Vol. 550 No. 5
9 Mr. M. Higgins asked the Tánaiste and Minister for Enterprise, Trade and Employment the progress made to date in her consideration of the submissions received from SIPTU and ICTU regarding proposed increases in payments available under the Redundancy Payments Act, 1979; the progress made at her meeting with ICTU and SIPTU to discuss the matter; and if she will make a statement on the matter. [9470/02]
15 Mr. D. Carey asked the Tánaiste and Minister for Enterprise, Trade and Employment if she favours an increase in the lump sum payment to three weeks pay per year of service regardless of age in relation to redundancy reform; and if she will make a statement on the matter. [9361/02]
17 Mr. Connaughton asked the Tánaiste and Minister for Enterprise, Trade and Employment the extent to which she envisages change in statutory redundancy entitlements; and if she will make a statement on the matter. [9360/02]
18 Ms Fitzgerald asked the Tánaiste and Minister for Enterprise, Trade and Employment the proposals she deems appropriate to the Redundancy Payments Acts, 1967-1991; and if she will make a statement on the matter. [9373/02]
48 Mr. McCormack asked the Tánaiste and Minister for Enterprise, Trade and Employment her views on a submission from SIPTU regarding amendments to the Redundancy Payments Act, 1967-1991; and if she will make a statement on the matter. [9362/02]
I propose to take Questions Nos. 9, 15, 17, 18 and 48 together.
My Department has been reviewing how the operation of the statutory redundancy scheme could be made simpler and more efficient. The Irish Congress of Trade Unions and SIPTU have developed proposals to enhance the levels of payments made under the scheme. I met the ICTU on 6 March last and its proposals were outlined to me. I am currently consulting the other social partners – the employers – and I will bring proposals to Government next week for a comprehensive review of the scheme by a group representing employers, unions and the relevant Departments.
Does the Minister agree that the Redundancy Payments Acts are in urgent need of revision given the resurgence in the scale of redundancy, which we addressed at the outset of this question time? Does she agree that a half week's pay per year of service for workers under 41 is paltry compensation for losing one's job? It is far out of line with good practice as freely negotiated by employers and trades unions and the law needs to be brought into line with something approximating average good practice.
The Minister will know of a company about which she and I have had discussions where workers were made redundant and are awaiting their minimum statutory entitlements from the fund. That entitlement, of one half week's pay per year of service, plus one week, for those under 41, will have to be discharged by the Exchequer. If one is over 41 one is entitled to one week's pay per year of service plus a week on top. That is a miserable, paltry severance for any worker confronted with the trauma of losing his or her employment. Does the Minister not consider it time to give statutory support to average, decent settlements?
The redundancy payments legislation has been under review since last summer. This matter falls within what are broadly termed "the social partnership agreements" because those do not just deal with levels of pay, but with many other aspects of how employees are remunerated. I accept that it is the case that someone who is totally reliant on statutory redundancy, particularly someone on low wages, gets a paltry sum. The aim is to avoid redundancies where possible as no compensation compensates for the loss of a job, particularly for an employee in the 40 to 50 age group. Thankfully, most of those made redundant are paid compensation far above the statutory minimum and five or six weeks pay has not been unusual in recent times.
The Government has made changes in this area and last year it increased the weekly ceiling from £300 to £400, which came into effect on 1 April last. In the recent budget we hugely increased the tax-free element of redundancy payments. There was a once-off tax-free allowance available to those who were made redundant once. We are now experiencing situations where people have been made redundant for a second time and, in certain circumstances, a person can get €20,000 tax free.
However, the issue of the rate of remuneration has to be dealt with in the context of discussions with the social partners. The reason is that although statutory redundancy is paid out of the social insurance fund, the employers are refunded 60% and must carry the other 40%. We are trying to keep costs down and to remain competitive, as we discussed in the context of an earlier question, so any increase in the weekly rate has implications for the cost of employment and for competitiveness. Any change can only be made on the basis of agreement. After next week's approval by the Government, I hope to put the review group in place to report within the next couple of months. It will have to run alongside a successor to PPF.
In relation to reforming the redundancy Acts and the amount of payment, will the Minister accept that as well as dealing with payment it might also be important and prudent to deal with training and up-skilling Perhaps the changes could include training and up-skilling courses and the provision of State aid in this regard to ensure replacement employment. Second, in cases where companies default in meeting the statutory redundancy entitlement – I suspect it is a small number – and those companies have parent companies abroad, is there a system or mutual arrangement which allows the State to recoup from a parent company in another jurisdiction, particularly in the EU, any amount paid from the social insurance fund?
I do not know the answer to that question; I will have to check it. Obviously, where the employer for whatever reason does not meet the payment, it is paid from the fund by the State. Deputy Rabbitte mentioned the age differential. In some areas we need to examine if the age dif ferential is still relevant. I presume the age differential was introduced because it was more difficult in the past, and that might still be the case, for people over 40 years of age to get another job. Those people, therefore, were given an additional half week on top of the bonus week to provide a higher sum because of their more difficult circumstances. We need to examine if that is still relevant.
There is also the age limit of 66 years and the qualification period of two years continuous employment. The unions have raised that issue and have asked that the qualification period be one year. There are also issues relating to employees abroad and the multiple of the weekly amount in terms of whether it should be a half week, one week or more. There are a number of other reforms required, I understand, in the technical way the scheme is administered. There is need for greater simplification in the administration of the redundancy payment scheme and that has to be part of any reform package.
It comes down to this – at a time when there are pressures in the economy, such as the pressures we are experiencing at present, do we, in response to that pressure, increase the statutory entitlement? If we do, does it mean employees who would up to now get a great deal more than the statutory requirement might get less? In other words, if we were to increase the statutory requirement, will that reduce the amount that is paid by some employers at present? These are issues which need to be addressed in the context of agreement.
Can the Minister indicate, on the basis of her formal meetings with IBEC and the employers and any informal contacts she might have with IBEC, what the employers are saying about this? The employers do not have a vested interest in the lowest common denominator disadvantaging workers in this fashion, where workers have to resort to the fund or where they are dependent solely on statutory redundancy, which is such a paltry amount. Have the employers given any indication, in the discussions that have taken place so far, of their attitudes to these questions?
I have to admit that my contacts are informal but not with the person the Deputy suspects. I have not had a formal meeting with IBEC on this matter but I have spoken to the Director General informally about it. The employers make two points. First, they say there are enormous pressures at present. Wage costs are rising to a high level in the economy. Sixty per cent of the amount is refunded from the social insurance fund but 40% is carried by the employer. There are many cases where a relatively small group of employees might be made redundant to make the company competitive but 40% of the cost of that redundancy has to be carried by the employer during a time of pressure. They suggest that if we increase the amount that has to be paid, we will put further pressure on that employer and, perhaps, cause more people to be made redundant.
They also say that any increase or change, such as that suggested by ICTU, is outside the PPF agreement, particularly part 1.3 of that agreement in relation to workplace relations and work environment. They strongly make the point that these are matters which should more appropriately be discussed in the context of a successor to the PPF, not as a parallel unilateral matter that could be decided between two of the parties to the social partnership, that is, the Government and the Irish Congress of Trade Unions. They believe it is central to the partnership process and that any change would have to come in the context of other matters being discussed.
