Is a redundancy lump sum payment taxable?

What is the situation regarding workers on what is called “fixed-purpose” contracts?
The Redundancy Payments Act 2003 safeguards the right to redundancy of a worker employed under a “fixed-purpose” contract i.e. where the exact duration of the contract was incapable of being determined at the beginning. If the contract is not renewed following the fulfilling of the purpose, with the fixed-purpose contract therefore ceasing, a redundancy situation can arise. There is already provision under Section 9(1)(b) of the Redundancy Payments Act, 1967 regarding fixed-term contracts under which a redundancy situation exists where a fixed-term of employment expires without being renewed under the same or a similar contract.

What is the position regarding the redundancy rights of Part-Time Workers?
The Redundancy Payments Act 2003 has secured the rights of part-time workers to a statutory redundancy payment through amending insurability requirements for redundancy to bring them into line with the Social Welfare Acts and the Protection of Employees (Part-Time Work) Act 2001. This is in line with the provision of the 2001 Act that part-time employees cannot be treated in a less favourable manner than comparable full-time employees in relation to conditions of employment. In particular, there is recognition for the rights of workers to statutory redundancy in the following cases – (a) casual employment, (b) subsidiary employment (where a person depends on another employment for his/her livelihood) and (c) employment of inconsiderable extent i.e. very low wage.

Mairead Griffin, Career Coach & Outplacement Specialist, Career Mentors -

Phone 01-2160880 Email mairead@careermentors.ie

Read More……………………..

Can an employee be made redundant while on Maternity Leave or on Additional Maternity Leave?
No. Notice of Redundancy (included in RP50) cannot issue when a person is on Maternity Leave or indeed on Additional Maternity Leave. The Equality Authority are the experts on this and can be contacted at (01) 4173333. (Lo Call – 1890 24 55 45).

Are Maternity Leave, Additional Maternity and Parental Leave reckonable for redundancy calculation purposes?
From the 1st March 2007 the first 26 weeks of maternity leave are fully reckonable for redundancy calculation purposes (up from 22 weeks since the 1st of March 2006). Furthermore, in respect of all redundancies notified/declared on or after 10th April, 2005, additional maternity leave is also reckonable. The same applies to protective leave or natal care absence within the meaning of the Maternity Protection Act 1994. Again, all this applies only to the 3 year period ending on the date of termination of employment. Absences from employment before that period (in respect of all redundancies notified/declared on or after 10th April, 2005) are always fully reckonable.

The full 14 weeks of parental leave are fully reckonable for redundancy purposes (under the Parental Leave Act, 1998). So also is force majeure leave within the meaning of the Parental Leave Act 1998. Again, the 3 year rule referred to above applies here also.

Is Adoptive Leave reckonable for redundancy purposes?
Yes. Since 1st of March 2007, the first 24 weeks of Adoptive Leave have been reckonable (20 weeks prior to that) under the Adoptive Leave Act, 1995. The additional 16 weeks Adoptive Leave (unpaid) are also reckonable. The 3 year rule applies.

Is Carers Leave reckonable for redundancy purposes?
Yes. Carers Leave, up to a maximum period of 104 weeks in respect of any one care-recipient, is reckonable. Again, the 3 year rule applies – non-reckonable service applies only to the last 3 years of service. Everything before that is fully reckonable.

What happens when different working conditions are offered?
As a general rule, where the terms and conditions offered are different from those of the existing job, the offer must be of “suitable employment” for that employee. Otherwise it would seem that a redundancy situation is involved i.e. where there is a material deterioration in the terms and conditions of employment.

If a person goes from company to company over the years, when does their reckonable service start?
From the start of their employment at the last company, unless that company is a subsidiary of the previous company, in which case it would be the start of employment in the previous company.

If an employee is on sick leave for 8 months, with 6 months therefore being reckonable, and 2 months being non-reckonable, returns to work for, say two weeks and goes sick again, does the 6 months of reckonable service start again?
Yes. An employee can go out sick, return to work, go out sick again, and return again, and in each case gets the full benefit of 6 months sick leave being reckonable. Again, this question of non-reckonable service applies only to the last 3 years of employment.

