The main aims of this Bill are—
(i) to provide financial assistance to workers who lose their jobs through redundancy;
(ii) to recognise the right of a worker to compensation for the loss of a job in which he has given service for a number of years;
(iii) to give financial help to unemployed workers who may have to leave their home areas to secure employment.
The schemes provided for in this Bill should give workers a greater sense of security and should help to reduce resistance to technological and other changes which are essential in the interests of national economic development.
There are two points that I would like to stress from the start. In the first place, this Bill has been promoted by the Government because we recognise that some redundancies will occur in a developing and changing economy. We accept the need to protect the interests of workers in this situation. But we do not expect large-scale redundancies. In the second place, this Bill must be viewed in the context of the Government's overall manpower policy. The objective of that policy is to ensure that national economic progress will not be retarded by a neglect to develop and deploy our manpower resources to the best advantage. Manpower policy is not, in itself, a policy for full employment. This was clearly recognised by the National Industrial and Economic Council in their Report on Full Employment. Manpower policy is one, but only one, of many policies which must be energetically implemented if we are to attain full employment. This was also recognised by the NIEC. These provisions for redundancy payments are only one facet of our manpower policy. That policy has much more positive facets. These can be seen in the arrangements we are making for the development of the placement and guidance functions of the Employment Service. They can be seen in the schemes for training and retraining we are providing under the Industrial Training Act, 1967. They can be seen in the provisions of this Bill for resettlement allowances to promote geographic mobility of labour.
I want to make it clear, too, that this Bill does not relieve employers of their responsibilities to minimise the incidence of redundancy. In their plans for rationalisation and adaptation, employers should put a high priority on the interests and needs of their workers. They should strive to ameliorate the impact of redundancy by schemes of early retirements, transfers and normal wastage.
One of the main aims of Government policy is the expansion of employment opportunities. This aim will have to be achieved in conditions of free trade. This means that our industries must be as efficient as those of our competitors. Measures to improve efficiency and to increase productivity are essential if our goods are not to be priced out of the home market, not to mention foreign markets. Such measures involve change. It is natural that workers should often view change affecting their employment primarily from the aspect of job maintenance. It is understandable that broader economic considerations should frequently take second place in the minds of workers to the question of job preservation. But this approach in the long run can have serious results for the workers themselves and their dependants. If any industry fails, or is not permitted, to adopt improved methods of production or to avail itself fully of the benefits of technological advances that industry is unlikely to survive. If such failures were numerous, the effect on the economy as a whole could be calamitous. It is my earnest hope, therefore, that the existence of the Redundancy Payments Scheme provided for in this Bill will assist materially in reducing resistance to change. If this measure succeeds in doing this, thereby encouraging workers to adopt a realistic approach to the problem of modernising our industries, a great deal will have been achieved.
Before dealing with the actual provisions of the Bill, I should emphasise that this Bill is largely experimental. We are breaking new ground in this legislation. The operation of the redundancy payments scheme will be closely watched during the first few years. Its inadequacies will be closely examined and its impact on the problems I have just mentioned will be carefully measured. The Bill does not represent my final thinking on the question of redundancy and its related problems and I will have no hesitation in introducing amending legislation should any change appear to me to be necessary or desirable in the light of practical experience of the scheme.
The basic proposals in the Bill are:—
(i) A qualified worker who is discharged because of redundancy will, if certain conditions are fulfilled, be entitled to redundancy payment, which will consist of
(a) a lump-sum payment, and
(b) a weekly payment.
(ii) The lump-sum will be payable by the employer direct to the worker and the amount of the payment will be related to the worker's length of service with that employer and to his normal earnings prior to redundancy.
(iii) The maximum lump-sum payment will be the equivalent of twenty weeks pay.
(iv) The weekly payment will be broadly on the basis of one payment for each year of service and will amount to 50 per cent of the worker's normal pre-redundancy pay, payable in addition to Social Welfare benefit, subject to an overall limit of 90 per cent of previous pay.
(v) The weekly payment will be contingent on unemployment and will be paid out of a special fund which will be financed by contributions payable by employers and workers.
(vi) An employer who makes a lump-sum payment to a worker will be entitled to a rebate of 50 per cent, which in certain circumstances may be increased to 65 per cent of the lump-sum. These rebates will be paid out of the Fund.
