I move that the Bill be now read a Second Time.
The main purpose of this Bill is to provide financial help to workers who lose their jobs on account of redundancy and financial help to unemployed workers who have to move from their home areas to secure employment.
The first thing I want to stress is that I have not prepared this Bill because of fear that the future holds the prospect of large-scale redundancies. A basic fact of economic life which we must accept is that a certain degree of redundancy is an inescapable feature of a dynamic economy. But although only a small proportion of workers may be affected by redundancy, it is cold comfort for those who are affected to know that.
Redundancy has serious and distressing implications for the workers involved. It can have a shattering effect on a man with family responsibilities who thought his job was secure. It is understandable, therefore, that many workers are suspicious of economic or technological changes which threaten their sense of security. Yet change is the lifeblood of progress and fear of change and resistance to it can be a formidable obstacle to economic and social advancement.
The problem posed by this situation requires to be solved if our hopes and aspirations for the future of our country are to be realised. A more realistic approach than an indiscriminate resistance to redundancy is required. A policy of job maintenance at all costs will not do. This would be tantamount to a policy of economic stagnation. In the long term—and not very long term at that—such a policy would have disastrous results for workers and for the community as a whole. The Government's policy is to promote economic expansion. It is policy for the welfare of the nation and the nation is largely composed of workers and their families. It is essentially a policy which accepts the need for change involving some redundancies and displacements. The dictates of social justice demand that, in implementing that policy, we should strive as best we can to protect the interests of individual workers and their dependants.
While the primary purpose of this Bill is to provide a solution for the human problems associated with redundancy, there is a second aim which is also of major importance. This aim concerns the relationship between redundancy and economic progress. We are all anxious for the welfare of our economy; for more and better jobs and for higher living standards. The necessary economic growth which will provide these improvements is being fostered by the Government through a variety of measures. The ultimate success of the Government's measures will depend to a large extent on the capacity and the willingness of individual businesses to adapt themselves to new and changing demands; to avail themselves of the most modern techniques for improving their efficiency; and to accept change as a prerequisite for increased productivity.
Because of past experience change has, in the minds of many, carried with it the threat of the loss of job; the threat of long-term unemployment. A built-in resistance to change has thus been created. Apprehension on the part of workers is understandable. It cannot be dispelled merely by holding out a prospect of a better job at some undetermined date in the future. Something more is needed. The worker feels entitled to some compensation for the loss of his job and he needs protection for himself and his family in the interval that may occur before he finds other employment. The Bill is intended to meet this situation and so give the worker a sense of security, even when confronted with a threat of redundancy. The weekly payments for which the Bill provides are very important in this context.
I want to make it clear that I do not regard this Bill as providing the answers to all the problems associated with redundancy. It is an essential part of our manpower policy, but it is only a part and it should be clearly seen as such. The main purpose of the Bill is to provide financial help for redundant workers in the difficult period between the loss of one job and the securing of another. It is not enough to compensate a worker for the loss of his job. Positive steps must be taken to secure suitable alternative employment for him. That is why the placement and guidance functions of the Employment Service are being strengthened. That is why proposals for the training and retraining of redundant workers are now being considered by An Chomhairle Oiliúna under the Industrial Training Act, 1967. That is why this Bill contains provision for a scheme of resettlement allowances to enable redundant workers to move to new areas to secure employment.
Employers should not feel that, by meeting their obligations under this Bill, they are absolved from all responsibilities in regard to redundancies. They should plan their manpower requirements as far ahead as possible, and they should introduce schemes of early retirement, of transfers and of retraining to keep the number of redundancies to the minimum. There is little prospect, however, of employers being able to do this unless they appoint personnel managers, whose training and experience fit them for these specialised tasks. I should therefore like to take this opportunity to again ask employers in their own interests to consider appointing personnel officers. Where some redundancy is unavoidable, employers have a responsibility to co-operate fully with the Employment Service in an effort to secure suitable alternative jobs for the workers concerned.
