Revenue eBrief No. 092/22 – Tax treatment of Covid-19 Related Lay-off Payments (CRLP) to employees in respect of reckonable service

Revenue eBrief No. 092/22

22 April 2022

Tax treatment of Covid-19 Related Lay-off Payments (CRLP) to employees in respect of reckonable service

The Redundancy Payments (Amendment) Act 2022 was signed into law on 31 March 2022 and provides for a scheme for payments to employees who were made redundant and who were unable to accrue reckonable service due to layoffs caused by the Covid-19 public health restrictions. This eBrief summarises and outlines the tax treatment of the scheme.

The Scheme

Reckonable service is service that is included in the calculation of a redundancy lump sum payment. A period of lay-off within the final three years of service before redundancy is not considered reckonable service for the purposes of calculating a redundancy lump sum payment.

The necessary Covid-19 lockdowns caused lay-off situations which resulted in a loss of opportunity for some employees to accrue reckonable service.  A new State funded payment known as the “Covid-19 related lay-off payment” (CRLP) will be made from the Social Insurance Fund (SIF) in respect of periods of lay-off due to Covid-19, where the employee is subsequently made redundant. In essence a person will receive a State funded payment at the end of their employment as if they had not been laid off during the specific Covid related period.

The amount an eligible worker will receive will depend on the length of time they were placed on lay-off due to Covid-19. The calculation for the payment is based on existing statutory redundancy provisions and the maximum amount which any one employee will be entitled to is €2,268.

Administration of CRLP

The Department of Social Protection (DSP) will be responsible for administering the new scheme. As the new scheme is “employer-led”, this means that, for the majority of eligible employees, their employer will apply for this payment on their behalf. Applications can be made online via the Welfare Partners website. The opening of DSP’s application process has been aligned with the scheduled commencement of the legislation on 19 April 2022.

Tax Exemption

Statutory redundancy payments are exempt from tax under section 203 of the Taxes Consolidation Act 1997. Following approval by the Minister for Finance, the CRLP is exempt from income tax and USC. This brings the payments into line with the tax treatment allowed to statutory redundancy lump sum payments. Legislation will be enacted in due course to provide the tax exemption but in the meantime the CRLP should be paid to employees without deduction of income tax, USC and PRSI.

Further details published by the Department of Social Protection on how to qualify for, apply for and calculate the CRLP can be found on 

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