Extension to Ireland's temporary redundancy provisions

Out-Law Analysis | 05 Nov 2020 | 10:31 am | 2 min. read

The Irish government approved an extension to the redundancy provisions relating to temporary lay-off and short-time work, which arose as a result of the Covid-19 pandemic, until 30 November 2020. However, in light of the latest public health restrictions, we anticipate that this period is likely to be further extended.

From midnight 21 October 2020, Ireland commenced the highest level of 'lockdown' restrictions for a six-week period, to be reviewed after four weeks. As a result, amendments were also made to the level of payments under the Employment Wage Subsidy Scheme and the Pandemic Unemployment Payment, which will be in place until the end of January 2021.

Written by Jason McMenamin of Pinsent Masons, the law firm behind Out-Law.

Under the 2020 Emergency Measures in the Public Interest (Covid-19) Act, employees who have been laid off or kept on short-time due to the effects of measures taken by the employer in order to comply with, or as a consequence of, government policy to prevent, limit, minimise or slow the spread of infection of Covid-19 cannot trigger a redundancy situation during the 'emergency period'.

Ordinarily, the 1967 Redundancy Payments Act permits an employer to lay off an employee if the employer:

  • is unable to provide work;
  • reasonably believes that it will not be permanent; and
  • gives prior notice of the lay off using the RP9 form.

Where employees are laid off or placed on short time working, they are usually able to convert the lay-off or short-time working to a redundancy situation. Employees, who have been laid off or placed on short-time working for four or more consecutive weeks or six weeks in any 13 week period, can notify their employer of their intention to claim redundancy. The employer can prevent this if, within four weeks of this notice, it can guarantee the employee 13 consecutive weeks of work without lay-off or short-time working.

However, the right of an employee to trigger a redundancy situation has been suspended during the emergency period where the lay-off or short time is a consequence of Covid-19. Ireland's emergency period initially ran from 13 March until 31 May, but this was further extended to 10 August and then 17 September and it has now been extended until30 November. The reason behind the amendments is to prevent a situation where, if a redundancy was triggered, the employer may not be in a position to afford to pay redundancy due to cash flow issues which would, in some cases, propel the business into insolvency.

However, it should be noted that the extension only delays the date by which an employee can trigger a redundancy if they have been laid-off or put on short-time work for a period ending on 30 November. All other redundancy provisions remain unchanged and in force.

Pandemic Unemployment Payment (PUP)

While Ireland had changed the payment rates of the PUP in September, the latest public health restrictions has resulted in further changes and the reintroduction of the €350 rate. From 16 October 2020 until 31 January 2021 the PUP will be paid at four rates as set out below:

Prior gross weekly earnings  PUP payment 
More than €400  €350 
Between €300 and €399.99  €300 
Between €200 and €299.99  €250
Less than €200  €203

The new rates are effective from 16 October 2020. The department will examine the person’s average gross weekly earnings in 2019, and compare it to their average gross weekly earnings in January and February 2020. The higher earnings figure will be used to determine their weekly PUP rate. The payments will be liable to income tax at the end of the year.

It is proposed that there will be further changes to rates in February and April 2021.

Employment Wage Subsidy Scheme (EWSS)

Ireland's minister for finance announced that the rates of subsidy for the EWSS would also be revised to achieve better alignment to the PUP rates.

The revised EWSS subsidy rates effective from 20 October to 31 January are as follows:

Gross weekly pay  Revised rates 
More than €1,462  Nil
Between €400 and €1,462  €350 
Between €300 and €399.99  €300 
Between €203 and €299.99  €250 
Between €151.50 and €202.99  €203
Less than €151.50  Nil 

While the extension to Ireland's temporary redundancy provisions are due to expire at the end of November, a day before the current six week public health restrictions are also due to expire, it remains to be seen whether the government will once more extend the emergency period in order to mitigate against the risk of insolvency and bankruptcy situations which could result in further job losses.