Before coming to deal with the important sections of the Bill, I should like to refer briefly to another aspect of what I might term its secondary aim. With the coming of free trade and an intensification of competition, the outlook will be bleak for any industry or business that does not strive for maximum efficiency. Two practices which greatly militate against the achievement of maximum efficiency are underemployment, that is, overstaffing or under-utilisation of skills—and a reluctance to keep pace with modern methods and techniques. The preservation of jobs is frequently advanced as a reason for such practices, but the real interests of a business and of the workers engaged in it cannot be served in this way. Nor is it the way to protect employment. It is my hope that the introduction of the redundancy payments scheme will enable both managements and trade unions to adopt a more realistic approach towards practices which militate against efficiency and adversely affect the competitiveness of many of our products.
As Deputies are now aware, this is a very complex piece of legislation. We decided that, before the Bill was drafted, the proposed scheme should be discussed with the Irish Congress of Trade Unions and the main employers' organisations. The discussions have been long and detailed and have involved some delay in the introduction of the Bill. However, I am satisfied that this has been worthwhile, because the scheme which has emerged has benefited considerably from the useful contributions of both sides. There were, of course, some areas in which agreement was not possible. In spite of this, I believe that the main structure of the scheme provided for in this Bill will be acceptable to both employers and workers. I would like to thank all those who were involved in the discussions and to pay tribute to their constructive and responsible approach to the many problems involved.
To turn now to the actual provisions of the Bill the basic proposals are:—
(1) A qualified worker who is discharged because of redundancy will, if certain conditions are fulfilled, be entitled to redundancy payment, and this will consist of
(a) a lump sum payment, and
(b) a weekly payment.
(2) 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.
(3) The maximum lump sum payment will be the equivalent of 16 weeks' pay.
(4) 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.
(5) 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.
(6) The qualifying period of service for a redundancy payment will be four years with the same employer.
The scope of the scheme is set out in section 4. It will apply to all workers who are insured for all benefits under the Social Welfare Acts. This means that almost all manual workers and clerical workers with incomes of less than £1,200 a year will be covered with the exception of part-time workers and workers under the age of 18 years or over 65 years of age. There are, of course, some workers below the £1,200 limit who, because of the permanent and pensionable nature of their employment, are not insured for all benefits under the Social Welfare Acts. These will not come within the scope of the scheme. I think it will be agreed that, with the emphasis on weekly payments, it is realistic to tie the scope of the scheme in with the scope of the Social Welfare unemployment benefit scheme. We recognise that there may be some classes of workers for whom the general scheme would be unsuitable. The Minister for Labour will have power under the Bill, following consultations with the employer and worker interests concerned, to introduce special schemes more suited to the needs of any categories of workers for whom the general scheme may be found to be unsuitable.
Representative committees are already considering the possibility of preparing special schemes for building workers and for dock workers. I intend in the immediate future to open discussions with appropriate interests in agriculture on the question of whether a special scheme should be prepared for agriculture workers. We have to recognise, however, that there are many workers in the classes of employment to which I have referred who would, in the event of redundancy, qualify for benefit under the general scheme. I feel that the most equitable arrangement, in the circumstances, is to include all such classes in the general scheme until such time as a special scheme may be ready to be put into operation. If and when a special scheme is ready for any particular class, I can at that stage exclude that class from the main scheme, with effect from the date of introduction of the special scheme.
Having discussed the scope of the scheme, I think I should next look at the provisions dealing with the circumstances in which redundancy payments are to be made. Redundancy is defined in section 7. In effect, it means that an employer is required to make a redundancy payment to a qualified worker if he is dismissing the worker because he no longer requires his services. It is immaterial whether the dismissal is due to a change in production methods, falling off in demand for products, complete closure of the firm or its transfer to another area. Dismissal due to misconduct or some other fault of the employee would not, of course, rank as redundancy.
The provisions of section 15 are very important in regard to the question of entitlement to benefit; a worker who unreasonably refuses to accept an offer of suitable alternative employment by his employer will not be entitled to a lump sum payment. This applies only where the alternative employment is in the employer's own business, or, in the case of a company, in the business of a parent or subsidiary company. The same section also provides that a person who unreasonably refuses an offer by the Employment Service of suitable employment will be disqualified from receiving weekly payments.
