Voluntary Severance

Voluntary Severance occurs when an employer asks for staff to voluntarily depart from or leave the employment of a company. It can be a financial incentive offered by an employer to employees where a business is downsizing or restructuring.

A voluntary severance does not constitute a redundancy, in that the job the person accepting the voluntary severance would have carried out may continue to exist even after they have left the company.

A 'Voluntary severance payment' is any payment in connection with a mutually agreed and voluntary departure from employment by an employee.

Accepting a voluntary severance does not prevent the employee from being re-hired to do the same job under different working conditions, terms or rates of pay. However, forcing an employee to accept a voluntary severance in order to re-hire them under less favourable circumstances could constitute Constructive Dismissal and could be the subject of a complaint to the Employment Appeals Tribunal - www.workplacerelations.ie.

- Tax:

Unlike redundancy payments, voluntary severance payments are not tax-free payments and are subject to normal tax assessment.

- Jobseeker's payments:

You will not automatically qualify for a Jobseeker's Benefit / Jobseeker's Allowance payment if you accept voluntary severance. This is because you will have in effect 'voluntarily' made yourself unemployed. This could result in disqualification of payment of a Jobseekers payment for up to 9 weeks.

If applied, this disqualification period will be deducted from your overall 12 or 9 month entitlement to receive Jobseeker's Benefit.

Any monies received from a voluntary severance will be assessed as 'means' for the purpose of the means test for qualification for Jobseeker's Allowance.

- Other Supports:

Unlike a redundancy situation, you will not have immediate access to the Short-Term Enterprise Allowance or the Back to Education Allowance as would be the case in a redundancy situation. If you qualify for Jobseekers Benefit or Jobseekers Allowance after a voluntary severance you may be able to access the Back to Work Enterprise Allowance or the Back To Education Allowance under the standard qualifying conditions.