Redundancy Tax in Ireland: Statutory Pay, Ex-Gratia & SCSB

Redundancy calculations in Ireland become confusing because three different questions are often mixed together:

1. What statutory redundancy are you entitled to?
2. Is your employer paying anything above the statutory amount?
3. How much of an additional termination payment can be received tax free?

They are related, but they are not the same calculation.

Need to calculate a redundancy payment? Use the Redundancy Calculator Ireland 2026 for statutory pay and ex-gratia exemption estimates. This guide focuses on legal and tax treatment: which payments qualify, how Revenue’s exemptions work and when SCSB becomes relevant.

Redundancy can also change the rest of your year’s PAYE position. Compound’s tax credits guide explains how credits interact with Income Tax, while the Take-Home Pay Calculator can model a new salary if you move into another PAYE role.

Statutory redundancy in Ireland: the core formula

For an eligible employee, statutory redundancy is generally calculated as:

Two weeks’ normal weekly remuneration for each complete year of service, plus one bonus week.

The important catch is that the weekly remuneration used for the statutory calculation is capped at €600.

That means an employee earning €1,000 a week does not calculate statutory redundancy using €1,000. The statutory calculation uses €600.

The general service requirement is at least 104 weeks of continuous service, although statutory entitlement depends on the wider redundancy rules and employment circumstances.

Worked examples

Five years of service at €500 a week

The worker’s weekly remuneration is below the €600 ceiling.

• Two weeks × 5 years = 10 weeks
• Add one bonus week = 11 weeks
• 11 × €500 = €5,500

Estimated statutory redundancy: €5,500.

Ten years of service at €800 a week

The employee earns more than the statutory weekly ceiling, so €600 is used.

• Two weeks × 10 years = 20 weeks
• Add one bonus week = 21 weeks
• 21 × €600 = €12,600

Estimated statutory redundancy: €12,600.

This is why a redundancy payment can be materially lower than someone expects after multiplying their actual weekly salary by their years of service.

Twenty years of service at €600 a week

• Two weeks × 20 years = 40 weeks
• Add one bonus week = 41 weeks
• 41 × €600 = €24,600

Estimated statutory redundancy: €24,600.

You can run your own service and pay figures in the Irish redundancy calculator.

Is statutory redundancy taxed?

Revenue states that statutory redundancy payments are exempt from Income Tax and USC.

That does not mean every payment made when employment ends is tax free.

Salary due, holiday pay, bonuses and contractual payments can remain taxable as normal employment income. The tax position of an additional non-contractual termination payment is considered separately.

What is an ex-gratia redundancy payment?

An employer may choose to pay more than the statutory redundancy amount.

The extra amount is often described as an ex-gratia termination payment. The tax rules can allow some or all of a qualifying non-contractual payment to be exempt, depending on the worker’s circumstances.

Revenue’s main exemption calculations include:

• the basic exemption;
• the increased exemption, where the conditions are met; and
• the Standard Capital Superannuation Benefit, usually called SCSB.

The taxable amount is broadly the part of the qualifying termination payment that remains after the most beneficial available exemption, subject to the rules and lifetime limits.

The basic exemption

The basic exemption is:

€10,160 + €765 for each complete year of service.

For someone with 10 complete years:

• €10,160
• plus €7,650
• equals €17,810

That figure concerns the qualifying termination payment. It is not the formula for statutory redundancy itself.

The increased exemption

An additional exemption of up to €10,000 may be available where Revenue’s conditions are satisfied.

The increased exemption can be reduced by a tax-free lump sum from an occupational pension scheme. If the relevant pension lump-sum amount exceeds €10,000, the increased exemption may not be available.

Revenue also restricts how frequently the increased exemption can be used.

Because pension rights matter, two employees receiving the same ex-gratia payment after the same length of service can have different tax outcomes.

What is SCSB?

SCSB is another way of calculating the tax-free amount of a qualifying termination payment.

The broad formula uses:

• average annual remuneration over the final 36 months;
• complete years of service; and
• relevant pension lump-sum rights.

In simplified form:

SCSB = average annual remuneration ÷ 15 × complete years of service − relevant pension lump sum

Revenue’s detailed rules determine which remuneration and pension values are included.

The Redundancy Calculator Ireland lets you enter average annual pay and pension lump-sum rights to compare the estimated SCSB result with the basic and increased exemption.

Why contractual pay in lieu of notice matters

A common source of confusion is payment in lieu of notice.

Revenue states that where payment in lieu of notice is provided for by the employment contract, it is taxable as pay and does not qualify for the termination-payment exemptions.

So a package described informally as “€50,000 redundancy” may contain several components with different tax treatment.

Before estimating the tax-free amount, split the package into:

• statutory redundancy;
• contractual salary or holiday pay;
• contractual pay in lieu of notice;
• pension benefits; and
• any genuine non-contractual ex-gratia termination payment.

Is there a €200,000 lifetime limit?

Revenue applies a €200,000 lifetime limit to tax-free termination payments covered by these exemptions.

Previous qualifying exempt termination payments can therefore affect the remaining exemption available on a later redundancy.

This is particularly important for someone who has already received a large tax-free termination payment from another employer.

Redundancy and your wider finances

The redundancy cheque is only one side of the financial impact.

A useful short-term plan should also consider:

• final salary and holiday pay;
• how long existing cash reserves could cover essential spending;
• mortgage or rent commitments;
• health insurance or other employer benefits that are ending;
• pension arrangements after leaving employment;
• unemployment supports for which you may qualify; and
• the tax impact of taking another job during the same tax year.

Avoid treating the redundancy payment as a monthly income replacement without first separating money that may be needed for tax or other near-term obligations.

Frequently asked questions

How much redundancy do I get after 10 years in Ireland?

At the €600 statutory weekly ceiling, 10 complete years gives an estimated statutory amount of €12,600: €600 × 21 weeks. If weekly remuneration is lower than €600, the lower figure is used.

Is statutory redundancy tax free?

Revenue states that statutory redundancy is exempt from Income Tax and USC.

Is an ex-gratia redundancy payment tax free?

It can be partly or fully exempt if it qualifies under the termination-payment rules. The available exemption depends on service, pension rights, previous payments and whether the basic exemption, increased exemption or SCSB is most favourable.

Does my actual salary determine statutory redundancy?

Only up to the statutory weekly remuneration ceiling. The current statutory calculation caps weekly remuneration at €600.

Does redundancy use complete years only?

The statutory formula and Revenue’s basic exemption calculations use complete years of service. Specific employment-law entitlement should be checked if service dates or continuity are uncertain.

Is payment in lieu of notice tax free?

A contractual payment in lieu of notice is taxable as pay. A payment not arising under the contract can have different treatment, depending on the facts.

The useful way to calculate a redundancy package

Start with the statutory amount. Then separate every additional component of the employer’s package before looking at tax.

That prevents the most common error: assuming the words “redundancy payment” automatically mean the entire amount is tax free.

Use the Redundancy Calculator Ireland for the numbers, then verify a material ex-gratia package against the current Revenue guidance or professional advice before acting.

What to do after the redundancy calculation

If redundancy also means changing employer or leaving a workplace pension behind, read Changing jobs in Ireland: what happens to your pension. If the payment needs to bridge a period without income, the Emergency Fund Calculator can turn essential monthly spending into a target runway.