Choosing the Best Date for Redundancy
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This is a very important issue which most employees and their employers do not give adequate attention to. The different factors can interact with each other but here are some of the factors to consider.
If your employer is flexible, changing the date may be of great advantage to you.
Of course your employer might well time things for their benefit and to your disadvantage
Are you just short of working in total for 2 years?
If you have less than 2 years' PRSI contributions, you won't qualify for Jobseekers Benefit. So an extra few weeks could make all the difference. It does not matter that you worked for different employers.
Are you just short of 2 years' service with your existing employer?
Statutory Redundancy is paid to people with a minimum of 2 years' service with their existing employer.
So if you have been employed for 1 year and 364 days, you will get nothing.
If you have been employed in your existing job for 2 years, you will get 5 weeks' statutory pay up to a maximum of €3,000. This will cost your employer €1,200 but you will get it all tax-free.
After two years' service it does not matter that much.
Are you just short of working in total for 5 years?
If you have at least 5 years' PRSI contributions in total since you started working, then you will get Jobseekers Benefit for 12 months. If you have less than 5 years' PRSI, you will only get 9 months Jobseekers Benefit.
Is it better for you to be made redundant in late 2009 or early 2010?
If you are made redundant in 2009, your claim for Jobseekers Benefit will be based on your PRSI contributions for 2007. If you are made redundant in 2010, your Jobseekers Benefit will be based on 2008. For example, if you had fewer than 39 weeks PRSI contributions in 2007 but worked the full year in 2008, you would be better off changing the date to 2010.
If you are getting a lump-sum payment, some of which might be taxable, you would be better off being made redundant in the year which has the lowest marginal tax rates. So if the tax rates in 2010 are higher than 2009, you should get made redundant before the end of the tax year.
However, if you don't expect to have taxable income in 2010, then the rates for you may be lower.
Another factor is that after the end of the tax-year, you will get top-slicing relief on any tax paid on your lump-sum. If you are made redundant in December, you will get this relief immediately. If you are made redundant in January, you will have to wait a whole year.
If you are pregnant...
If you are made redundant within 16 weeks of the due date, you will get Maternity Benefit for 6 months and then Jobseekers Benefit for up to 12 months. If you are made redundant just short of the 16 weeks, you will probably not get any Maternity Benefit.
This is discussed in more detail in the section on Pregnancy and Redundancy
