# Statutory Redundancy in Ireland vs TFR and Collective Dismissal in Italy

> Irish statutory redundancy (2 years' service, €600 weekly cap) vs Italian TFR paid on every exit and the collective dismissal procedure.

In Ireland, severance is a contingency: statutory redundancy is paid only if the role disappears and the employee has at least two years' service. In Italy, the equivalent money is a certainty: **TFR** accrues from day one and is paid on every exit, while a genuine redundancy also triggers dismissal rules and, for larger groups, a formal collective procedure. Full comparison on [Italy vs Ireland](/italy-vs-ireland.html).

## Ireland: statutory redundancy

Under the Redundancy Payments Acts:

- **Qualifying service:** **2 years (104 weeks)** of continuous, reckonable service.
- **Formula:** **2 weeks' pay for every year of service, plus 1 additional week's pay.**
- **Cap:** the weekly pay used is capped at **€600** (€31,200 a year), even if actual pay is higher.
- **Reckonable service:** some absences in the last 3 years are deducted, for example sick leave over 26 consecutive weeks.
- **Payment:** the employer pays the lump sum on exit. The cost falls on the employer <!-- review: confirm no State rebate for solvent employers -->. Part of a lump sum may be tax-free.

Example: an employee on €1,000 a week with 6 years' service receives (6 × 2 + 1) × €600 = **€7,800**. With 18 months' service, nothing is due by statute. Many Irish employers pay enhanced, ex gratia redundancy on top, but that is a choice.

## Italy: TFR on every exit

**TFR** (trattamento di fine rapporto, art. 2120 c.c.) is not a redundancy payment. It is deferred pay:

- **Accrual:** each year, annual pay ÷ 13.5, minus the 0.5% contribution to INPS, about **6.91%** of gross pay including the 13th and 14th months.
- **Revaluation:** each 31 December, the accumulated fund is revalued at 1.5% plus 75% of ISTAT inflation.
- **Payment:** on **every** termination: resignation, dismissal, end of a fixed term, retirement. No qualifying period, no cap.
- **Pension option:** the employee may send future TFR to a supplementary pension fund (D.Lgs 252/2005). In firms with 50 or more employees, TFR left in the company goes monthly to an INPS treasury fund.

Example: a RAL of €60,000 accrues about €4,146 a year. After 6 years, roughly €25,000 plus revaluation is due, whatever the reason for leaving.

## Redundancy itself in Italy

Eliminating a role is an **objective dismissal** (giustificato motivo oggettivo). The employer must show the reorganisation is real and that it could not redeploy the employee. If it fails, the Jobs Act compensation of 6–36 months' pay (3–18 for small employers) applies; see [Unfair Dismissals Acts vs Italian dismissal rules](/articles/ireland-unfair-dismissal-vs-italian-dismissal-rules.html).

**Collective dismissal** (Law 223/1991) applies to employers with more than 15 employees making at least **5 dismissals within 120 days** in the same province. It requires written notice to unions and authorities, a union consultation phase of up to 45 days, an administrative phase, and selection criteria (family responsibilities, seniority, technical and organisational needs) unless agreed otherwise. Ireland also has a collective redundancy consultation duty, but the Italian procedure is more prescriptive and failure can lead to reinstatement.

Every dismissal also costs the **NASpI ticket**: about €649.73 per year of service in 2026, up to about €1,949, and **tripled** in collective dismissals without a union agreement.

## Side by side

| Topic | Ireland | Italy |
|---|---|---|
| What is it | Redundancy lump sum | TFR deferred pay + dismissal rules |
| Qualifying service | 2 years | None for TFR |
| Paid on resignation | No | Yes |
| Formula | 2 weeks/year + 1 week | Annual pay ÷ 13.5 − 0.5% |
| Cap | €600 a week | None |
| Collective procedure | Consultation duty | Law 223/1991, 5+ in 120 days, union phase |
| Extra cost | Ex gratia if offered | NASpI ticket, Jobs Act if unjustified |

## Budgeting the difference

An Irish finance team usually provides nothing for redundancy until a decision is taken. In Italy, budget TFR as about 7% of payroll every month and treat it as salary, because it will be paid. Add a provision for a possible settlement on exit: Italian exits are often closed with an incentive (a few months' pay) in exchange for a waiver signed in a protected venue.

## A worked comparison

Take an employee on €60,000 a year whose role is eliminated after four years.

**Ireland.** Statutory redundancy is (4 × 2 + 1) × €600 = **€5,400**, plus notice of 2 weeks (or pay in lieu) and pay for untaken leave. If the employer had made the role redundant at 23 months, nothing would be due by statute.

**Italy.** TFR of roughly €4,146 a year × 4 years, about **€16,600** plus revaluation, is paid whatever the reason. Add CCNL notice (often one to two months for a white-collar employee at this level), untaken leave and ROL, and the NASpI ticket at its maximum of about €1,949. If the employee challenges the dismissal and the employer cannot prove the reorganisation, Jobs Act compensation of at least 6 months' pay (3 for small employers) can follow. This is why many Italian exits end with a negotiated incentive in return for a signed waiver.

The TFR element would have been paid anyway on resignation, so it is not a true cost of redundancy, only of employment. The real redundancy-specific risk in Italy is the dismissal remedy, not the lump sum.

## Common questions

**Is TFR taxed?** Yes, by separate taxation at an average rate based on the employee's previous income, withheld by the employer.

**Does TFR replace notice?** No. Notice (or pay in lieu) and untaken leave are due as well.

**Can we agree to pay TFR monthly?** Not as a general rule. It is paid on exit or to a pension fund.

## What this means if you hire through an EOR

With an EOR, TFR accrues in Italian payroll, appears on every payslip and is included in the monthly cost you are invoiced, so there is no year-five surprise. If the role ends, the EOR handles the dismissal procedure or settlement, pays TFR in the final payslip and files the NASpI ticket. See [Italian employment contracts](/italy-employment-contracts.html), model the cost in the [calculator](/calculator.html), compare on [Italy vs your country](/italy-vs-your-country.html) or [contact us](/contact.html).

## Related guides for Irish companies

- [PRSI and MyFutureFund vs INPS](/articles/ireland-prsi-myfuturefund-vs-inps-employer-cost.html)
- [Irish written statement vs the Italian contract](/articles/ireland-written-statement-vs-italian-employment-contract.html)
- [Annual leave, sick pay and working time](/articles/ireland-annual-leave-sick-pay-working-time-vs-italy.html)

*General information, not legal advice.*

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Source: https://hiringitaly.com/articles/ireland-statutory-redundancy-vs-italy-tfr.html · 2026-11-10