Redundancy Payments Bill, 1970: Second Stage.

Question proposed: "That the Bill be now read a Second Time."

The main purposes of this Bill are: firstly, to provide for a new definition of redundancy to meet the circumstances arising from a decision of the High Court in 1969 which gave a narrower interpretation to the term redundancy than was originally intended and to provide for the compensation of workers adversely affected up to the present by the High Court decision; secondly, to reduce the qualifying period for statutory redundancy payments from four to two years; and, thirdly, to provide for improvements in the rates of redundancy payments.

The Bill also contains a large number of provisions dealing with problems of a technical nature. I am also proposing to provide for extension of the scope of the resettlement allowances scheme.

Senators will recall that the Redundancy Payments Act came into operation on 1st January, 1968. The scheme set out in the Act was designed to compensate workers for loss of employment, to alleviate hardship arising for workers affected by redundancy and to facilitate the rationalisation of production which is an essential feature of economic progress.

The existing scheme provides that a qualified worker who is dismissed by reason of redundancy after four years' continuous service with the same employer is entitled to a lump sum and weekly payments related to his age, service and pre-redundancy pay. The employer is obliged to pay the lump sum in full in the first instance but he may recover part of it, normally 50 per cent but up to 65 per cent depending on the length of notice of dismismisal given, by way of rebate from the Redundancy Fund, which is financed by weekly contributions from employers and workers. Redundancy weekly payments, which are paid to qualified workers during unemployment following redundancy are met in full from the fund.

The redundancy payments scheme applies to workers who are insured for all benefits under the Social Welfare Acts. In effect, therefore, virtually all manual workers are covered by the scheme while non-manual workers with earnings of up to £1,600 are also covered. The existing scheme also applies to workers for two years after they cease to be compulsorily insurable. The Bill proposes to extend this period to four years.

The annual income of the Redundancy Fund from the contributions of employers and employees is now about £1¼ million. In the period from 1st January, 1968, when the Act came into effect, up to 31st May, 1971, the total expenditure from the fund was almost £2,400,000.

It may perhaps be of assistance to Senators in assessing the usefulness of the redundancy payments scheme if I quote some figures relating to the operation of the scheme. Since the introduction of the scheme on 1st January, 1968, up to 28th May, 1971, a total of 14,547 redundancies was notified to my Department. This total was comprised of 11,356 men and 3,191 women. The number of redundancies in each of the calendar years 1968, 1969 and 1970 was remarkably even —3,863, 3,696 and 3,896 respectively. This year, in the period up to 28th May, 3,092 redundancies have been notified to my Department, comprising 2,362 men and 730 women. This figure is almost double the figure for the corresponding period of 1970.

From the monetary viewpoint, redundant workers have received lump sum payments totalling over £2 million and weekly payments amounting to about £1,400,000 in the period 1st January, 1968—31st May, 1971. Lump sums paid in accordance with the scheme have ranged from about £15 to over £1,100 and the average weekly payment has been approximately £7, which is additional to unemployment benefit or other payment to which a worker would be entitled under the social welfare code. These figures provide, I believe, clear evidence that the redundancy payments scheme has been of great benefit in reducing the hardships resulting from redundancy for many workers and their dependants.

When speaking on the Second Stage on the Bill in Dáil Éireann, I said that the Redundancy Fund from which the scheme is financed was in a financially sound condition and that, despite the substantial outgoings on lump sums and weekly payments since 1st January, 1968, the fund had a credit balance of approximately £1¾ million. I said also that, while it was important to maintain a reserve in the fund against unforeseen contingencies, I believed it was possible with the surplus then in the fund to introduce a number of worthwhile improvements in the benefits available under the scheme. I stated, however, that, in case it should be argued that the Bill did not go far enough in extra benefits, there was a need for prudence to provide for increased demands on the fund. I think our experience so far this year underlines the need for prudence. Current income in to the fund is being balanced by current outgoings, even before the introduction of the improvements proposed in the Bill. In the circumstances, I suggest to the House that it would be unwise to take on any further commiments beyond those provided for in the Bill.

I shall now briefly describe the main provisions of the Bill. The decision to amend the definition of redundancy arose following a High Court judment in 1969 which had the effect of interpreting the definition of "redundancy" in a restricted way which was not intended. If this interpretation were allowed to stand, certain workers dismissed as surplus to their employers' requirements who are redundant in the generally-accepted sense would not be entitled to redundancy payments. The Government decided to amend the appropriate provision in the Act. I publicly announced this decision in October, 1969, and that it was proposed to provide for payment from the fund of compensation to workers debarred from receiving redundancy payments following the High Court decision. Payments have, in effect, been made from the fund to 24 workers in anticipation of this legislation.

