The Redundancy Payments Act, 1965 has introduced the redundancy payments scheme as one of the first substantial statutory individual employment rights. Presently, the Employment Rights Act 1996 contains the substantially consolidated law on this subject and provides for a comprehensive redundancy payment scheme for employees in the period of uncertainty and hardship after dismissal or redundancy. According to the Employment Rights Act 1996 an employee is held to be dismissed for redundancy when the dismissal is either entirely or mainly due to:
“(a) the fact that his employer has ceased, or intends to cease (i) to carry on the business for the purposes of which the employee was employed by him, or (ii) to carry on that business in the place where the employee was so employed, or
(b) the fact that the requirements of the business (i) for employees to carry out work of a particular kind, or (ii) for employees to carry out work of a particular kind in the place where the employee was employed by the employer have ceased or diminished or are expected to cease or diminish”
Thus an employee can be said to be redundant if the entire business is shut down, or even if the business continues, the class or type of worker who belongs to the employee's kind is no longer needed at that particular place. An employee is qualified for a redundancy payment only if the employer continuously employed him for at least 2 years at the date of the dismissal.