(vii) The qualifying period of service for a redundancy payment will be four years continuous service with the same employer.
During the passage of the Bill through Dáil Éireann many changes-some of a substantial nature-were made in my proposals as originally framed. In the first place, the scope of the Bill has been broadened. As a result of changes made by the Dáil, the Bill will now apply to all persons between the ages of 16 years and 70 years who are insured for all benefits under the Social Welfare Acts, including part-time workers who work for 21 or more hours a week for the same employer. I must say that, while I accepted the proposals to widen the scope of the Bill in these respects, I have some reservations about the possible effects on the financing of the scheme. There is the possibility that the additional outgoings in benefits will exceed the expected increase in income. I had some misgivings, too, about persons of 20 years of age being entitled to redundancy payments. However, on reflection, I decided that the arguments put forward in favour of the extension of the scheme to cover the categories I have mentioned were sufficiently strong to encourage me to accept them at the risk of upsetting the calculations on which the financing was based.
I should mention here that I recognise that there are some categories of workers for whom the general scheme may be unsuitable. I have, therefore, included in the Bill a provision to enable the Minister for Labour to introduce, after consultation with the employer and worker interests concerned, a special scheme to cater for the needs of such workers. From the date of the introduction of any such special scheme, the workers concerned would, by Order, be excluded from the scope of the main scheme. One of the classes of workers I have in mind in relation to special schemes are agricultural workers. I have taken preliminary steps to form a committee representative of the various interests involved to consider the feasibility of having a special scheme for these workers. Committees have been considering the question of preparing special schemes for building workers and for dock workers. All these classes of employees will, of course, be covered by the provisions of the main scheme, unless and until a special scheme is in operation for them.
Important changes were also made in Dáil Éireann in relation to the proposed benefits under the Scheme. The Bill provides for two forms of redundancy payments. Firstly, lump-sum payments which will be made direct to the worker by the employer at the time of dismissal and, secondly, weekly payments, which will be paid to the worker out of the Redundancy Fund, but will be contingent on unemployment. Both these payments will be calculated by reference to the worker's pre-redundancy rate of pay and to his length of service with the employer who is declaring him redundant. The amount of the lump-sum payment will be half a week's pay for each year of service between the ages of 16 and 41 years and one week's pay for each year of employment after the age of 41 years. There is a maximum limit on the amount of the lump-sum payable. Following consideration of the question in the Dáil, the limit now proposed in the Bill is 20 weeks pay. This is a substantial improvement on the original proposals.
In the Dáil strong pleas were made in favour of further increasing the amount of lump sums payable. An amendment on the subject sought to have these payments raised to the level of those paid under the schemes operating in Britain and Northern Ireland. I rejected and I reject now the suggestion that a valid comparison can be made between the lump sums provided for in this Bill and those payable under the British and Northern schemes. The schemes are basically different. Our scheme provides for a weekly payment as well as a lump sum, whereas the British and Northern ones make provision for a lump sum only. I believe that, in our conditions, we are right to put the emphasis on weekly, rather than on lump sum, payments.
I feel that in any appraisal of the level of the proposed benefits in our scheme regard must be had to certain basic considerations. Firstly, the benefits must be sufficient to enable redundant workers to maintain standards relatively close to their pre-redundancy levels while they are being placed in, or retrained for, alternative employment; secondly, they must be big enough to effect the necessary changes in attitudes towards the conditions which bring about redundancy; and thirdly, they must not be so high as to add significantly to production costs.
I am satisfied that the benefits as now proposed, when viewed in the light of these considerations, will be seen to be both reasonable and adequate. I want to make it clear that I will have to resist any pressure to increase the lump sum payments. This is one matter which can, and should, be reviewed in the light of experience with the operation of the scheme.
As regard the weekly payment, this will be the equivalent of 50 per cent of the worker's pre-redundancy pay and will be payable in addition to any Social Welfare benefits to which the worker might be entitled. The weekly payments will continue for a period of one week for each year of employment, but, for this purpose, each completed two years of service over the age of 41 years will count as three years. This will weight the benefit in favour of the older workers, which I think is reasonable and desirable. In the Bill as first introduced in Dáil Éireann, there was provision for a waiting period of four weeks before weekly payments would commence. This has now been amended to a waiting period of two weeks.