The following are the principal improvements proposed in the Bill:—

(i) reduction in the period to qualify for benefit from four years' continuous service with the same employer to two years;

(ii) the abolition of the 20 weeks' pay maximum on the amount of a lump sum;

(iii) years of continuous employment over the age of 41 years to count for two weekly payments— at present each two years over 41 counts for three weekly payments;

(iv) a minimum of four weekly payments contingent on unemployment;

(v) an increase in each lump sum payment by the equivalent of one week's pay;

(vi) a general 5 per cent increase in the rates of lump sum rebates to employers;

(vii) the existing waiting period of two weeks for weekly redundancy payments to be reduced to three days; and, finally, as I already mentioned,

(viii) cover by the Act to continue for four years after the insurable limit under the Social Welfare Acts is exceeded instead of for two years at present.

Every worker who becomes redundant in future will secure some additional benefit under this Bill. The main emphasis in the new benefits is, however, directed towards older and long service workers who will gain from the abolition of the overriding maximum on the lump sum and the extra weekly payments for service over 41 years of age. Workers with shorter service will be helped by the reduction in the required period of qualifying service to two years and the minimum of four weekly payments. The higher rebates will, in effect, reimburse employers for extra cost which they may have to meet as a result of the additional benefits.

When the Bill was before the Dáil I introduced amendments to allow weekly redundancy payments to be made to persons who became redundant in the Twenty-Six Counties but who are resident in Northern Ireland. I am sure that the Seanad will agree that, if only on grounds of equity, such persons who will have contributed to our Redundancy Fund should be entitled to receive weekly payments as well as lump sum payments.

As most of the other amendments which I am proposing to the Redundancy Payments Act, 1967, are of a technical nature they are more appropriate for discussion on Committee Stage. In general, they are designed to facilitate the more efficient administration of the Redundancy Scheme, to remove anomalies and to deal with situations not specifically covered in the 1967 Act. While, as I have said, these amendments will be dealt with in detail on Committee Stage, there are a few which I think are of sufficient importance to merit mention at this point.

The Bill includes a provision extending the time limit for the making of claims by employees. It also provides additional protection for workers' rights where there are changes of ownership. There is also provision that in future there shall be a presumption in the worker's favour in the event of a dispute arising as to whether dismissal was due to redundancy or service was continuous. The Bill also provides that provisions of the 1967 Act or of the new Act that relate to the continuity of an employee's employment shall apply to periods before as well as after 1st January, 1968. The procedure to be followed by an employee who wishes to claim a redundancy payment from his employer by reason of being kept on lay-off or short-time for a substantial period is being simplified. The Bill also provides for the award of costs, at the discretion of the court, to be paid by the Redundancy Fund where cases which are dealt with by the Redundancy Appeals Tribunal are brought to the High Court. The position in relation to eligibility for weekly redundancy payments in the event of a trade dispute is being brought into line with the Social Welfare Acts and some further penalties in relation to fraud are being introduced.

I am also proposing amendment of the provision in the Redundancy Payments Act, 1967, relating to resettlement allowances. Under this scheme various types of financial aids are payable entirely from State funds to unemployed persons or persons about to become redundant to move to new areas to take up employment. These allowances include interview grants, travel expenses for the worker and his dependants, household removal expenses, settling-in grants, lodging allowances, grants for the worker to visit his family while awaiting their transfer to the new area and grants towards the legal expenses involved in the sale or purchase of a house. The resettlement allowances scheme came into effect in January, 1968. The number of persons availing themselves of it is increasing but is still comparatively small—186 persons throughout the whole of 1970 and 60 in the period from 1st January, 1971, to 31st May, 1971. There is little tradition of geographical mobility of labour within this country except to the cities— mainly Dublin—and there are other factors, such as lack of housing, which inhibit internal mobility. I think, nevertheless, that this scheme does help to encourage mobility and is worth persevering with and developing.

I have, accordingly, included a provision in the Bill which will enable the scheme to be extended to persons already in employment and Irish emigrants wishing to return to this country. I also propose that benefit under the scheme should be available to persons who have to travel to attend for tests for selection for training at approved training centres—such as those operated by An Chomhairle Oiliúna—or to undertake courses of training at such centres. I also want to make clear that the scheme may be applied to persons other than persons who are insured for all benefits under the Social Welfare Acts. The actual implmentation of these improvements will be effected by regulations when the Bill is enacted.

