Dáil Éireann Debate, Tuesday - 11 December 2012
272. Deputy Martin Heydon asked the Minister for Social Protection if, in view of the recent budget announcement to abolish the redundancy rebate for employers, she will now consider an exemption for this rebate for small businesses who are already struggling with many costs and who if they need to make persons redundant may now have to cut other costs which may lead to further job losses; and if she will make a statement on the matter. [55670/12]
View answerThe purpose of the redundancy payments scheme is to compensate workers, under the Redundancy Payments Acts, for the loss of their jobs by reason of redundancy. Compensation is based on the worker’s length of reckonable service and reckonable weekly remuneration, subject to a ceiling of €600 per week. The recent Budget announcement has no impact on the level of statutory redundancy payable to employees who are being made redundant.
It is the responsibility of the employer to pay statutory redundancy to all their eligible employees. An employer who pays statutory redundancy payments to their employees is currently entitled to a rebate of a portion of that payment from the State. Where an employer can prove to the satisfaction of the Department that it is unable to pay the statutory redundancy to its eligible employees the Department will make lump sum payments directly to those employees and will seek to recover the debt from the employer. Rebates to employers and lump sums paid directly to employees are paid from the Social Insurance Fund (SIF).
Significant and increasing amounts have been paid out in redundancy rebates to employers from the SIF in recent years. While the SIF is constituted primarily from employer contributions, the taxpayers’ contribution is also significant. One of the factors which influenced the Government’s decisions to revise the rebate rate last year and now to remove the rebate was the increasing cost of rebates in recent years. I am very concerned about the deficit in the SIF. In terms of redundancy rebate payments to employers, €152.2 million was paid out in 2006; €167.4 million in 2007; €161.8 million in 2008; €247.9 million in 2009; €373.2 million in 2010 and €185.3 million in 2011. The amounts paid out in lump sums to employees have also increased.
As a result of the changes announced in Budget 2013 no rebate will be payable to employers in cases where the date of dismissal by reason of redundancy occurs on or after 1 January 2013. The 15% rebate will continue to apply to those cases on hand and those which will be received in the coming months where the date of dismissal is on or between 1 January 2012 and 31 December 2012. It is not proposed to make exceptions to the abolition of the redundancy rebate for small businesses.
