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Joint Committee on Enterprise, Trade and Employment debate -
Wednesday, 1 Dec 2021

General Scheme of the Redundancy Payments (Amendment) Bill 2021: Discussion

We move on to the next item on the agenda. We are commencing pre-legislative scrutiny of the redundancy payments (amendment) Bill 2021. The Bill will provide for the making of a State-funded payment to employees facing redundancy of lost opportunity accrual for reckonable service due to lay-offs caused by the Covid-19 restrictions since last year. As things stand, employees who have been laid off due to the Covid-19 restrictions will not have this period counted towards reckonable service where they have already been made redundant or are made redundant within the next three years. The Department of Enterprise, Trade and Employment is collaborating with the Department of Social Protection on this matter. The Minister, Deputy Varadkar, has asked the committee to give this urgent consideration and to carry out pre-legislative scrutiny of the matter. I thank members for allowing us to facilitate this as fast as we could. To discuss the matter, I would like to welcome, from the Department of Enterprise, Trade and Employment, Ms Dara Breathnach and I invite her to make the Department's opening statement on the Bill, which will be circulated to members.

Ms Dara Breathnach

I am the head of the redundancy and insolvency policy unit in the Department of Enterprise, Trade and Employment. I am accompanied by my colleague, Ms Orla Mulready. As the Minister of State, Deputy English, is unfortunately not available because of other parliamentary commitments, I am pleased to present the general scheme of the redundancy payments (amendment) Bill 2021 for the committee’s consideration.

As we all know, the Government’s Covid-19 pandemic response has had enormous impacts on virtually every aspect of life in the State over the past 20 months. Its impact on work and employment has been particularly substantial. Many people lost their jobs, either temporarily or for a longer period, owing to the pandemic. While we are now experiencing a significant economic resurgence, unfortunately some jobs will not return, and some workers have been made redundant already or will become so in the time ahead. This general scheme is designed to mitigate a particular issue arising for workers who become redundant after being laid off because of Covid restrictions for some part of the Covid emergency period. The issue is that under the Redundancy Payments Acts, statutory redundancy is based on duration of service. A qualified employee is entitled to two weeks of pay per year of service, plus a bonus week, subject to a cap of €600 in earnings per week. However, periods of lay-off in the final three years of service do not count as reckonable service. This means that in the case of redundancies now arising, where the qualified employee may have been on Covid-related lay-off for protracted periods, his or her redundancy entitlement will not factor in those periods. For an employee normally earning in excess of €600 a week who has been on lay-off for, say, 12 months cumulatively and is subsequently made redundant, this could mean a reduction of €1,200 in his or her statutory redundancy entitlement. The provisions set out within this general scheme are designed to plug that gap through a direct payment from the Social Insurance Fund. The payment will ensure that the employee being made redundant will receive the same overall redundancy payment as though he or she had not been laid off during the pandemic.

In the normal course of events, employers are liable for the cost of lump sums on redundancy, and this continues to be the case. However, the cost of this additional payment covering Covid-related lay-off periods will not be imposed on employers because the pandemic-related restrictions were outside of their control. Furthermore, were the cost imposed on them, that could endanger the viability of some businesses that would otherwise be able to recover. All qualified employees will benefit from the proposals in the general scheme. They do not need to have gone onto any particular form of State payment on being laid off. The criteria are simply that the person qualifies for redundancy in the usual way and was laid off because of Covid restrictions during the emergency period.

I would like to explain how we are defining the emergency period. In normal times, an employee who is on protracted lay-off has the right to trigger a claim for redundancy. This right is set out in section 12 of the Redundancy Payments Act. The right was suspended as part of the Government’s pandemic response. This was part of a package of measures to help preserve employer-employee relationships and safeguard business viability, as an otherwise viable business could be driven into insolvency if a large proportion of employees claimed redundancy. The right was suspended from 13 March 2020 until 30 September 2021. An employee’s right to claim redundancy is now fully restored. The emergency period for the purposes of this general scheme is aligned with the period during which the right to claim for redundancy was suspended. This corresponds with the period of greatest pandemic-related restrictions and uncertainty. An employee who has been laid off for protracted periods now has again the right to trigger a redundancy claim, which carries with it a corresponding possibility for an employer to bring back the employee. With the reopening of large sectors of the economy, the rules regarding redundancy and the mutual rights and responsibilities of employees and employers are normalised. Because periods of lay-off within the last three years of employment do not count as reckonable service towards the statutory redundancy lump sum, the people who will benefit from these proposals are employees who have been made redundant over the course of the pandemic or who are made redundant within three years of the end of the emergency period, having been laid off for some part of the emergency period. Therefore, the general scheme refers to 30 September 2024 and this is essentially a built-in sunset clause. It means that the exposure of the Social Insurance Fund to claims for this additional payment will cease for redundancies occurring from October 2024 onwards.