Where an employee was receiving Unemployment Benefit due to being temporarily laid of or being put on short-time, is there any effect on calculating how much redundancy payment he/she are due?
Yes. If it is a lay-off, all the period of lay-off is non-reckonable for redundancy purposes, i.e. must be excluded in deciding how many years were served and therefore in calculating how much redundancy is due. Periods of short-time, in contrast, are in fact fully reckonable. All of this applies only to a 3 year period ending on the date of termination (for all redundancies notified on or after 10th April, 2005). There is therefore no non-reckonable service prior to this 3 year period.

What is the redundancy position for employees who commence working abroad?
Under the Redundancy Payments Act 2003 employees who start work in a company abroad, work there for some time and are then transferred to the company or an associated company in the Republic of Ireland and work here for at least two years before being made redundant, will have all of their service counted in calculating their statutory redundancy entitlements.

If a person is given insufficient notice of redundancy, being told on Tuesday 1st that they will be made redundant on Thursday 3rd, and given money to compensate them for the remainder of their two weeks notice, (payment in lieu of notice), what date of termination is inserted on the RP50?

The date used is the date that would have been applicable if they had got their full notice i.e. Monday 14th.

Courtesy of Dept of Enterprise & Employment

Is a redundancy lump sum payment payment taxable?

A statutory redundancy lump sum, which under the law must be paid, is entirely tax-free. Only a payment above and beyond the statutory payment (an ex-gratia payment) is taxable –and only when it goes over a certain limit. For information on this, contact the Telephone Information Office of the Revenue Commissioners at 1890 60 50 90.

What is the position regarding the redundancy rights of Part-Time Workers?

The Redundancy Payments Act 2003 has secured the rights of part-time workers to a statutory redundancy payment through amending insurability requirements for redundancy to bring them into line with the Social Welfare Acts and the Protection of Employees (Part-Time Work) Act 2001. This is in line with the provision of the 2001 Act that part-time employees cannot be treated in a less favourable manner than comparable full-time employees in relation to conditions of employment. In particular, there is recognition for the rights of workers to statutory redundancy in the following cases – (a) casual employment, (b) subsidiary employment (where a person depends on another employment for his/her livelihood) and (c) employment of inconsiderable extent i.e. very low wage.

 Read More

    What is the situation regarding workers on what is called “fixed-purpose” contracts?

The Redundancy Payments Act 2003 safeguards the right to redundancy of a worker employed under a “fixed-purpose” contract i.e. where the exact duration of the contract was incapable of being determined at the beginning. If the contract is not renewed following the fulfilling of the purpose, with the fixed-purpose contract therefore ceasing, a redundancy situation can arise. There is already provision under Section 9(1)(b) of the Redundancy Payments Act, 1967 regarding fixed-term contracts under which a redundancy situation exists where a fixed-term of employment expires without being renewed under the same or a similar contract.

Can an employee be made redundant while on Maternity Leave or on Additional Maternity

Leave?

No. Notice of Redundancy (included in RP50) cannot issue when a person is on Maternity Leave or indeed on Additional Maternity Leave. The Equality Authority are the experts on this and can be contacted at (01) 4173333. (Lo Call – 1890 24 55 45).

Are Maternity Leave, Additional Maternity and Parental Leave reckonable for redundancy

calculation purposes?

From the 1st March 2007 the first 26 weeks of maternity leave are fully reckonable for redundancy calculation purposes (up from 22 weeks since the 1st of March 2006). Furthermore, in respect of all redundancies notified/declared on or after 10th April, 2005, additional maternity leave is also reckonable. The same applies to protective leave or natal care absence within the meaning of the Maternity Protection Act 1994. Again, all this applies only to the 3 year period ending on the date of termination of employment. Absences from employment before that period (in respect of all redundancies notified/declared on or after 10th April, 2005) are always fully reckonable.