Before passing from the weekly payments, I would like to mention that, although these will be payable in addition to unemployment benefit or unemployment assistance, I have deemed it advisable to provide that the total amount payable shall not exceed 90 per cent of the worker's pre-redundancy pay. This is intended to guard against creating disincentives in regard to the seeking or accepting of alternative employment.
In this Bill a worker's entitlement to a redundancy payment has been made subject to certain basic conditions being met. These conditions are prescribed in section 7 of the Bill. The first condition is that the worker must be dismissed for reasons of redundancy. Redundancy is defined in the section. In brief, if a worker is being dismissed because his employer, for one reason or another, no longer requires his services, he will be taken to have been dismissed for redundancy. Dismissal because of misconduct, inefficiency, or some other fault of the employee, would not constitute redundancy.
The next condition relates to a minimum period of service. This period is prescribed as four years (208 weeks) of continuous employment with the employer who is dismissing him. In the Dáil there was pressure to have this minimum period of service reduced. I resisted this pressure because I believe four years is a reasonable period of service to fix as a qualification for entitlement to a redundancy payment. The concept of entitlement to payment on being dismissed because of redundancy is based on a principle which I mentioned earlier. That is, that over a period a worker builds up certain rights in his job and, if he is deprived of those rights through no fault of his own, he ought to be compensated for this loss. The question at issue is what constitutes a reasonable period after which it could be claimed that a worker has established rights in his job. My view is that four years is the minimum period that could generally be regarded as reasonable in this connection. For this reason I have resisted proposals for a reduction in the qualifying period for redundancy payments.
Apart from dismissal, the entitlement to a redundancy payment may also, under the provisions of section 7, arise because of prolonged lay-off or short-time working. Section 12 of the Bill deals with the procedure to be followed in relation to claims in this regard. The provisions as regards lay-off and short-time are somewhat complex and will, no doubt, be fully discussed in Committee. At this stage, therefore, I feel it is sufficient for me to say that a balance between the interests of the worker and those of his employer is, I think, achieved by the procedure prescribed.
Seasonal workers are covered by the Bill. If a seasonal worker is employed regularly each year by the same employer and eventually becomes redundant he will be entitled to payments under the Bill. The payments will be related to his total aggregated service with that employer. It would of course, be manifestly unfair to employers of this type of labour to leave them open to redundancy claims from all their employees on the first occasion of seasonal lay-off after the commencement of the Act. To meet the situation, special provisions are contained in section 8, the effect of which is to declare that in the case of such workers there will normally be no question of a redundancy payment until the usual commencement time of the seasonal work. If the worker is not then re-employed the question of redundancy arises, but not until then.
I have mentioned that it is proposed to establish a special fund which will be known as the Redundancy Fund and out of which the weekly payments and the rebates to employers will be made. This Fund will be financed by contributions from employers and workers. The employers' contribution will be 8d a week in respect of men and 6d a week in respect of women. The workers' contribution will be 4d a week for men and 3d a week for women. Broadly speaking, these contributions will be payable in respect of any week that an employment contribution is payable under the Social Welfare Acts. The existence and operation of this Fund will enable the major part of the cost of redundancy payments to be spread over the widest possible field of employment.
The rebates to employers, which I have mentioned, will be met out of the Redundancy Fund and will amount to the equivalent of 50 per cent of any lump sum paid under the provisions of the Scheme. An additional bonus of 2½ per cent of the lump sum will be paid in respect of each extra week of notice given in excess of the minimum notice of two weeks required under the Bill, subject to a maximum of 65 per cent of the actual lump sum payment. The purpose of this bonus is to encourage employers to give as much notice as possible of impending redundancies. This would ensure the smooth operation of the scheme administratively and would afford the Employment Service an opportunity of placing the workers in alternative employment within the minimum time lag after the dismissal takes effect.
A further important consideration in relation to the Redundancy Fund is that it will bear lump-sum payments to workers who are unable to obtain them directly from their employers. Such a situation could arise where the employer is insolvent and unable to make the payments. Where such payments are made out of the Fund, appropriate steps will be taken to recover the amounts which should have been paid by the employer from his own resources.