Turning to the overall cost of the proposals, I have to say that this remains quite uncertain for a number of reasons. While the economic bounce-back has been significant, many people have already been made redundant. We can also unfortunately expect that some businesses will not survive, leading to further redundancies. However, one measure of returned employment is the number of people exiting the pandemic unemployment payment, PUP, and not entering the live register, and those figures are encouraging. For example, in the first transition of PUP recipients to the live register, PUP claims fell by almost 13,000 but live register claims rose by only 2,600. In the second phase in mid-November, PUP claims fell by over 14,000 and the live register also fell. This makes it very difficult to quantify the overall likely cost. What we can say with certainty is that the maximum sum to which any one employee will be entitled is €1,860. This is based on an employee normally earning more than €600 per week, who was laid off for the entirety of the emergency period and is subsequently made redundant. The worst-case scenario, modelled about six weeks ago but possibly already out of date, was that the maximum redundancies at the higher end of the scale would see a total exposure of almost €150 million. The Department already thinks that is very much on the high side. However, I stress that this is not the expected outturn, given the significant reopening of economic sectors and return to employment that is already in evidence.

I know there have been some concerns raised about the effect of short time on redundancy entitlements. I am happy to confirm that periods on short time are reckonable service for the purposes of statutory redundancy entitlements. I thank members for their attention and I am happy to take any queries.

I invite members to discuss the proposed Bill with Ms Breathnach and Ms Mulready. I remind members participating remotely, as all members are, to use the raised hand feature and, importantly, to cancel it when they finish speaking. The first person who has indicated to speak is Senator Gavan and he has 14 minutes.

I will not need 14 minutes on this occasion. I thank Ms Breathnach for outlining the Bill. It is one that everyone would broadly welcome. It addresses an important issue for people. I have a concern and it may be something Ms Breathnach can explain to me quite simply. I note the scheme will operate for three years up to October 2024. What happens to people who are made redundant after October 2024 regarding that potential break of service? Are there any protections for those people to ensure that if they are made redundant after October 2024, they will not be deemed to have had a break in service regarding their redundancy entitlements? That is my key concern and it would be very helpful if Ms Breathnach could talk around that issue.

Ms Dara Breathnach

I am happy to confirm that in cases of periods of lay-offs like that, those are not treated as a break in service. They are treated as continuous with previous service. The point of the three-year cut-off, essentially, is that it is only periods of lay-off during the final three years of service which are disregarded for the purposes of the statutory redundancy entitlement. I hope that answers the Senator’s question. The existing law is that such periods of lay-offs are treated as continuous with previous service.

That is definitely very encouraging. I have one further question, as I have this opportunity. I have come across a few examples recently of employers ignoring the RP9 form. There are employees who want to apply for their redundancy but employers are basically are not communicating with them. It seems to be another problem, unfortunately, in the construction industry in particular. Does Ms Breathnach have any comment or advice on that issue?

Ms Dara Breathnach

I am not an expert on the position that applies where an employer ignores the form. Employers certainly have the entitlement to give a contrary notice in order to bring people back but if they just flat out ignore it, more than likely the appropriate avenue is the Workplace Relations Commission. Ms Mulready might confirm if that is the case.

Ms Orla Mulready

The RP9 form is one that was used by employers to advise employees they would be placed on lay-off and there was also a section of it where, if the lay-off period extended beyond four weeks, the employee could trigger their redundancy claim under section 12. It is not a legislative form. One does not have to use that. The legislation states there has to be written notice given but if an employee is triggering his or her claim using the RP9 form and the employer is ignoring that, the employee's remedy is to refer a complaint to the Workplace Relations Commission because essentially, the employer is ignoring the employee's redundancy situation and the employee has a right to seek an adjudication in those cases.

That is super. I appreciate the witnesses' guidance. That is all I need. I thank both witnesses.

The next person who has indicated to speak is Deputy Stanton and he has seven minutes.

I will not take all that time. I join Senator Gavan in welcoming this legislation. It is good we are discussing it and facilitating its scrutiny today. I have one question with respect to an issue around the date of 13 March 2020. I have been contacted by a number of people who were working in seasonal employment and prior to that time, they would not have been working. They would have expected to be back in employment after that date as the tourism season kicks off from St. Patrick’s Day onwards but because businesses were shut down they were not able to go back into employment. Therefore, they missed out on the PUP and other supports because they were signing on prior to 13 March. Is there anything in this legislation that would help those people or have the witnesses come across those particular instances in their work?

