Navigating Redundancy
A financial guide for employees in Ireland
Redundancy can bring uncertainty about income, retirement and the protection your employer provides. A payment that looks substantial may need to cover several months without a salary, while decisions about tax and pensions can have consequences long after you return to work.
Whether redundancy is a possibility or you already have an offer, begin by understanding the package, identifying benefits that will end and working out what your household needs next. You do not need to make every financial decision at once, but some deadlines deserve early attention.
1. Understand the package on offer
Ask your employer for a written breakdown showing:
- Statutory redundancy and any additional severance or ex-gratia payment.
- Final salary, outstanding holiday pay, bonuses and payment in lieu of notice.
- The proposed employment end date and payment dates.
- Pension contributions or enhancements included in the offer.
- When life cover, income protection, health insurance and other benefits end.
- Any conditions, acceptance deadlines or settlement agreement requirements.
Compare the expected net payment, not just the headline amount. Different elements can have different tax treatment. Contractual termination payments are generally taxable as pay; contractual payment in lieu of notice does not qualify for termination-payment exemptions. Non-contractual notice payments may be treated differently. Revenue explains these distinctions.
Statutory redundancy
Eligible employees generally need at least 104 weeks’ continuous service, qualifying insurable employment and a job that is genuinely redundant. The statutory calculation is two weeks’ pay for each year of reckonable service, plus one additional week, with weekly pay capped at €600. The calculation can include qualifying part-years.
An employer may offer more, but an enhanced package should not be confused with the statutory entitlement. Check how the employer has calculated service and whether its quoted total includes statutory redundancy. Department of Social Protection: Redundancy Payment Scheme.
Statutory redundancy is exempt from tax under the relevant rules. An additional termination payment is not automatically exempt. Revenue: Other tax-exempt termination payments.
If you are asked to sign away employment rights or accept settlement conditions, obtain appropriate legal advice. A financial review does not replace advice from an employment solicitor.
2. Check tax relief before making pension decisions
For a qualifying termination payment, the relevant relief is generally the more favourable of the basic exemption, including any available increase, or Standard Capital Superannuation Benefit (SCSB). These are alternative calculations, not allowances to add together. Revenue: Lump sum payments.
Basic exemption
The basic exemption is €10,160 plus €765 for each complete year of qualifying service. A €200,000 lifetime limit applies to qualifying tax-exempt termination payments; previous payments and the applicable conditions must be checked. Revenue: Basic exemption.
Increased exemption
An increase of up to €10,000 may be available, subject to conditions including previous use within ten years. Pension lump sums already received or available from the employment can reduce or eliminate the increase. The current value of a future pension lump sum may need to be considered.
Do not waive a pension lump-sum entitlement simply to increase the tax-free part of a redundancy payment. Giving up that right can affect your retirement benefits. Have the immediate tax saving and the value of the pension rights compared before signing any election. Revenue: Increased exemption.
SCSB
SCSB uses average annual pay over the final 36 months and complete years of service, with a deduction for relevant tax-free pension lump-sum entitlements. It may be more favourable for some employees with longer service or higher earnings. Ask payroll or your tax adviser to show the calculation and the pension information used. Revenue: SCSB.
Ask for confirmation of the relief applied and all payroll deductions. Your personal history and pension entitlements can change the result, so another employee’s net payment is not a reliable comparison.
3. Work out how long your money needs to last
Build a budget around essential spending: mortgage or rent, food, utilities, insurance, childcare, debt repayments and known tax commitments. Add replacement costs for benefits previously paid by your employer.
Calculate the gap between those costs and reliable household income. Test several possible periods without work rather than assuming a new role will start quickly. Include retraining, job-search expenses and any planned career break.
Divide the available payment into clear purposes:
- Near-term living costs: money needed while employment income is uncertain.
- Known commitments and a contingency reserve: upcoming bills and unexpected costs.
- Longer-term decisions: money not required for the transition, considered only after the first two needs are covered.
Avoid committing the entire payment to a pension, investment or mortgage repayment before checking access needs. Repaying borrowing may help, but review early repayment charges and the cash you would retain. Contact your lender early if repayments may become difficult.
Check State supports
Jobseeker’s Pay-Related Benefit may be available to eligible people who become fully unemployed, subject to PRSI and other conditions. Receiving a redundancy payment does not itself affect eligibility for this benefit. It is not a retirement payment: availability for and active pursuit of work are among the conditions.
Other supports, including Jobseeker’s Allowance, have different rules and may be means-tested. Check your position with Intreo rather than assuming a redundancy payment rules out assistance. Department of Social Protection: Jobseeker’s Pay-Related Benefit.
4. Review your workplace pension
Redundancy does not necessarily mean losing pension benefits already built up. The outcome depends on your arrangement, qualifying service and scheme rules. Ask the administrator for your leaving-service options, current benefit statement and confirmation of when contributions stop.
