Dáil Éireann Debate, Thursday - 15 February 2018
298. Deputy Niall Collins asked the Minister for Employment Affairs and Social Protection her views on restoring redundancy rebates to businesses which previously facilitated small and micro-sized businesses to hire staff; and if she will make a statement on the matter. [7985/18]
View answerThe purpose of the redundancy payments scheme is to compensate employees for the loss of their jobs, where the employer is unable to pay statutory redundancy due to financial difficulties or insolvency. The scheme is funded from the social insurance fund.
Up to 2011, the scheme provided a rebate of 60 per cent to employers who provided statutory redundancy payments to their employees. In Budgets 2012 and 2013, the Government first reduced and then abolished the rebate payment. This decision was made because of the high cost of the rebate and its impact on the financial sustainability of the social insurance fund at the time of the economic crisis. Furthermore, the rebate to employers was paid regardless of a company’s financial situation and ability to pay, thus benefitting viable and profitable companies, including multinational companies. It was not a targeted use of the resources of the social insurance fund.
The redundancy payments scheme as it now operates benefits employees whose employers are unable to pay for statutory redundancy. Employers who declare they cannot sustain the cost of redundancy payments, albeit they continue to trade, are required to submit documentation from their accountants or solicitors and to accept liability for the redundancy payment to the social insurance fund. This ensures that the current scheme takes into account both an employer’s ability to pay redundancy payments and that the social insurance fund can be reimbursed in the future, through debt repayment if their financial position improves.
A rebate of redundancy payments to smaller businesses would discriminate between employers and may be construed as a form of state aid, as rebates are not the norm in EU member states. Restoring the rebate would lead to higher costs for the social insurance fund and could restrict the scope for expanding social protection coverage, as set out in the Programme for a Partnership Government.
While I acknowledge the contribution made by small businesses in the creation of employment, I do not consider it appropriate to reinstate the rebate scheme on any basis.
I hope this clarifies the matter for the Deputy.
