What Severance Pay Rules Must Employers Follow in Ireland?

Which Employees Qualify for Severance Pay?

Employees in Ireland qualify for statutory redundancy (severance) if they meet all of the following criteria:

• They have at least two years (104 weeks) of continuous service with the employer.
• Their position is genuinely redundant, as defined by law.
• They are aged 16 or older.
• They are employed under a contract of service (not self-employed or under a contract for services).
• They have not been dismissed for misconduct.
• They have received a proper notice of redundancy.

Certain sectors may also include enhanced severance through collective agreements or individual contracts.

What Are the Legal Timelines for Paying Severance?

Employers must pay statutory redundancy on or as soon as reasonably practicable after the termination date. In most cases, the payment is made within the final payroll cycle following the employee’s departure. The redundancy payment must be accompanied by a Form RP50, which outlines the calculation and confirms the payment to both the employee and the Department of Social Protection.

Failure to make payment promptly can result in claims to the Workplace Relations Commission (WRC). Employers are encouraged to process payments immediately upon termination to avoid disputes and ensure compliance.

What Penalties Apply if Severance Is Not Paid Correctly?

If severance (redundancy pay) is not paid correctly, employers can face several legal and financial consequences:

• Employee claims to the Workplace Relations Commission (WRC): The WRC can order payment of statutory redundancy entitlements plus compensation.
• Interest and penalties: Employers may be required to pay interest on unpaid amounts.
• Government recovery: The Department of Social Protection can pay redundancy directly to the employee and recover the cost from the employer.
• Legal costs and reputational risk: Non-compliance can lead to legal fees, disputes, and reputational harm.

Failing to pay severance in accordance with Irish law can quickly become more expensive than paying it correctly from the start.

Does Outsourcing Employment via an EOR Change Severance Liability?

Yes, if you hire through an Employer of Record (EOR) in Ireland, the EOR becomes the legal employer. This means the EOR is responsible for administering and paying statutory redundancy (severance pay) to eligible employees. However, the cost of severance is typically borne by the client company under the service agreement.

In practice, this setup protects the client company from direct compliance risk. The EOR ensures severance is calculated according to Irish labor law, applies the correct caps, and processes payment through compliant payroll channels, reducing the employer’s exposure to error or legal action.

Be 100% Compliant in Offering Severance with Playroll

Severance rules can be complex, and in Ireland, compliance means more than cutting a final check. You need to calculate service accurately, follow the right forms, and meet statutory deadlines. Playroll handles all of that for you.

With Playroll, employers hire confidently in Ireland knowing every redundancy payment is calculated correctly, paid on time, and fully compliant with Irish labor law. Our platform automates local legal requirements and provides transparent cost forecasting, so you make people decisions without compliance anxiety. Partner with Playroll to ensure every severance payment is fair, lawful, and stress-free for both your business and your employees.