Possible routes can include leaving a preserved benefit in the scheme or transferring to another eligible pension arrangement. Compare charges, investment choices, retirement access, death benefits and any guarantees before deciding. A transfer is not automatically an improvement. The Pensions Authority explains benefits on leaving employment.
A Personal Retirement Bond, also called a buy-out bond, is one possible destination for eligible occupational pension benefits. It holds retirement benefits in your name; it is not an accessible savings account or a payment of cash to you. Zurich Ireland: Personal Retirement Bonds.
If you have short pension-scheme service, ask specifically what you can preserve or transfer and whether a contribution refund is available. A refund may be taxed and may not include employer contributions. Do not assume two years with the employer is the same as two years’ pension membership. Irish Life: Leaving a company pension.
Take particular care near retirement
Some occupational pension arrangements may permit early retirement from age 50 after leaving the relevant employment, subject to scheme rules and approvals. Redundancy does not create a universal right to cash in every pension. Taking benefits early can leave less for later retirement. Irish Life explains early-access considerations.
If you have a defined benefit pension, assess the deferred pension and benefits you would surrender before considering a transfer. Have retirement and redundancy tax calculations considered together, particularly before making a pension lump-sum election.
5. Find out what happens to your insurance
The value of a job includes more than salary. Losing employer-funded protection can leave a gap even if the redundancy payment covers current bills.
Life cover and death-in-service benefits
Confirm the end date, amount of cover and any dependants’ benefits. Ask whether your scheme offers an extension or conversion to an individual policy and obtain the application deadline in writing.
Irish Life’s group protection guidance describes conditional life-cover continuation options and discretionary extensions in redundancy situations. These are not automatic rights under every employer’s scheme, and they do not mean income protection continues on the same basis. Check your own insurer’s written terms. Irish Life: Group Protection Guide.
Income protection
Income protection generally covers inability to work because of illness or injury, not redundancy itself. Do not budget for a claim simply because your salary stops.
Employer-funded and personally owned policies can work differently. Ask what ceases, what can continue, whether a change of occupation or employment status affects benefits, and whether premiums remain payable. Aviva Ireland’s brochure illustrates that some personal arrangements can continue after redundancy while restricting claims during a job search; the exact policy conditions govern. Aviva Ireland: Income Protection brochure.
If you are already ill, absent from work or receiving a benefit, get advice on your existing position before agreeing termination terms. Do not assume a new policy will replace existing rights.
Health insurance
Check cover for you and any family members before the employer stops paying. You may be able to take over payments or arrange another policy, depending on how the cover is set up. Confirm continuity, benefits and premiums directly with the insurer before cancelling anything. Vhi: Policy changes when leaving a job.
6. Why seek financial advice early?
Redundancy brings several connected decisions into a short period. The option that produces the highest payment today may not best support your household or retirement.
A financial review can help you:
- Assess the package alongside your household budget and future plans.
- Identify pension choices and insurance deadlines requiring attention.
- Compare keeping money accessible with debt repayment or longer-term saving.
- Consider how a career change, self-employment or earlier retirement would affect the plan.
- Coordinate the financial picture with payroll, your tax adviser, pension administrator and solicitor.
Ask what the advice covers, its costs and any commission, and which decisions require a separate specialist. Advice cannot guarantee a particular tax outcome, investment return or future income, but it can help you understand the trade-offs before committing.
Your redundancy checklist
Before accepting or acting on an offer, gather:
- The written package, employment contract and proposed settlement agreement.
- A gross-to-net calculation and details of any previous termination payments.
- Pension statements, leaving-service options and pension lump-sum information.
- Written insurance end dates, continuation terms and application deadlines.
- A household budget, savings and debts, and known upcoming costs.
- A list of decisions, who will advise on each and the deadline for action.
Talk to Indigo Investment Group
If redundancy is on the horizon, contact Indigo Investment Group to discuss tailored financial advice. Reviewing your package, pension and protection together can help you make decisions with a clearer view of both immediate needs and longer-term goals.
Email enquiries@iig.ie to arrange a conversation about your circumstances and the scope and cost of advice.
Important information
This guide provides general information for employees in the Republic of Ireland. It is not personal financial, pension, legal or tax advice and does not determine your employment rights or individual entitlements. Information and linked sources were reviewed on 2 November 2026; legislation, tax rules, provider terms and scheme conditions can change.
Provider examples explain possible features, not benefits guaranteed to every reader. Your employer’s scheme, policy documents and individual circumstances determine the options available. Obtain appropriate advice before signing a settlement, waiving pension rights, transferring a pension or taking retirement benefits.
Warning: The value of your investment may go down as well as up. You may get back less than you invest.