I thank Deputy Kirk for raising this matter on the Adjournment. Lissadell Towels Ltd is part of Enterprise Ireland's portfolio of companies. Due to a significant decline in its business activity, which is mainly as a supplier to the international hotel bedroom and bathroom market, the company has been in discussion with its staff and union representatives regarding redundancies.
On 30 January 2003, the company appointed an interim examiner to assess the future prospects of the company. Also on that day, a petition pursuant to the Companies (Amendment) Act 1990 was presented to the Central Office of the High Court by the directors of the company. This was directed to be heard at the High Court on 17 February 2003. At the hearing on 17 February, the court appointed an examiner. The examiner has 21 days to complete his report and, accordingly, his report is due in the week ending 8 March 2003.
The likely outcome of the process is that the company will cease to be a manufacturing company but will continue as a supplier. The company is continuing to trade pending the report of the examiner. The reasons for the difficulties all relate to competitiveness issues. Currently, 60 people are employed but this figure will reduce if manufacturing ceases.
The severance package for employees who are made redundant is composed of two elements – statutory redundancy, in respect of which the social insurance fund pays a 60% rebate to the employer, and ex gratia redundancy. The latter is a matter for negotiation between the employer and the employees or a trade union acting on their behalf.
With regard to statutory redundancy, the position is that in April 2002 the Government established a review group, in the context of the social partnership, to examine the operation of the redundancy payments scheme so as to ensure that the scheme best meets the requirements of employers and employees. The review group consisted of representatives of the social partners, IBEC, CIF, ICTU and the Departments of the Taoiseach, Finance, Social and Family Affairs and Enterprise, Trade and Employment. The chair and secretariat were provided by the Department of Enterprise, Trade and Employment.
The review group, which reported back to the Tánaiste and Government in October, agreed a range of changes to the redundancy scheme, including a simpler method for calculating service, changes in the treatment of absences from work, treatment of service abroad, simplification of application forms and a new IT system, including an e-Government aspect.
The group did not reach consensus on issues such as an increase in the level of statutory redundancy payments and size of rebate to employers. The draft partnership agreement endorses the changes agreed by the redundancy review group and provides, in addition, that the distinction between service under and over 41 years will be removed; there will be two weeks pay for every year of service; the bonus week will be retained; and the rebate of 60% to the employer retained.
On 18 February 2003 the Government approved the drafting of a Bill on a priority basis to give effect to the new enhanced redundancy payments scheme. The Bill has since been sent to the parliamentary counsel for drafting. Following ratification of the new partnership agreement it is the Tánaiste's intention to bring the increased statutory payments into effect at the earliest possible date.
A new IT system will be required to implement the full range of changes and it is estimated that this process could take approximately 18 months from start to finish. However, a relatively minor modification can be made to the present computer system which enables the enhanced statutory entitlements of employees and other improvements to be brought into effect soon after the proposed Bill is enacted.
The heads of the Bill provide for the remaining changes to be introduced by ministerial order, when the new IT system is available, projected for the second half of 2004. Pending the enactment of the new legislation, the existing statutory redundancy terms remain operative. Backdating is not possible because the redundancy scheme places obligations on employers and confers rights on employees. The legal advice from the Attorney General's office is that obligations, such as increased statutory redundancy, cannot be assigned to employers retrospectively.
When the improved statutory redundancy payments come into operation it is estimated that a full year's cost of payments to the social insurance fund based on the 2002 level of redundancy will be in the region of €149 million. This is an increase of €96 million in the annual cost to bring the new enhanced rates into effect.