When the Bill was before the Dáil I was pressed very strongly to apply some or all of the new benefits retrospectively. There was also some criticism that the new benefits should be more generous. To anticipate further debate on these aspects in this House I should like to sound a note of warning. The Redundancy Fund is still in a healthy state but, as I have already mentioned, with the increase in the number of redundancies this year it is no longer accumulating a surplus. Wages are going up all the time and higher pay will be reflected in higher benefit payments, while contributions continue to be pegged at the existing flat rates. The raising of the social insurance limit from £1,200 to £1,600 in May of this year means that many higher paid non-manual employees will in future be eligible to qualify for redundancy benefits and the effect of this on the fund cannot be predicted. The "crunch" period of the Free Trade Agreement with Britain and the probability of membership of an enlarged EEC are approaching.

The Redundancy Fund must, in the interests of prudence, be left with a reserve to meet these major contingencies. Apart from the financial aspect I am against rerospection because any there could be no basis in principle for picking one retrospective date rather than another and because any retrospective payments would have to be borne in full by the Redundancy Fund. It was calculated that he additional benefits in the Bill would cost the fund about £450,000 a year but this estimate may be conservative in view of recent redundancy figures. The benefits could be further improved if contributions were increased substantially but I am most anxious to avoid an increase in indirect charges on employers and workers for redundancy benefits at the present time.

In commending this Bill to the Seanad I want to make the point that the redundancy payments legislation is just a part of the Government's overall manpower policy. Industrial development and increased industrial employment are likely to increase rather than diminish the scale on which we experience redundancy in Ireland. Technological development, which we must accept if we are to grow in prosperity, sometimes leads to radical and bewildering changes in the employment situation.

Redundancy can be a near tragic experience for a worker and we must all bend our energies to helping workers who encounter this hazard. The main aim must be to get such workers back into at least as good jobs as they lost as quickly as possible. Towards this end the Government have set up the National Manpower Service to provide improved placement and guidance facilities. Training and retraining of redundant workers is a function of An Chomhairle Oiliúna set up under the Industrial Training Act, 1967. AnCO are expanding the number of training places in their training centres as rapidly as possible. The redundancy payments scheme, and the extra benefits now proposed, should be viewed as a part of this major effort by the Government to help workers to cope with this unfortunate, but unavoidable contingency of our modern industrial society.

The first thing that must strike any Senator in regard to the particular measure that the Minister has recommended to us is its complexity. The Principal Act which it is now proposed to amend was one of some 60 sections. In the amending measure before us we have a Bill of 20 sections. As one hopefully reaches section 19 and hopes that most of the main amendments have already been covered in one's study of the Bill, one finds that section 19 is, as it were, an opening to an even more untidy garden than the one through which one has walked in section 1 to 18.

The Minister has listed the eight main improvements in regard to the redundancy scheme. Seven of these eight improvements are listed among the miscellaneous items in the Schedule to the Bill in a manner in which it is rather difficult to reference them, rather difficult to be specific in regard to which particular amendment. There may be very good reasons. Of course, parliamentary draftsmen never fail to have good reasons that convince them that this is the way in which Bills should be presented to legislators.

I do not want to be unduly carping nor do I want to be unduly critical, but I ask the Minister to try to realise the position of legislators if faced with a Bill in the form in which this Bill is before us this evening. The Minister may not appreciate this because, in difficulty, he can turn o the appropriate page of his nice fat brief, which will guide him through this difficult passage.

However, those of us who have to write our won briefs find Bills like this difficult to read and, we suspect, unnecessarily difficult to read. Many of the major amendments to the law, which the Minister is now proposing to us, are contained in the Schedule to this Bill. You can only beging to make sense of them when you realise that within the Schedule we have amendments to both the sections and to the Schedule of the Principal Act. This seems to me to be a matter of great difficulty and we are entitled to comment on it, and we are entitled to ask, as the legislators whose judgment is being asked on measures of this type, that something more should be done to present these proposals to us in a more readily assimilative form.

In introducing the Bill to the Dáil, the Minister paid the House and those of us who read that first Bill the courtesy of circulating an explanatory memorandum. We might never have found our way through it without that explanatory memorandum, but the Bill before us is not the Bill that was introduced to the Dáil. There are two new sections in it which throws all the numbering of the explanatory memorandum out of joint. When we go to look at paragraph 2 of the Schedule of the original Act we find this has been changed by a later amendment. I am not saying that the Minister should not accept amendments in the Dáil. What starts as Ministerial benevolence in the Dáil is liable to become Senatorial confusion later on. In this debate and the Committee Stage debate we will have to come to grips with his proposals and I ask that he should be indulgent towards those of us who have to pick our way through this particular thicket.