The full 14 weeks of parental leave are fully reckonable for redundancy purposes (under the Parental Leave Act, 1998). So also is force majeure leave within the meaning of the Parental Leave Act 1998. Again, the 3 year rule referred to above applies here also.

    Is Adoptive Leave reckonable for redundancy purposes?

Yes. Since 1st of March 2007, the first 24 weeks of Adoptive Leave have been reckonable (20 weeks prior to that) under the Adoptive Leave Act, 1995. The additional 16 weeks Adoptive Leave (unpaid) are also reckonable. The 3 year rule  applies.

    Is Carers Leave reckonable for redundancy purposes?

Yes. Carers Leave, up to a maximum period of 104 weeks in respect of any one care-recipient, is reckonable. Again, the 3 year rule applies – non-reckonable service applies only to the last 3 years of service. Everything before that is fully reckonable.

Can a person be paid both a redundancy lump sum and compensation for unfair dismissals

on foot of a taking a case to the Employment Appeals Tribunal?

No. Both can’t be claimed. An employee is either made redundant or dismissed. In a redundancy situation, the actual job disappears, due, for example, to a total closure, liquidation, rationalisation etc. Section 5 of the Redundancy Payments Act 2003 emphasises the objective nature of redundancy as being work related by using the phrase redundancy “for one or more reasons not related to the employee concerned”. In a dismissal situation, an employee is asked to leave, whether fairly or unfairly, and is simply replaced by another person doing exactly the same job.

    What happens when different working conditions are offered?

As a general rule, where the terms and conditions offered are different from those of the existing job, the offer must be of “suitable employment” for that employee. Otherwise it would seem that a redundancy situation is involved i.e. where there is a material deterioration in the terms and conditions of employment.

If a person goes from company to company over the years, when does their reckonable

service start?

From the start of their employment at the last company, unless that company is a subsidiary of the previous company, in which case it would be the start of employment in the previous company.

What is the difference between Ordinary Illness and Occupational Injury and how does it

affect redundancy calculations?

Ordinary Illness means illnesses which people can get in general e.g. influenza. The first 26 weeks of such leave are allowable in calculating a redundancy lump sum, whereas a full 52 weeks are allowable (reckonable) in respect of an Occupational Injury, which is work-related (occupational accident or injury). In respect of all redundancies declared on or after 10^th April 2005, non-reckonable service applies only to a 3 year period ending on the date of termination. There is no non-reckonable service prior to this 3 year period.

If an employee is on sick leave for 8 months, with 6 months therefore being reckonable, and

2 months being non-reckonable, returns to work for, say two weeks and goes sick again, does

the 6 months of reckonable service start again?

Yes. An employee can go out sick, return to work, go out sick again, and return again, and in each case gets the full benefit of 6 months sick leave being reckonable. Again, this question of non-reckonable service applies only to the last 3 years of employment.

Where an employee was receiving Unemployment Benefit due to being temporarily laid of

or being put on short-time, is there any effect on calculating how much redundancy payment

he/she are due?

Yes. If it is a lay-off, all the period of lay-off is non-reckonable for redundancy purposes, i.e. must be excluded in deciding how many years were served and therefore in calculating how much redundancy is due. Periods of short-time, in contrast, are in fact fully reckonable. All of this applies only to a 3 year period ending on the date of termination (for all redundancies notified on or after 10th April, 2005). There is therefore no non-reckonable service prior to this 3 year period.

    What is the redundancy position for employees who commence working abroad?

Under the Redundancy Payments Act 2003 employees who start work in a company abroad, work there for some time and are then transferred to the company or an associated company in the Republic of Ireland and work here for at least two years before being made redundant, will have all of their service counted in calculating their statutory redundancy entitlements.

    If a person is given insufficient notice of redundancy, being told on Tuesday 1st that they will be made redundant on Thursday 3rd, and given money to compensate them for the remainder of their two weeks notice, (payment in lieu of notice), what date of termination is inserted on the RP50?

The date used is the date that would have been applicable if they had got their full notice i.e. Monday 14th.

