Taxpayer's money cannot be spent without an appropriation from Dail Eireann. Hence there must have been a Dail vote approving this expenditure.
I agree that it is disgraceful. As I understand it. members of local authorities are not paid a salary, but receive an allowance for (unvouched) expenses. If they had a salary, there might be a case for a termination payment by analogy with a redundant worker, but not in respect of expenses. When they are no longer councillors they will no longer incure the "expenses" for which they were supposedly being reimbursed, so they are at no loss. So why should they get any compensation?