Chapter 2 of 10 · Redundancy · 7 of 8
Voluntary redundancy in Ireland: what you are owed and what to ask before you accept
Checked 13 Oct 2026the employment Acts as amended.
Voluntary redundancy is still redundancy in Ireland: the statutory sum of two weeks' pay per year plus one at a €600 cap is owed, the tax exemptions apply, and you can still claim Jobseeker's.
Written for employees. This guide covers the Republic of Ireland.
Voluntary redundancy is an invitation from your employer to leave on terms, usually when it needs to cut headcount and would rather not choose. The word "voluntary" changes how people feel about it but changes very little in law. If you accept, you are being made redundant, with the same entitlements, the same tax treatment and the same social welfare position as a colleague who was selected. What is different is that you have a choice, which means you have questions to ask before you make it.
It is still redundancy
The Redundancy Payments Acts 1967 to 2014 do not distinguish between a redundancy you volunteered for and one you were selected for. In both cases the employer dismisses you by reason of redundancy because the business needs fewer people, and in both cases, after 104 weeks' continuous service, the statutory sum is owed.
Two things follow. First, a "voluntary" scheme cannot offer less than the statutory minimum. If a package is described as a lump sum, check that it is at least two weeks' pay per year of service plus one week, with weekly pay capped at €600, before any enhancement. Second, the employer still has to have a genuine redundancy situation. A scheme used to move one particular person out of the door, with no reduction in the work, may be something other than redundancy, and the tax treatment can follow the substance rather than the label.
What the statutory sum is
The statutory floor is the same as for any redundancy:
- two weeks' pay for every year of continuous service, with part years counted as days over 365;
- plus one bonus week;
- weekly pay capped at €600;
- free of income tax, USC and PRSI.
Someone with 8 complete years on €650 a week has a statutory sum of 17 weeks × €600 = €10,200. The calculator explainer walks through part years and part-time hours, and the redundancy calculator does the arithmetic.
Enhanced packages: how they are usually built
Most voluntary schemes pay more than the statutory minimum. There is no legal formula for the enhancement; it is whatever the employer offers, and it is often the result of negotiation with a union or staff representatives. Common shapes:
- Extra weeks per year. "Four weeks per year of service inclusive of statutory", or "two weeks per year on top of statutory". Read the word "inclusive" carefully: it means the statutory sum is part of, not in addition to, the headline figure.
- A cap on the total. A maximum number of weeks (for example 52 or 104) or a cash ceiling, which bites for long-serving staff.
- Uncapped pay. Many enhanced schemes use your actual weekly pay rather than the €600 cap for the enhanced element, while the statutory element remains capped.
- Pay in lieu of notice. Some schemes include it; some add it on top. Check which.
- Other items. Outplacement support, continued health insurance for a period, an agreed reference.
Ask for the written scheme terms and a personalised written calculation showing the statutory sum, the enhanced sum, notice and holiday pay as separate lines.
Tax on a voluntary package
The statutory sum is tax-free. The enhanced part is an ex gratia payment, and Revenue allows the highest of three exemptions before tax:
- the Basic Exemption: €10,160 plus €765 for each complete year of service;
- the Increased Exemption: the Basic Exemption plus up to €10,000, where you have not had, and are not entitled to, a tax-free pension lump sum and have not claimed it in the previous ten years;
- the SCSB: your average annual pay over the last three years, multiplied by complete years of service, divided by 15, less any tax-free pension lump sum.
There is a lifetime cap of €200,000 on tax-free ex gratia payments.
A worked example: 12 complete years, average pay €50,000, no pension lump sum, and a package of €55,000 made up of €15,000 statutory (25 weeks × €600) and €40,000 ex gratia.
- Basic Exemption: €10,160 + (12 × €765) = €19,340.
- Increased Exemption: €19,340 + €10,000 = €29,340.
- SCSB: (€50,000 × 12) ÷ 15 = €40,000.
- Best exemption: SCSB, €40,000. The whole ex gratia payment is tax-free, and so is the statutory sum.
If this person had already taken a tax-free pension lump sum of €20,000, the SCSB would fall to €20,000, the Increased Exemption would be unavailable, and €20,000 of the ex gratia payment would be taxed. That is why the pension question matters before you sign; the tax guide covers it in detail.
Social welfare after voluntary redundancy
Taking voluntary redundancy does not disqualify you from a jobseeker's payment. The Department of Social Protection treats it as leaving work through redundancy, not as leaving voluntarily without good cause.