Having regard to the payments to be made out of the Redundancy Fund, the question that poses itself is whether the contribution rates fixed will provide sufficient funds to meet all outgoings. This is a question that can only be answered in the light of experience and which must be kept under review when the scheme comes into operation. The Minister for Labour will have power under the Bill to make any necessary changes in contribution rates subject to affirmative resolution of both Houses of the Oireachtas. Similar resolutions will be required for changes in the benefits payable, for changes in scope, and for the introduction of the special schemes which I mentioned earlier.
In regard to the contributions, it has to be borne in mind that the rates in the Bill were decided by reference to likely outgoings under the provisions as originally drafted. Since the original calculations were made, important changes have been made, changes that will undoubtedly increase outgoings. I have already given details of the more important of these changes but it might be helpful if I were to summarise the more important ones here. They are:-
(i) The scope of the scheme has been broadened; it now embraces workers between the ages of 16 and 70 years as against 18 to 65 years originally proposed. Part-time workers who work for 21 hours or more per week now included. The figure originally proposed was 25 hours.
(ii) The maximum lump-sum payable has been increased from the equivalent of 16 weeks pay to the equivalent of 20 weeks pay.
These improvements will certainly result in increased outgoings and whether the present proposed rates of contributions will be sufficient to meet this is questionable. I felt, however, that I should not increase the proposed contributions without experience of the operation of the scheme. I decided instead to amend section 57 of the Bill as introduced so as to provide that the administrative costs of operating the scheme will be borne by the Exchequer. This is a further major concession. I have, however, excluded from this arrangement the cost of operating the appeals machinery being established under the scheme.
I think I should stress here that the decision to relieve the Fund of having to bear the administrative costs of the scheme does not represent a departure from the firm decision taken by the Government that there can be no direct contribution from State funds towards the cost of this scheme. That decision must stand. The taxpayer will be bearing the cost of a whole range of manpower services such as comprehensive training and retraining schemes, an improved and expanded Employment Service, a scheme of resettlement allowances and a manpower forecasting service. It would, in my view, be unreasonable to expect the community generally to contribute as well to the cost of the Redundancy Payments Scheme.
A further major change made in the Bill as a result of the deliberations on its provisions in Dáil Éireann relates to the arrangements for dealing with disputes under the scheme. Because of the tie-in between the proposed weekly payments and social welfare benefits, I originally felt that the existing appeals machinery of the Department of Social Welfare should be used for the purpose of settling disputes. However, as a result of criticisms of this proposal, I examined the matter further and decided to introduce an amendment to provide for the establishment of a separate Appeals Tribunal for the purposes of the Redundancy Payments Scheme.
In deciding in favour of an Appeals Tribunal I was mainly influenced by an examination of the type of dispute that may be expected to arise under the scheme and by the fact that the vast majority of the appeals will almost certainly relate to questions in dispute between employers and workers. The operation of somewhat similar schemes in Britain and Northern Ireland has shown that this is most likely to be the position here.
It is proposed in section 39 that the Appeals Tribunal will consist of an independent chairman and a number of other members representative of employers' and workers' interests. The Chairman of the Tribunal will be a practising barrister or solicitor of at least seven years standing. It was strongly represented by Deputies of the Labour Party in the Dáil that it is not essential that the Chairman should have legal qualifications but, having regard to the type of matters that will be at issue between the parties, I was unable to accept this view. The section in question provides for the appointment of three vice-chairmen and eight ordinary members. This will enable the Tribunal to act by division, and this should ensure the expeditious clearance of cases sent forward to the Tribunal.
I have mentioned that it is proposed that redundancy contributions will be collected by means of a special redundancy stamp. The possibility of having the contributions collected by means of a surcharge on the existing social insurance stamp received close examination. Serious administrative difficulties arose in this connection and, having regard to an undertaking I gave in Dáil Éireann to have the scheme brought in operation, if at all possible, on 1st January next, it was decided to proceed on the basis of separate cards and stamps. The position has changed somewhat because the amendments made in the Dáil bring the scope of the social insurance and redundancy payments schemes close together. To get the redundancy scheme going by 1st January next we now have to proceed on the basis of separate cards and stamps for the first year. I am, however, considering whether it would be possible to have a unified stamp for the payment of both social welfare and redundancy contributions for future years after the first year.
