Statutory redundancy payments made under new legislation enacted this week will be exempt from taxation, the Department of Enterprise, Trade and Employment has confirmed.
Trade unions campaigning for the new law welcomed the news as an unexpected bonus, noting there had been "fears" that payments above an existing cap of €10,160 would be taxed.
However, a spokesman for the Department, said all statutory payments made under the Redundancy Payments Act, 2003, which came into force last Sunday, would remain tax-free. Any change in this situation would require fresh legislation, he said.
Mr Eamon Devoy, assistant general secretary of the Technical Engineering and Electrical Union (TEEU), said "the maintenance of tax exemption on redundancy payments is some compensation for the lack of retrospection in the Act."
He added the legislation vindicated the stance taken by the Trade Union Federation - comprising the TEEU and SIPTU - on reform of redundancy law, which had not been overhauled in 35 years. Not only employers' groups had criticised the campaign, but even some trade unions had been quietly sceptical that anything could be achieved, Mr Devoy remarked.
The federation organised a half-day stoppage and protest marches last October over low statutory redundancy payments at the Irish Glass Bottle Company and a number of other firms.
The Act guarantees two weeks pay for each year of service regardless of age. Previously, those aged under 41 years received just half a week of pay per year of service, rising to a week over the age threshold.
SIPTU vice-president, Mr Jack O'Connor, said the law showed what could be achieved when workers campaigned to redress a long-standing grievance.