The Bill and the proposal to amend the code is a welcome one. Before considering it let us just recall what we mean by the redundancy code. We are passing the first amendment to the original Act of 1967. The payment of redundancy allowance is therefore a relatively modern development because it is only relatively recently that the right to such payments has been recognised. We have at last come to the point of view that the man who works in a particular job for a number of years has made a real and sometimes a very much more real investment in that job than anyone who made available to it its working capital.

It is recognition of this fact which gives rise to the redundancy code. We must recognise in dealing with this code that this is what we are concerned with: this person has made an investment of a considerable part of his working life in one particular enterprise. Part of this belongs to him because of what he has given to it. It is through this point of view that we manage to work out in our legislation the principle that we accepted on paper long ago: that labour is not a commodity. But it is only recently that we have started to put it into practice through legislation such as this.

We are glad that the Minister is back with us this evening after a few short years to increase the benefits and to remove the anomalies that have existed. From what he said in recommending the Bill to us this evening and from the figures he gave us concerning the numbers of persons who have benefited, the amount that has been paid out in lump sums or in weekly payments, it is clear that there are many people who, in the past 3½ years, have had, as he said, the cushioning of the benefits of redundancy payments which otherwise they would not have had. The Minister has brought in the Bill with improvements because the Redundancy Fund, which is the basis of this particular code, has shown the accumulation of a surplus. Although from what the Minister has said this evening it would appear that that surplus has already been heavily eaten into during the periods of economic difficulty which have become intensified since the beginning of this year, it would appear from the figures which the Minister has given us that there is very little left of cushioning in this fund, as a fund, if these conditions are to continue.

By my reckoning the position was that up to the end of last year the amount that was being drawn from the fund was something of the order of between £600,000 and £700,000 each year. It would appear that since the beginning of the year there has been a drawing of something approaching £500,000 from the fund. If we add to this figure of £450,000, which is the Minister's estimate based on the conditions running over the three years of the increased benefit, it would appear that the drawing from the fund during the next year or so will be well in excess of £1 million. I may have done my arithmetic wrong in this regard. If so, I should be glad if the Minister could put me right on these points. My hurried arithmetic on the basis of the figures the Minister has given us this evening would indicate that it is likely, even without the increases that we have had in the past few months, that there will be drawings from the fund of the order of over £1 million. It would need very little for these withdrawals from the fund to overake the income in the fund which is reckoned at something like £1,250,000.

If this Bill had been introduced six months ago we might well have pressed heavily on the Minister, might well have accused him of conservatism in the management of the fund by proposing only the benefits which he has proposed here this evening. It would appear on the basis of the figures which he has given us now that that accusation can no longer be made.

We welcome, of course, the improvements which the Minister has proposed. Going through them, I think we can see in every case that he is meeting a real difficulty. We could perhaps discuss and disagree on points of emphasis between particular improvements to the scheme.

By and large one cannot see any area which would appear to be a major error of judgment in regard to the clearing up of the definition of "redundancy". The right of those who have reached the age of 71 and who are drawing redundancy payments to continue to draw them, the problems of dealing with the change of ownership, the problems of dealing with lay-off and short-time, in all of these the Minister has gone some distance towards making this a more humane code, in broadening it so that more people will benefit and so that there will be fewer hard cases who would be excluded by the rigidity of the original legislation.

In the proposals that he has brought forward to us this evening in regard to the tribunal, again he has done the sort of thing we would have hoped him to do in introducing the idea of a presumption before the tribunal that the redundancy right existed. It is, I think, the proper way in which to handle this problem. Matters such as the extension of the claim period and the reduction of the qualifying period were all matters which, I am sure, the Minister's predecessor had hoped to tackle but felt he was unable financially to do when introducing the original legislation.

The Minister has made more flexible the arrangements with regard to the repayment of rebates to employers in respect of the lump sum. Indeed, he has increased this amount generally. Also to be welcomed are some of the minor provisions, for example reciprocal agreements with other countries and resettlement. In connection with these two matters there are some questions I should like to ask. With regard to reciprocal agreements concerning redundancy, I should like to ask the Minister firstly whether any agreements have been made; secondly, whether any agreements are being negotiated; and, thirdly, whether any agreements which either are, or would be, negotiated would be concerned only with the disposition of moneys from the Redundancy Fund or whether there would also be an arrangement which would involve some payments from the Central Fund.