Ms Dara Breathnach

That area of people who have been in seasonal employment is quite complicated. If they have routinely been in seasonal employment with the same employer, it would appear to me that they should be entitled to redundancy payments in the normal way if they are not now taken back on their seasonal employment in the future. There is nothing in the general scheme which directly addresses those. If they normally had been working at the same time of a year on a routine basis over a number of years and they are not taken back for the next season, it would appear a redundancy situation may arise but that is by what is deemed the normal operation of the law to all intents and purposes and not anything that is directly covered in this general scheme.

I thank Ms Breathnach for that response. This is something that was not envisaged and many of those people were left high and dry. Because they were not working prior to that date and then they could not be taken on afterwards they were not able to avail of any of the payments. Because this sector and other sectors were closed and, thankfully, they reopened and people returned to employment, is there something in the legislation to provide for those people for the period of time they were laid off, given that they were not working prior to 13 March and were taken on later as they would normally been by the same employer?

Ms Dara Breathnach

In the case of a redundancy situation subsequently arising then, yes, there may be but only if a redundancy situation does subsequently arise. We would certainly hope that with the reopening of those seasonal areas of the economy and some returned tourism and so on, very limited redundancies would arise but, yes, if a redundancy arises it may be covered as well.

In welcoming this small technical Bill, are there plans to make it widely known that this law will be in place in order that people can avail of the terms under the law? How are people to be informed about this?

Ms Dara Breathnach

Absolutely, there are. This will be delivered via the Department of Social Protection and we are working closely with it on that. When this has proceeded through the Houses of the Oireachtas, that Department will be able to introduce an information campaign. It will be an employer-led application process for the most part although where an employer does not or is unable to co-operate for some reason, there will also be a guaranteed route for employees to be able to apply directly. Payment will always be made directly to employees, not via employers. There will be an information campaign and the information will be made available to employers and employees alike.

I thank Ms Breathnach for that response.

I call Senator Sherlock and she has seven minutes.

I thank the Department officials, Ms Breathnach and Ms Mulready, for attending the committee today. I very much welcome this small but important item of legislation that will have a real benefit and impact on those workers who are facing into a redundancy situation in the next number of months and, obviously, a very difficult time. I am conscious that while the Department has responsibility for the legislation, the Department of Social Protection effectively will be administrating the scheme, if I understand it correctly. I have a number of questions which the witnesses may or may not be able to answer on that but it is important that we get clarity in the answers to these questions.

How quickly will an application be dealt with? What safeguards are in place to ensure that once an application is made by an employer or directly by an employee it will be dealt with quickly? I am not clear on the time it will take to process the administration of a payment. There would be a concern there might be a delay between the payment by the employer relative to the payment by the State.

Regarding the circumstance in which an employee directly applies to the scheme, Senator Gavan spoke of a number of employers refusing to engage. I seek clarity on the other circumstances in which an employee would be able to directly apply to the scheme because there is a degree of understandable confusion and nervousness about the process. It was suspended and that suspension has just been lifted. There is a degree of confusion as to what workers are entitled to.

Ms Dara Breathnach

I thank the Senator for her questions. The scheme cannot be launched until the legislation has made its way through the Houses of the Oireachtas. That is the earliest constraint but our colleagues in the Department of Social Protection also need to set up the necessary application system. That involves the development of a significant piece of information technology with a platform that will be familiar to employers. That is why it is largely intended to be an employer-led application process where employers have had to make people redundant over the course of the pandemic or where they will have to make them redundant in the coming years. That will be part of that termination process. It is expected the system will be online and available in the first half of next year. We hope it will be on the early side of that first half of next year but we cannot give a commitment on that at this stage.

The administration of the payment is not intended or expected to be a very long process. The Department of Social Protection is very experienced in delivering schemes comparable to this one, for example, in situations where it is funding redundancy payments because of an employer’s inability to pay. There may well be some crossover in this case as well, with employers having to let people go and they might end up having the redundancy payments on the Social Insurance Fund, as already happens under law when the employer cannot pay, and having this additional payment as well. That addresses the Senator's first two questions.

Her final question was on the circumstances in which an employee would have to make the application. That is very much a case where the employee's former employer simply will not engage and refuses to make the application on the employee's behalf. We very much hope that would happen in only a very small minority of cases. Many employers will still want to maintain some form of goodwill with those former staff members. This will not involve any skin off the employer's nose because the employer is not liable for the payment. There is no debt raised against the employer when the payment is made to the employee.

I thank Ms Breathnach for that response. I also thank the Chair.

As nobody else has indicated, that concludes our consideration of this matter. I thank Ms Breathnach and Ms Mulready for assisting the committee. I also thank the members for allowing us to proceed with this matter as quickly as we could. That concludes the committee's business in public session. I propose we go into private session to consider other business. Is that agreed? Agreed.

The joint committee went into private session at 10.45 a.m. and adjourned at 11.00 a.m. until 9.30 a.m. on Wednesday, 8 December 2021.
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