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.