Voluntary Severance / Voluntary Separation
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. You should be very clear if your employer is making you statutorily redundant, offering voluntary redundancy or offering voluntary severance / voluntary separation.
A voluntary severance / voluntary separation does not constitute a redundancy. This is because that job may continue to exist even after the person who accepted the voluntary severance has left the company.
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 Workplace Relations Commission (WRC) – www.workplacerelations.ie
Voluntary Severance – Tax
Voluntary severance payments are not tax-free payments and are subject to normal tax.
Voluntary Severance – Jobseekers 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 a Jobseekers payment for up to 9 weeks.
Voluntary Severance – Other Supports
If you qualify for Jobseeker’s Benefit or Jobseeker’s Allowance after a voluntary severance you may be able to access the Back to Work Enterprise Allowance (BTWEA) or the Back to Education Allowance (BTEA) under the standardqualifying conditions.