Recently HRM Recruitment Group and TOP People completed a survey of 695 office support employees including PA’s, Receptionists, Secretaries, Administrators, Accounts Staff and Customer Service staff. It has highlighted that they completely understand the challenges employers face and are ready to get behind their organisations at a time of great need.

94% are happy to take on extra responsibility outside their current job description

82% of candidates will work longer hours to ensure all tasks are completed.

78% would be willing to take a reduction in pay

The survey indicates that a much greater proportion of candidates (69%) will now look at temporary or contract opportunities compared with (54%) this time last year. Good news for employers too in that it implies a higher quality temporary office worker now being available to organisations.

Read More

Perhaps not surprisingly morale management is a key issue for organisations right now with 53% suggesting that the recession is impacting on job satisfaction. While the majority of these suggest the impact is negative, a proportion indicate that increased responsibilities and more variety of work are positive impacts on their job satisfaction.

Irish people have always been hard workers! We are ready to fight this period of redunancies!

The most important thing is that you’re open and honest with your bank before you get to the point of financial despair. It is critical that you protect your future credit rating as much as possible. You should speak to your lender before your bills mount up!! Before approaching your bank read the Irish Mortgage Federations Code of Practice on Mortgage Arrears on the www.ibf.ie website. Ensure you have all the facts and entitlements in advance of meeting your bank

Option 1
Request a payment holiday whereby you will not have to make any repayments of capital or interest. This is what you should ask for first.

Option 2
Ask to be moved to interest only until you are back on your financial feet

Option 3
The Mortgage Interest Supplement. provides short term support to help you pay your mortgage interest repayments. You will only get assistance with the interest portion of your mortgage repayments. You will not get help with the portion that pays off the actual loan and house insurance. You should contact your lender to discuss repaying the actual loan.

To get Mortgage Interest Supplement you must meet the following conditions:

•When you began your mortgage, you could afford the repayments
•Your house is not up for sale
•The amount of your mortgage interest payable does not exceed an amount the Health Service Executive considers reasonable to meet your residential and other needs

See here for further conditions…..

What is the process?

To apply, fill in a Mortgage Interest Supplement Form . Part of the form will need to be filled in by your lending agency. You will also need to fill in another form called the Supplementary Welfare Allowance Form – this form is used to gather additional details relevant to your application for Mortgage Interest Supplement.  When you apply for Mortgage Interest Supplement the Community Welfare Officer will assess your means. You may qualify for a Rent Supplement if you live in private rented accommodation and are unable to meet the cost of your rent. You must be in receipt of either a Social Welfare payment or Supplementary Welfare Allowance (SWA) payment in order to receive this Supplement.

Some of the most common reasons that people do not qualify for a rent supplement are:
•The rent is too high
•Your income is too high
•One member of the household is working full-time (over 30 hours per week or more)

Rent/Mortgage Interest Supplement Means Test

Taking up part-time employment can effect your Rent/Mortgage supplement. Income is assessed in the following way:

The first €75 of ‘additional household income’ is disregarded.
Additional household income over €75 is disregarded at 25% of its value. There is no upper limit on the amount that can be disregarded.

EXAMPLE – SINGLE PERSON ON JOBSEEKERS ALLOWANCE & NO OTHER INCOME

Single Rate Jobseeker’s Allowance €204
Basic SWA rate for a single person – €204
Additional income above Basic SWA rate €0.00
Private Rented Accommodation per week €115
Minus minimum personal contribution (person pays) – €24
Maximum Rent Supplement payable per week (HSE) €91
Minus additional income above Basic SWA rate – €0

Rent Supplement payable (HSE) €91 per week

For Further Information go to www.inou.ie or www.welfare.ie

http://www.careermentors.ie

                                      COPING WITH REDUNDANCY

1. Allow time to grieve the loss

It is helpful to acknowledge how you feel, notice the feelings it brings up and
to accept yourself for the feelings you do have.

2. Dont take it personally

It was you ROLE that was made redundant

3. Dont buy into negative thoughts

When you notice you are having negative thoughts, do your best to let them go rather than allow yourself to get carried away with them.

