheme for eligible employees made redundant and unable to accrue reckonable service due to the public health restrictions caused by the COVID-19 pandemic. The Government is providing a special tax-free payment of up to €2,268 to this cohort in order to bridge the gap in redundancy entitlements.
The Scheme
The necessary COVID-19 lockdowns caused lay-off situations which resulted in a loss of opportunity for some employees to accrue reckonable service. The Act provides for a once-off lump sum for employees who
- have been made redundant since 13 March 2020, or are made redundant before 31 January 2025, and
- Have lost the opportunity to build reckonable service due to temporary lay-offs caused by Covid-19 restrictions from 13 March 2020 to 31 January 2022.
Other criteria must be met to qualify for the scheme and can be found on gov.ie
Under statutory redundancy rules, periods spent on lay-off within the final three years of an employee’s service do not count as reckonable service for the purposes of statutory redundancy payments. The Act aims to ensure that employees who are made redundant, are eligible for a statutory redundancy payment and were placed on lay-off due to COVID-19 restrictions are not disadvantaged in the calculation of their redundancy entitlements.
The amount an eligible worker will receive will depend on the length of time they were placed on lay-off due to Covid-19. The calculation for the payment is based on existing statutory redundancy provisions and the maximum amount which any one employee will be entitled to is €2,268 if they earned more than €600 or more per week and were laid off due to Covid-19 restrictions for the full period from 13 March 2020 to 31 January 2022.
Administration of CRLP
The Department of Social Protection (DSP) will be responsible for administering the new scheme. As the new scheme is "employer-led", this means that, for most eligible employees, their employer will apply for this payment on their behalf. Applications can be made online via the Welfare Partners website. The DSP's application process commenced on the 19 April 2022.
Tax Exemption
Statutory redundancy payments are exempt from tax. Following approval by the Minister for Finance, the CRLP is exempt from income tax and USC. This brings the payments into line with the tax treatment allowed to statutory redundancy lump sum payments. Legislation will be enacted in due course to provide the tax exemption but in the meantime the CRLP should be paid to employees without deduction of income tax, USC and PRSI. Revenue’s eBrief 092/2022 sets out this position.
Further details published by the Department of Social Protection on how to qualify for, apply for and calculate the CRLP can be found on gov.ie
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