Jobseeker's Benefit is based on your PRSI record and is not means tested. The lump sum does not reduce it. The Department can apply a waiting period before payment starts where you are under a certain age and received a redundancy payment above a certain amount; the age and the amount are the Department's own figures and could not be verified for this guide, so check the Jobseeker's Benefit page before you rely on them.
Jobseeker's Allowance is means tested, so a lump sum sitting in a savings account is counted as capital. If your PRSI record does not qualify you for Benefit, this is the route, and a large package can reduce the weekly payment.
Apply as soon as your employment ends. The lead guide has the full social welfare section.
What to ask before you accept
A voluntary scheme is an offer, and the questions below are the ones a union official or a solicitor would ask on your behalf.
- What is the statutory sum on its own? Get it in writing and check it against the formula. The enhancement should be on top of, or at least inclusive of and larger than, this figure.
- What is the enhanced element, and how was it worked out? Weeks per year, capped or uncapped pay, any ceiling.
- Is notice included or extra? Your minimum notice under the Minimum Notice and Terms of Employment Acts 1973 to 2005 is one to eight weeks depending on service, and your contract may give more. See redundancy notice periods.
- What about holiday pay? Accrued annual leave not taken is owed in any event.
- What is the tax position? Which exemption applies, whether a pension lump sum affects it, and whether the employer has run the figures.
- What happens to my pension? Whether you can leave it in the scheme, transfer it, or take a lump sum, and how that interacts with the tax exemption.
- Is there a waiver of claims? Many schemes ask you to sign a settlement agreement giving up any claim against the employer. That is a serious step and you should be given time and, ideally, independent advice before signing; most agreements say the employer will contribute to the cost of that advice.
- When is it paid? On the termination date, or later. Get a date.
- Can I change my mind? Most schemes say an accepted application is binding. Do not apply unless you mean it.
- What if the application is refused? Whether compulsory redundancies will follow, and on what selection basis.
Nothing obliges you to decide on the spot. If the deadline is short, ask in writing for it to be extended while you take advice.
If you decline and are then selected
Declining a voluntary offer does not remove your protection. If the employer moves to compulsory redundancies, the selection must be fair and the redundancy genuine, and you are still owed the statutory sum. Some schemes say the compulsory terms will be less generous than the voluntary ones, which is lawful as long as the statutory minimum is met, and is a factor to weigh. If you believe you were selected because you declined, or for a reason that touches an equality ground, the dismissal may be unfair and the WRC route is open within 6 months.
Where this leaves you
Put your dates and pay into the redundancy calculator to see the statutory floor and the tax exemptions on the enhanced part, and compare the result with the written offer line by line. If the package comes with a settlement agreement, or the pension interaction is large, independent advice before you sign is what most people get, and the enquiry page explains how that works on this site.
Frequently asked questions
Is voluntary redundancy still redundancy in Ireland?
Yes. If you volunteer in response to an employer's call for redundancies, the dismissal is still by reason of redundancy. You keep the statutory entitlement after 104 weeks' service, the statutory sum is still tax-free, and any enhanced payment is taxed under the same exemptions as any other ex gratia payment.
How is voluntary redundancy calculated in Ireland?
The statutory floor is two weeks' pay for each year of service plus one bonus week, with weekly pay capped at €600. A voluntary package is usually that sum plus an enhanced ex gratia payment, often expressed as extra weeks per year of service, sometimes with a cap on the total. Only the statutory part is set by law; the rest is whatever the employer offers.
Can I get social welfare after voluntary redundancy in Ireland?
Taking voluntary redundancy does not disqualify you from Jobseeker's Benefit or Allowance. Jobseeker's Benefit is not means tested, so the lump sum does not reduce it, although the Department can apply a waiting period for large payments to people under a certain age. Jobseeker's Allowance is means tested, so a lump sum held as savings counts.
Is voluntary redundancy taxed in Ireland?
The statutory sum is free of tax, USC and PRSI. The enhanced part is an ex gratia payment: the first part is tax-free under the Basic Exemption of €10,160 plus €765 per complete year, the Increased Exemption of up to €10,000 more where you have no tax-free pension lump sum, or the SCSB formula, whichever is highest, up to a €200,000 lifetime cap.
Can my employer refuse my application for voluntary redundancy?
Usually yes. A voluntary scheme is an invitation, and most schemes say the employer decides which applications to accept, often to keep particular skills. If the employer refuses you and then selects you compulsorily, you are still entitled to the statutory sum and the selection must be fair. If it refuses you and makes someone else redundant instead, there is normally no claim.