Quick answer
- Statutory redundancy is exempt from Income Tax and USC and is separate from the reliefs for extra termination payments.
- Extra employer redundancy payments are not the same as statutory redundancy and may need relief checks.
- Notice pay, holiday pay and final wages are usually separate from statutory redundancy.
- The basic exemption for a qualifying extra lump sum is €10,160 plus €765 for each complete year of service, but another relief may produce a different tax-free amount.
Redundancy Pay Calculator
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On this page
- What a redundancy payment can contain
- Decision tree: what type of payment is it?
- Basic exemption: €10,160 plus €765 for each complete year
- Increased exemption and SCSB
- Why final payslips can be confusing
- What to check before relying on a tax-free figure
- Check lifetime relief use before comparing exemptions
- Worked package: compare reliefs without counting statutory pay twice
What a redundancy payment can contain
A final redundancy package can contain several payment lines, and each line may receive different tax treatment. Separate them before estimating what may be tax-free or taxed through payroll.
| Payment line | Typical tax question | Planning note |
|---|---|---|
| Statutory redundancy | Is this tax-free? | Exempt from Income Tax and USC and ignored when checking relief on an extra termination payment. |
| Enhanced / ex-gratia redundancy | Does a relief or exemption apply? | Check the basic exemption, increased exemption or SCSB where relevant. |
| Payment in lieu of notice | Is it taxable as pay? | A contractual payment is generally taxable in full and does not qualify for the lump-sum exemption. |
| Holiday pay / final wages | Is this normal payroll? | Usually handled as employment pay rather than redundancy. |
Decision tree: what type of payment is it?
Basic exemption: €10,160 plus €765 for each complete year
Revenue’s standard basic exemption for a qualifying termination lump sum is €10,160 plus €765 for each complete year of service. Partial years do not add a proportion of €765.
| Complete years | Basic exemption illustration |
|---|---|
| 5 years | €10,160 + (€765 × 5) = €13,985 |
| 10 years | €10,160 + (€765 × 10) = €17,810 |
| 20 years | €10,160 + (€765 × 20) = €25,460 |
This calculation applies to the qualifying extra termination payment, not to the statutory redundancy amount, which is already exempt.
Increased exemption and SCSB
| Relief | What it considers | Important limitation |
|---|---|---|
| Increased exemption | Can add up to €10,000 to the basic exemption, reduced by certain tax-free pension lump sums. | Conditions apply, including the rule on using the increase within the previous 10 years. |
| SCSB | Uses average annual pay for the final 36 months, complete years of service and relevant pension lump-sum rights. | It is a separate calculation and is not automatically better than the basic or increased exemption. |
Revenue’s general approach is to compare the qualifying reliefs and tax only the part of the relevant extra payment above the applicable tax-free amount. Because pension rights and past termination payments can affect the answer, this guide does not produce a single automatic tax figure.
Why final payslips can be confusing
A final payment can include wages, notice, untaken annual leave, statutory redundancy and an extra employer payment. These are not all treated the same way. That is why a statutory redundancy calculator should not be used as a full final-payslip tax calculator.
What to check before relying on a tax-free figure
- Which part is statutory redundancy.
- Whether there is an enhanced or ex-gratia payment.
- Whether notice pay and holiday pay are included separately.
- Whether Revenue reliefs or limits apply to the extra payment.
Check lifetime relief use before comparing exemptions
Revenue’s basic-exemption guidance states a €200,000 lifetime limit. Ask payroll to check earlier qualifying termination-payment relief; do not assume the whole limit is available again. Statutory redundancy remains separate from the qualifying extra termination payment.
The increased exemption has its own ten-year conditions and pension-lump-sum adjustment. A future pension right can matter even if no pension cash has been received. Do not waive pension rights just to reproduce an example.
Compare eligible basic/increased relief with SCSB, rather than adding both results. SCSB uses average annual pay over the last 36 months of continued service × complete service years ÷ 15, less the relevant tax-free occupational-pension lump sum received or receivable. Unpaid leave and breaks need their specific treatment.