There are several rather complex sections dealing with entitlement to redundancy payments arising out of lay-off or short-time working. I do not intend to deal with these provisions in detail on this stage, except to say that the intention is to provide that an employee will be entitled to redundancy payments if he is laid off or kept on short-time working for excessive periods. At the same time, it would be unreasonable to expect an employer to make redundancy payments because of a temporary lay-off, and this is recognised in the Bill.
Special arrangements are made under section 8 to deal with the case of seasonal workers who return to the same employer year after year. What we propose here is that, in the case of workers who are laid off for an average period of more than 12 weeks during the four years prior to redundancy, the provisions relating to lay-off in the Bill will not apply until the end of that average period. In the case of a seasonal worker, therefore, there will normally be no question of redundancy until the usual commencement time of his seasonal work. If he is not then re-employed, the question of redundancy arises, but not until then.
This Bill recognises the principle that, over the years, a worker builds up certain rights in his job, and if he is deprived of these rights by circumstances outside his control, that he ought to be compensated. This will, I believe, give the worker a new status in relation to his job and in the long run, will make for better relations between managements and workers. It is necessary to say in the Bill after what period of time this right commences to operate. There can be divergent views on this but I consider that four years is a reasonable measure of the length of time that must elapse before a worker can be said to have established a right in a particular job. I have decided, therefore, that to qualify for a redundancy payment a worker must have had at least four years' continuous service with the employer by whom he is declared redundant.
As I have mentioned, the Bill provides for redundancy payments in two forms, a lump sum payment to be made by the employer at the time of dismissal and weekly payments which will begin four weeks after that date. The amount of the lump sum and the amount and duration of the weekly payments will be related to the worker's service and to his normal pre-redundancy pay.
In deciding the scale of benefits, there are a number of factors to be considered. 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 should be substantial enough to effect the necessary change in attitudes towards redundancy; and, thirdly, they must not be so high as to add significantly to production costs or to act as a disincentive to the seeking or accepting of alternative employment. This last mentioned point has particular significance in relation to the weekly payment. I believe that the benefits proposed in the Bill achieve the necessary balance between these various considerations.
The scale of payments and methods of calculation are laid down in Schedules 1 and 3 of the Bill. The lump sum will be calculated on the basis of half a week's pay for each year of employment between the ages of 18 and 41 years and one week's pay for each year of employment over the age of 41 years. The maximum payment will not exceed the equivalent of 16 week's pay.
As I said earlier, one of the aims of the scheme is to try to maintain the worker's living standards as close as possible to the pre-redundancy level. For this reason the emphasis is on continuing weekly payments rather than on a large lump sum payment. The weekly payments, which will be contingent on unemployment, will be the equivalent of 50 per cent of the worker's pre-redundancy pay. The payments will be payable in addition to social welfare benefits and will continue for a period of one week for each year of employment. For the purposes of this calculation each two completed years of employment over the age of 41 years will count as three completed years. It will be noted that the benefits are weighted in favour of older workers with long service and I think Deputies will agree that this is a just and reasonable approach.
I have mentioned that the weekly payments will be paid in addition to any unemployment benefit or assistance or other social welfare benefit to which the worker concerned may be entitled. However, because of the disincentive danger to which I referred earlier, it is proposed that the total amount of the weekly redundancy payment and the social welfare benefit payable should not exceed 90 per cent of a redundant worker's pre-redundancy pay.
Another important point in connection with the weekly payment is that, while it is payable only if the worker is unemployed, the worker will not lose his entitlement to the balance of the payments due if he accepts employment before exhausting his entitlement. The proposal is that the unexpired balance will be placed to his credit and may be drawn by him in the event of future unemployment. This will involve administrative problems, but I believe that any other course would be unfair. Besides, the fact that his entitlement to weekly payments will be kept open should encourage the worker to accept alternative employment, even if it is only of a temporary nature.
