It may be a terrible shock – or a welcome offer – but whether your redundancy is voluntary or otherwise, working out the sums of the package on offer is always going to be critical.
Thankfully, those sums have just got a little bit more attractive thanks to a new initiative from Government.
From March 31st, 2025, those being made redundant are able to claim Jobseeker’s Benefit at a substantially higher rate, thanks to the introduction of a new pay-related payment, known as Jobseeker’s Pay-Related Benefit.
It aims to bring Ireland into line with other EU countries and will, the State says, benefit people who “have a strong and recent attachment to the labour market”.
This is because prior to the new system, someone who worked for 20 years, and someone who has never worked, are entitled to the same rate of benefit – albeit the Jobseeker’s Allowance for those without a sufficient record of PRSI payments is means-tested.
So, it’s a way of rewarding those who have made substantial PRSI contributions throughout their working lives. It also softens the blow for those who may have been in higher-earning jobs prior to redundancy.
But just how much is this payment? And who exactly can claim it?
Who’s eligible?
Not everyone who loses their job will qualify for the enhanced payment. You must first fall the right side of a certain date – March 31st of this year – when you become fully unemployed, which means in effect that your last day of work must have been on or after Friday March 28th.
If you are already on Jobseeker’s Benefit, you won’t qualify for the new higher rate.
You must also have paid enough PRSI contributions and the right rate of PRSI, be under 66 years of age (or under 70 if you have agreed to defer your pension), and be “genuinely seeking work”.
If you’re a part-time, casual or seasonal worker, or if you’re put on short-time work, you won’t qualify for it. And firefighters and those working around the school or academic year will also be excluded.
Getting a redundancy package from your employer won’t preclude your right to get the new payment.
While it is possible that you will be eligible for the new payment if you opt for a voluntary severance package, the Department of Social Protection says this will depend on your “individual circumstances”.
This means that, just as with the current Jobseeker’s Benefit, you might not be eligible for the payment for up to nine weeks, depending on your age and the value of your redundancy package.
How much?
The amount you receive is related to the amount you earned in your job. The maximum rate for those who have five years of PRSI contributions is €450 a week (€1,800 a month).
The figure is based on 60 per cent of your weekly earnings up to a certain cap – €750.
So, if for example, you earn €500 a week, you will be entitled to a weekly payment of €300; if you earn €800, you’ll get €450 – and if you earn €2,000 you’ll still get €450.
This top rate is only paid for 13 weeks. After that, it slides down to 55 per cent of earnings up to a maximum weekly payment of €375. Again this will be paid for 13 weeks, at which time it will decrease to 50 per cent of earnings up to a maximum payment of €300 a week for another 13 weeks.
In total then, a claimant entitled to the maximum (ie weekly earnings of €750) will receive Jobseeker’s Benefit of €14,625, should they remain unemployed for those 39 weeks.
Unfortunately, if you work for yourself and your business dries up, you won’t be entitled to the new higher rates of pay
If you only have between two and five years of PRSI contributions, you will only be entitled to the new payment for 26 weeks (or 13 weeks less).
And, it is paid at a lower level – 50 per cent of earnings up to a maximum weekly Jobseeker’s payment of €300 a week. In total, the payment could be worth €7,800 to a claimant in those circumstances.
Once this enhanced payment period passes, (ie in 26 or 39 weeks, depending on PRSI contributions), claimants can apply for the means-tested Jobseeker’s Allowance scheme, as is the case with the current Jobseeker’s Benefit. This is paid at a maximum rate of €244 a week.
The new payment is substantially higher than it was before -particularly for those who find a new job within the 39-week period of the benefit.
Jobseeker’s Benefit, for example, is paid out at a maximum rate of €244 a week – though there is an increased rate of payment for a qualified adult and a child-support payment for all qualified children.
So, over that initial 39 weeks, you could claim a maximum of €9,516 under the old system with no sliding scale – or a maximum of €14,625 under the new.
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It’s worth noting, however, that according to the Department of Social Protection, and unlike with traditional Jobseeker’s Benefit, no increases are payable for qualified adults or child support payments. This means that for some people, the old regime may offer them a greater rate of pay, given that an additional payment of up to €162 can be available for a dependent adult, as well as up to €62 per dependent child.
Calculating the payment
To work out your “weekly rate”, the department will calculate your weekly average gross earnings for the 12 months up to the eight weeks before you lost your job. So, for example, if you lost your job on March 31st last, the department would go back to January 20th, and would then work out your weekly payment based on earnings between January 20th, 2024 and this date.
Unfortunately, if you work for yourself and your business dries up, you won’t be entitled to the new higher rates of pay.
This is despite support for the self-employed to be included in the new benefit. As part of the consultation process on the new payment back in 2023, for example, the Citizens Information Board expressed the view that self-employed workers should also be entitled to the new payment.
“It would be unjust if these workers were to be excluded from PRB [pay-related benefit], especially if their PRSI contribution rates were increased to reflect improved eligibility,” the agency said.
You will, however, remain eligible to apply for the existing Jobseeker’s Benefit (Self-Employed) scheme. This pays out at a top weekly rate of €244, with top-ups available for qualified adults/children.
Liability to tax
Depending on your overall income in the year in question, you may be liable to pay tax on your payments, as Jobseeker’s Pay-Related Benefit is one of those welfare payments, like maternity benefit and the State pension, that can be taxable.
But you won’t pay any tax up front.
According to Revenue, any tax due on the payment will be collected by reducing your tax credits and rate band. So, when you go back to work, Revenue will inform your new employer and deductions associated with the benefit will then be paid out of your wages.
But will you be liable for tax?
Olive O’Donoghue, a tax partner with KPMG, says that if you are claiming the benefit, and had no other income in that tax year, your personal tax credit of €2,000 would cover 22.2 weeks of the payment, given that a weekly payment of €450 would accrue a tax charge of €90 at the standard rate of 20 per cent (and €2,000 covers 22.2 weeks of this €90 charge).
As she notes, however, this is not “entirely realistic”, as most unemployed workers claiming the benefit will likely have had earnings taxed through payroll already, and therefore will have already used some of their tax credit.
In short then, a tax liability is likely for many people when they recommence work.
What if I’m retiring?
Since the State pension age increased to 66 back in 2014, those retiring at 65 have been able to claim a jobseeker’s-type benefit, even though they don’t need to show proof that they are looking for work. As with Jobseeker’s, this is paid at a maximum rate of €244.
But will such claimants now be able to move on to the pay-related benefit?
No, according to the department. Once you retire, you won’t be eligible for the new payment, as you must be “available for full-time work and genuinely seeking employment to qualify for the scheme”.
If, however, you already get the new payment, and you turn 65 years of age while on it, you can remain on the scheme until your 66th birthday.