Gather the payment breakdown, service dates, 36-month pay record, pension-right valuation and prior relief details. A contractual lump sum is generally taxable in full; contractual notice pay is payroll pay. Non-contractual notice can require a different review under Revenue’s termination-payment guidance.
Worked package: compare reliefs without counting statutory pay twice
Take a fictional employee with 20 complete reckonable service years, normal weekly pay above the €600 statutory ceiling, steady gross annual pay of €54,000 throughout the final 36 months, and a relevant pension lump-sum entitlement valued at €8,000. Assume no career break, no unpaid leave requiring adjustment, no prior lifetime relief use, and the increased-exemption conditions otherwise satisfied. The pension entitlement is an input, not extra cash in this employer package.
| Employer payment line | Amount | Treatment in this example |
|---|---|---|
| Statutory redundancy | €24,600 | (2 × 20 + 1) × €600; kept separate. |
| Qualifying non-contractual ex-gratia lump sum | €70,000 | Compare the eligible termination reliefs. |
| Final wages, holiday and contractual notice pay | €3,500 | Ordinary payroll; no termination exemption assumed. |
| Total employer package | €98,100 | Gross payment lines before payroll tax. |
Calculate each eligible relief on the €70,000 extra payment
| Relief | Calculation | Result |
|---|---|---|
| Basic | €10,160 + (€765 × 20) | €25,460 |
| Basic plus eligible increase | €25,460 + (€10,000 − €8,000) | €27,460 |
| SCSB | (€54,000 × 20 ÷ 15) − €8,000 | €64,000 |
Under these assumptions SCSB is the larger eligible relief. Of the €70,000 extra lump sum, €64,000 is relieved and €6,000 remains taxable. Do not add €27,460 to €64,000. The separate €24,600 statutory payment is not reduced by this comparison.
The package therefore contains €88,600 of exempt/relieved employer payments (€24,600 + €64,000), and €9,500 outside those exemptions (€6,000 + €3,500). Those figures reconcile to €98,100. €9,500 is not the tax bill; the payslip still needs the correct Income Tax, USC and applicable PRSI treatment for each payment line.
If the same employee instead had relevant pension rights of €70,000, SCSB would be €2,000 and the increased exemption would not be available. Basic relief of €25,460 would then be larger. This shows why the pension figure cannot be silently left blank.
Confirm the actual package with payroll. The Redundancy Pay Calculator estimates the statutory payment; it does not compute all termination reliefs or a final net payslip.
Frequently asked questions
Is statutory redundancy tax-free in Ireland?
Statutory redundancy is generally tax-free.
Is an enhanced redundancy payment tax-free?
Not automatically. Extra employer payments need separate checking because exemptions, reliefs or limits may apply.
What is the basic exemption for redundancy?
For a qualifying extra termination lump sum, the basic exemption is €10,160 plus €765 for each complete year of service. Statutory redundancy is already separately exempt.
What is the increased exemption?
Subject to conditions, the increased exemption can add up to €10,000 to the basic exemption, reduced by certain tax-free pension lump sums. It is generally available only once in a 10-year period.
What is SCSB?
Standard Capital Superannuation Benefit is an alternative Revenue calculation based on average annual pay for the final 36 months, complete years of service and relevant pension lump-sum rights.
Is payment in lieu of notice taxable?
If the employment contract provides for payment in lieu of notice, Revenue explains that this part is taxable as pay and the lump-sum exemptions do not apply to it.
Does the redundancy calculator estimate tax on extra payments?
No. It estimates statutory redundancy only. Enhanced redundancy and final-payslip tax should be checked separately.
Sources & references
- Workplace Relations Commission: Redundancy
- Workplace Relations Commission: Minimum Notice
- Citizens Information: Redundancy Payments
- Department of Enterprise: Redundancy
- Department of Social Protection: Redundancy Payment Scheme
- MyWelfare: Official Redundancy Calculator
- Revenue: Lump Sum Payments
- Revenue: Basic Exemption
- Revenue: Increased Exemption
- Revenue: Standard Capital Superannuation Benefit
- Revenue: USC and redundancy payments
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