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Redundancy Payments

Employers are obliged by law to pay statutory redundancy payments to certain employees in certain circumstances.
The circumstances in which redundancy is payable would include situations where not enough work is available. The amount that is payable would be by reference to the length of service and normal weekly earnings. To be eligible for redundancy payment the employees must have 2 years continuous service and have employment that is fully insurable for all the benefits under the Social Welfare Act. Where applicable the statutory redundancy available to employees is based on 2 weeks average salary for each continuous year of employment plus one additional week.

The statutory amount payable is capped at €600 per week regardless of salary. You should also be aware that where proper notice is given (2 weeks) that employers are entitled to a 60% rebate from the Department of Enterprise, Trade and Employment. Employers are obliged to make redundancy payments in accordance with the statutory requirements laid down under the Redundancy Payments Acts.

In situations where the employer is not in a position to pay the statutory redundancy to their employees then they should sign the RP50 form and submit the following information:

    • A letter from Accountant or solicitor stating the company is not in a position to pay and accepting liability for the 40% owing to the Social Insurance Fund and
    • Documentary evidence i.e Audited accounts/statement of affairs. The Department of Enterprise, Trade and Employment pays the full amount direct to the employees from the Social Insurance Fund (S.I.F.). The employee fills in Form RP50 including the original employer signature and sends it into the Department.

Interest on Late Payments

Late interest charge is calculated using the Late Payments in Commercial Transactions Regulations for 2002.
The Regulations apply to commercial transactions in both the public and private sectors. They do not apply to contracts made before 7 August 2002, claims for interest of less than €5, transactions with consumers or debts that are subject to other laws, e.g. insolvency proceedings. To calculate the interest due on a late payment the amount of the debt is multiplied by the number of days in excess of 30 for which the payment is late and by the daily interest rate in operation at the time.

From the 1st January 2009, the late payment interest rate is 9.50% per annum (that is based on the ECB rate of 2.50% plus the margin of 7%). The rate for 2008 was 11.00% being a daily rate of 0.03% (This rate applies for the full year of 2008. The rates change every 6 months approximately. If you are a supplier who has been paid late for a commercial transaction you are now legally entitled to be paid interest on the amount outstanding and compensation for debt recovery costs.

It is a matter for a supplier to decide how, or if, they wish to recover a debt, including any late payment interest or compensation associated with it. It shall be an implied term of every commercial transaction that where late payment interest becomes payable under Regulation 4, the supplier shall be entitled, in addition to the late payment interest, to the amount specified in the Schedule to these Regulations as compensation towards the relevant recovery costs incurred by the supplier as a consequence of late payment.