I do not feel it necessary to comment, at this stage, on various other sections of the Bill relating to the redundancy payments scheme although some of these contain interesting provisions. However, in the main they deal with operational details of the Bill and can to better advantage be dealt with on the Committee Stage. Among these sections are those concerned with change of ownership of a business (section 20), re-engagement of employees by associated companies (section 16), employment wholly or partly abroad (section 25) and provisions relating to winding up and bankruptcy (section 42).
There are three important schedules to the Bill. The first schedule deals with the method of calculating weekly payments; the second with the situation created by the death of an employer or an employee, and the third schedule provides rules for calculating lump sums, continuous service and reckonable service.
There are, however, two other points to which I should like to refer briefly. I resisted pressure in the Dáil to give retrospective effect to this Bill. If there is similar pressure in this House, I shall have to maintain my stand. It should be clear to everyone that whenever a scheme is introduced giving benefits to a section of the community, there always will be cases in which people would have benefited if the scheme had been introduced earlier. It will happen in this case also. There must be an operative date for a scheme and whatever date is decided on there will be people who just missed benefiting by it. Senators will, I am sure, agree that retrospection is a bad principle in a scheme of this sort and I must continue to resist firmly any pressure for it in this case.
The second point I want to deal with relates to strikes and lockouts. Strikes and lockouts, whether they occur before or after the operative date of the Bill, will not break continuity of service. I state this here because doubts have been expressed whether this intention is reflected adequately in the Bill. If necessary, I shall table an amendment on Committee Stage in the Seanad to remove these doubts. Time lost owing to lockouts, whether before or after the operative date, will count as reckonable service. Time lost owing to strikes before the operative date will count as reckonable service, but time lost owing to strikes after the operative date will not so count. I consider that these provisions are fair and reasonable and represent a just balance between the interests of workers and the interests of employers and for that reason I found it necessary to resist pressure in the Dáil to change them.
Under section 46 of the Bill, I will have power to make regulations providing for the introduction of a scheme of resettlement allowances. This, I think, is a necessary adjunct to any scheme for redundancy payments. The availability of resettlement allowances will be of considerable assistance to the Employment Service in placing unemployed workers in suitable employment. Let me stress, however, that there will be no element of compulsion associated with the administration of the proposed scheme of resettlement allowances. This scheme will be operated on a strictly voluntary basis and a worker who does not elect to move to a new area to secure employment will not in any way prejudice his entitlement to a weekly payment under the Redundancy Payments Bill or to any Social Welfare benefit. The basic principle of the scheme is that, if an unemployed worker is willing and anxious to move to a new area to secure employment, he should not be deterred from doing so because of the expense involved.
The full cost of the resettlement allowances scheme will be borne by the Exchequer and will not involve any charge on the Redundancy Fund. It is proposed that the scheme will meet in part such expenses as household removal, travel allowances, lodging allowances and the legal costs involved in selling a house in the home area and buying one in the area where new employment is taken up. Final details of the scheme of resettlement allowances have not yet been worked out. Draft proposals are at present being considered by the Manpower Advisory Committee, which, as Senators will be aware, comprises representatives of employers and trade unions, as well as my Department. My intention is, however, that the scheme should be brought into operation concurrently with the Redundancy Payments Scheme.
Finally, may I advert to a statement I made on the concluding stage of the Bill in Dáil Éireann. I have already informed the Seanad that I gave an undertaking in the Dáil to have the Scheme of Redundancy Payments brought into operation on 1st January, 1968, if this is at all possible. In order to meet my commitment in this regard, it was necessary for me to direct that the necessary administrative arrangements for the operation of the Redundancy Payments Scheme should be put in hands in anticipation of the passing of the legislation and I explained in some detail to Dáil Éireann what was involved in that connection. Among the measures found necessary to meet the deadline I have mentioned was the making of public announcements inviting the co-operation of employers and others in regard to some administrative aspects of the scheme, including arrangements for the issue of redundancy cards.
I feel that Senators will appreciate that the measures which I have found necessary to take in anticipation of the passing of the Bill through the Oireachtas are not intended to derogate from the authority of the Oireachtas. The Deputies in Dáil Éireann were gracious enough to accept my statement in this regard and I am sure that the Members of Seanad Éireann will be no less understanding. I can assure the Seanad that the measures which I have taken were essential if the scheme is to be brought into operation early in 1968, and I think this is the desire of everybody.