Before I leave the question of weekly payments, there is one point I should like to make. There is a strong link between these payments and certain social welfare benefits and, consequently, any adjustment or other developments in regard to the social welfare payments will inevitably involve a review of the weekly payments under the redundancy scheme. My colleague, the Minister for Social Welfare, is at present considering the feasibility of introducing a wagerelated social insurance scheme. The introduction of such a scheme would make it necessary for us to re-assess the benefits payable under the redundancy payments scheme. Any changes or adjustments that may be necessary in such circumstances will, under the provisions of the Bill, be subject to an appropriate resolution of both Houses of the Oireachtas.
Since the amount of the lump sum payments and the duration of the weekly payments are related directly to the length of the workers' service with the employer concerned, it would be relevant at this point to comment briefly on the provisions for calculating length of service. The first thing to be noted is that the service must have been continuous, and rules for determining whether service was continuous or not are set out in Schedule 3, Generally speaking, service can be taken to have been continuous unless it was broken by the worker being discharged or voluntarily leaving the employment. However, discharge due, say, to recession in business or to illness of the worker which proved to be only a temporary break and did not exceed 26 weeks in duration would not be regarded as breaking continuity. While certain absences from work will not break continuity, the periods may not be reckonable for the purpose of calculating length of service. Rules in regard to this aspect of the matter are also included in Schedule 3.
I might mention that under the proposed rules in Schedule 3 strikes will not break the employee's continuity of service, although neither will periods spent on strike after the commencement date of the Act count as reckonable service: periods of strike which occurred prior to that date, however, will count.
Part III of the Bill deals with the establishment of the redundancy fund. This fund will be financed by contributions from employers and workers. The employer will pay 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. The main purpose of the fund is to spread the major part of the cost of redundancy over the widest possible area of employment. I think the idea of a special fund will meet with general approval. I believe that the proposed contributions will be sufficient to meet the likely outgoings from the fund. This opinion is based on the best information available to my Department at the moment. There are too many imponderables involved at this stage—the likely incidence of redundancy, the average age, length of service, and pay levels of workers becoming redundant —to enable us to estimate with any certainty what the outgoings from the fund will be. Experience alone will show whether adjustments in the contribution rates or the benefits are necessary. If they are, I will have power under the Bill, subject to affirmative resolution of both Houses, to make the necessary changes.
The weekly payments which I referred to earlier will be paid out of the fund. In addition, where a worker is unable to obtain from his employer a lump sum payment to which he is entitled—for example, if the employer is insolvent—the full amount due to the worker will be paid from the fund. Steps will then be taken to recover for the fund the part of the payment which should have been made by the employer.
An employer who makes a redundancy payment for which he is liable will be entitled to a rebate from the fund equivalent to one-half of the lump sum paid. This rebate will be increased by an additional 2½ per cent bonus for each extra week of notice which the employer gives in excess of the minimum notice of two weeks required under the Bill. The maximum rebate will be 65 per cent of the actual lump sum payment. I hope that this added incentive will encourage employers to give early notice of impending redundancies. This will enable the Employment Service to take steps in good time to seek suitable alternative employment, after a period of retraining if necessary, for the workers about to become redundant.
In discussions it has been suggested that the fund should bear all or, at least, a higher proportion of the lump sum payments. I do not agree. It is essential that a substantial part of the cost of redundancies should be met by the employer who is declaring the workers to be redundant. This will help to safeguard the fund from possible abuse and will ensure that employers adopt a responsible approach to redundancy. If employers could declare workers redundant at little or no cost to themselves the scheme would be open to abuse. But apart from this, I believe that it is right in principle that an employer should meet a reasonable portion of the redundancy payments for his workers directly from his own resources.
It has been argued too in discussions that there should be a State contribution to the scheme. I cannot accept this. It is clear from what I said earlier that this scheme will be of direct benefit to both workers and employers, and it is only right that they, and not the public in general, should bear the cost. It has to be borne in mind that a whole range of manpower services are being provided— new training and retraining schemes, an improved and expanded Employment Service, a manpower forecasting service and a scheme of resettlement allowances.
The taxpayer will be bearing the major part of the cost of providing these services. In these circumstances it would not be reasonable to expect the taxpayer to contribute also to the redundancy payments scheme. Having regard to the relatively low contributions, it is only fair that employers and workers should share between them the cost of this scheme.