4. Keep active

keeping your body moving keeps your energy high, your blood circulating and blocks you from falling into apathy

5. Think about what you actually want to do in your future

this is the one time in your life where you have the perfect opportunity to think about what you really want in life. Sit down with a piece of paper and list your strengths, passions, weaknesses and aspirations.

6.Get proactive and start looking so you are ready when the right thing comes up

7. Let everyone know that you are looking.

‘It’s not what you know it’s who you know’ – having the right contacts can get you everywhere. You can dramatically increase your chances of landing the ideal job by getting clear about what you want and getting out and letting the all your friends & ex colleagues know.Most employers are sourcing people by word of mouth. They dont invest in agencies anymore as the funds arent there!

8. Start working on your CV and interviewing skills so you are ready when the right thing comes up

9. Focus on your good points

It’s easy when you have lost your job to get caught up in your weaknesses and failings but refuse to do
so. Focus every single day on your assets, your strengths, accomplishments, experiences, what difference you can make to any job role.

10. Get Support from those around you

whatever you do reach out
and allow others to help you help yourself. This could actually turn out to be the best thing that had even happened to you, if you allow it.

11. Make use of the Outplacement Service your ex-employer has provided for you. Quite often transitioning employees do not even accept the service. Get help from an expert

The number of individuals receiving outplacement support has increased by 50% over the past two years
More than 50% of employers surveyed, reported that outplacement support had been offered for at least 85% of those separated from the organization
Approximately 50% of employers surveyed utilize exclusively external outplacement providers

81% of employers surveyed utilize some help from external outplacement providers
Why are companies providing outplacement support?

Beyond minimizing potential litigation from displaced employees, more and more companies are crediting outplacement with a wide array of other benefits. The Value of Outplacement study reported:
65% of employers believe that providing outplacement improves staff morale, motivation and productivity
78% of employers felt the provision of outplacement could improve the organisation’s reputation
55% of employers believed outplacement could help it to be seen as an employer of choice
Another 2003 study of over 1,200 HR executives in North America found:
78% believe that outplacement consulting and career transition services improve the organizations’ image, both internally and externally
72% said outplacement and career transition services help reduce litigation

Is outplacement linked to retention?

Beyond improving staff morale, motivation and productivity, many employers further credit outplacement with increased employee retention. At first glance, this statement seems contradictory . . . how can services for terminated employees actually affect the “survivors?” Consider the following from The Value of Outplacement study:
55% of employers agreed that providing employment support for staff no longer needed, helped the organization retain those staff deemed necessary
More than 70% of employers believe that offering outplacement helps line managers to shed staff with a clearer conscience, making their jobs easier
87% of those managers interviewed felt that it eased the pressure on them, making their jobs easier.
The 2003 study of over 1,200 HR executives in North America found:
66% said outplacement reduces stress on managers implementing organizational changes, again, making their jobs easier

What are the most valuable components of outplacement?

According to research from the The Value of Outplacement study, the 3 most highly rated components of outplacement support by employers are:

Quality of one-to-one consultancy
Interviews and assessment training

CV/Resume development
And what does the future hold?

The Reed Consulting study reported:

78% of employers surveyed felt the need for outplacement would increase or stay at the current levels for the coming year
22% of employers surveyed felt the need for outplacement would fall in the coming year

The key stages are:

1. Apply good strategies around change management. Continuely monitor change, market trends, financial status and planning

2. Minimise redundancies but considering alternatives EG reduced working weeks, redeployment, temporary lay offs

3 Select the jobs and not the individuals that will be effected.

4. Communicate the news to the individuals and offer them time to reflect and come back with alternatives to redundancy

5. Identify a outplacement service provider. Many of these people will not be equipped to handle both the emotional and financial turmoil that goes with redundancy. Quite often those who have been made redundant may not have job searched for decades and need up to date support around their curriculum vitaes, how to interview and where to actually go to secure their next role

Mairead Griffin
Owner, Career Mentors