On the question of resettlement, I should like to ask the Minister if he could state the amounts paid out from the Central Fund under section 46 of the Principal Act. One can detect a note of disappointment in what the Minister said about the numbers who have benefited under this provision. However, I shall return to that point later.

Most of the provisions contained in the Bill are provisions that we would all welcome. The reduction of waiting time, the removal of the limit, the additional benefits for the older worker are all matters which we would expect to be contained in an enlightened code. The question of a redundancy code is very much a part of the problem which the Minister, in his Department is facing. In dealing with the question of redundancy and redundancy payments we are dealing with the alleviation of symptoms rather than with the cure of what is wrong in regard to our institutions and the structure of our industry. A redundancy code and redundancy payments are certainly necessary in order to deal with the problems raised by structural unemployment. However, they can never effect a cure.

It is with regard to a cure that the problems of resettlement and retraining come into their own. If it can be said that the redundancy code was a code which worked in a relatively satisfactory way and which is now being improved, the same cannot be said in regard to resettlement and retraining. If we speak about what is being done by the Industrial Training Authority with regard to retraining, we must come to the conclusion that, while what is being done is meritorious and deserving of our praise, it is too small when compared to the problem with which it is dealing.

The Minister must be disappointed and I, certainly, am disappointed at the progress being made with regard to adult retraining. It is true that the Industrial Training Authority have had to undertake many things in their early years but I feel that that authority, and the Minister's Department, will have to direct their energies more and more to the question of adult retraining.

While it is necessary that we should train in the widest possible way and according to the best techniques those who are now entering the labour force, we would make a very great mistake if we did so to such an extent that we were seriously neglecting those who have already entered the work force, mainly those who entered the work force in the days when all of the benefits of new training and new education were not available.

Those people, as the Minister well knows, are his responsibility just as much as school leavers. The fact that those workers have jobs now is not sufficient to discharge that responsibility, which lies on the Industrial Training Authority, on the Minister, on the Legislature and on the whole community. We have a duty to those people and, as I have already said, it is not enough that they have jobs now. The Minister pointed out very clearly to us this evening that many of those workers may not have those jobs in the future and many of them will be seeking the protection and help of the redundancy code before very long.

It is, perhaps, symptomatic that there has been a heavy drain on the Redundancy Fund after three years of operation. The increased strain on the fund may well be a reflection of the fact that other aspects of the problem of retaining and resettlement did not move as fast as the redundancy legislation and the operation of this code in the past few years. During those years of relative plenty compared to now, many things might have been done. They are matters which will have to be attended to now, in leaner times.

Though we welcome what is contained in this Bill, it deals only with a transition and it will not solve our fundamental problems. The Minister has come to us with his Bill which has had the benefit of the advice of his Department. It has had the benefit also of the views of the Irish Congress of Trade Unions and the Federated Union of Employers. However, I wonder if, in amending the legislation, there are some other people who have been forgotten. The unions have been able to put forward the case for their members and the Federated Union of Employers have had the opportunity of putting the case of the well organised employer, but there may be many cases of small employers. The small employer is really in serious trouble these times and he may well suffer because of a certain rigidity in this code. It might well be that the Minister could have relaxed some of the bureaucratic rigidity of this code.

To illustrate what I am talking about, I should like to mention a specific case. This is the case of a small builder who found that he would be unable to carry on. He was working in a small way of business. He could not really carry on this business but he had, as many of these small employers have, a great loyalty to those who worked for him. This man, before he sent out any notices under any section of this code, went around to his colleagues in the building industry and ensured that every one of those men who were working for him would not be idle one day. He ensured that the day after he was forced to lay off these men, due to the closure of his business, they would start the next morning in a comparable job, a job in which he was satisfied they would have the same working conditions which he was able to give them in the past.

This man, by acting in this way, was doing a great social good for these men who had worked with him as a team, because that is the way these small businesses very often work. By ensuring that there was absolute continuity of employment he had saved the Redundancy Fund from making payments to these individuals. But because this individual did not fill out a form, did not inform the Department of Labour about this particular action, he was unable to get the benefit to which he would otherwise have been entitled. Because of the lack of an official notification this individual was unable to get the benefit he otherwise would be entitled to under this scheme.

I understand this particular person made an appeal in this case. The tribunal were sympathetic to him, but section 29 of the original Act was so rigid that it gave them no discretion, in this particular case, to overlook the fact that certain statutory requirements had not been met.

Debate adjourned.