The Bill has been drafted on the basis that contributions will be collected by means of a special redundancy stamp. The possibility of having contributions collected by means of a surcharge on the existing Social Insurance stamp is being examined but there are serious administrative and other problems involved which it may not be possible to overcome. I will have power under section 33 to make regulations providing for the collection of contributions by means other than by a special redundancy stamp and the merits of alternative methods of collection will be fully investigated before I come to a final decision on the matter.
If a worker is dissatisfied with an employer's decision regarding a lump sum payment, he may ask to have the question resolved by the appeals machinery of the Department of Social Welfare. A worker may also avail of the same appeals machinery if he is dissatisfied with a decision of a deciding officer. Likewise, an employer may appeal against the decision of a deciding officer on matters relating to scope and contributions. Reference to the High Court may be made where a question of law is involved. In some respects, separate machinery for redundancy appeals would appear to be desirable, but if we are to have a scheme which provides for continuing weekly payments tied in with certain social welfare benefits the only practical arrangement is to have appeals under both schemes dealt with by the same appeals machinery.
Special arrangements are proposed in relation to CIE workers. This is necessary because, under the Transport Acts, certain CIE employees might already be entitled to compensation in the event of redundancy. It is proposed under section 48 that all CIE workers will be covered by the provisions of the Bill. If, however, a worker should qualify for redundancy payment under the Transport Acts, he will not be entitled to receive, as well, payments under the Redundancy Payments Act. In such circumstances redundancy fund contributions will be refunded. New entrants to CIE will not be entitled to compensation under the Transport Acts. They will be insured under the Bill in so far as they come within its scope.
I will have power under section 46 to introduce a scheme of resettlement allowances. The cost of this scheme will be borne by the Exchequer and will not be a charge on the redundancy fund. The purpose of the scheme is to provide financial assistance to unemployed workers who must leave their home areas to secure employment. I do not want anyone to get the impression that the introduction of such a scheme would represent a major shift in the Government's policy in relation to undeveloped areas.
It has been and it will continue to be Government policy to stimulate economic activity in such areas and, in particular, to do everything possible to facilitate the establishment of new industries which will give much-needed employment. The resettlement allowances scheme is designed to promote a desirable degree of geographical mobility of labour within the country as a whole. Its main value, however, is likely to be in assisting the establishment of development centres in undeveloped areas by helping workers within these areas to move to jobs in the development centres.
The resettlement scheme will provide for payments to meet part of the cost of household removal, travel allowances, lodging allowances and part of the legal costs involved in selling a house in the home area and buying one in the new area. It is the intention that the scheme will apply to unemployed workers over the age of 18 years who have no immediate prospects of re-employment in their home area. The payment will, of course, only be made if employment of a reasonably permanent nature is available in the new area and there are no suitable unemployed workers available in that area.
Both the redundancy payments scheme and the resettlement allowances scheme provided for under this Bill are largely experimental. Experience alone will show whether they are financially viable. Experience alone will show whether they are suitable to achieve the social and economic objectives at which we are aiming. I want to assure the House that the operation of both schemes will be kept under careful review and that I will have no hesitation in promoting any improvements or amendments that may be shown to be desirable. I think the only sensible course is to introduce the schemes as quickly as possible, to learn what lessons may have to be learned from their own operation, and to be ready and willing to make whatever improvements or modifications that time may reveal to be necessary.
Before I conclude, I want to emphasise once again that in introducing this Bill the Government are in no way pessimistic regarding the future of the economy. We are confident that the measures in this Bill will strengthen the economy and that whatever future redundancies may occur will reflect the success of the Government's programme for economic development and expansion and not economic recession or malaise.
The type of redundancy that must be envisaged is that associated with the transfer of surplus workers from contracting industries to new or expanding industries; the release for retraining of workers whose skills have become obsolete in consequence of advances in technology; and the re-training or resettlement of workers who may become surplus to a business because of mergers, and readaptation or other measures designed to promote efficiency. Workers, however, cannot be expected to accept the hardships of disemployment even in such circumstances unless their personal interests are protected. This is precisely what the Bill attempts to do and I commend it to the House for adoption.
