I move: "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 by the High Court decision in the period before the amending legislation comes into effect; 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 includes a number of other amendments to the Act, which are necessary or desirable to clarify certain provisions, to remove anomalies, and generally to facilitate the more efficient administration of the redundancy scheme. I am also proposing to amend the provisions in relation to the resettlement allowances scheme to provide that the scheme may be extended in scope.
Perhaps it would be helpful if I were to refer briefly to the provisions of the Redundancy Payments Act, 1967, and to give some information on how the Act has operated. Under the Act, a qualified worker who is dismissed on 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 lump sum is payable in full by the employer who may receive a rebate of part of it, normally 50 per cent, but up to 65 per cent depending on the length of notice of dismissal given. Rebates of lump sums to employers are paid 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 redundancy fund.
The redundancy payments scheme was designed to achieve two broad objectives. Firstly, it set out to alleviate the hardship arising for workers affected by redundancy and, secondly, it sought to facilitate rationalisation of production, which is an essential feature of economic progress.
The redundancy payments scheme applies to workers who are insured for all benefits under the Social Welfare Acts. This means that virtually all manual workers are covered and that non-manual workers with earnings of up to £1,200 a year are within the scope of the scheme. The number of workers at present covered by the scheme is approximately 730,000, comprising about 470,000 men and 260,000 women.
The annual income of the redundancy fund from the contributions of employers and employees is now about £1,200,000. In the period from 1st January, 1968, when the Act came into effect, up to 31st December, 1970, the total expenditure from the fund was £1,900,000 approximately. This included £42,000 in respect of the expenses of the redundancy appeals tribunal.
In the three year period since the introduction of the scheme on 1st January, 1968, up to 31st December, 1970, a total of 11,455 redundancies was notified to my Department. This total was comprised of 8,994 men and 2,461 women. The yearly number of redundancies has been remarkably even—3,863, 3,696 and 3,896 in the years 1968, 1969 and 1970 respectively.
In the three year period 1st January, 1968 to 31st December, 1970, redundant workers received lump sum payments totalling about £1,600,000 and weekly payments amounting to almost £1,000,000. Lump sums paid under the scheme have ranged from about £15 to almost £1,000 and the average weekly payment has been approximately £7, which is, of course, additional to unemployment benefit or other payment to which a worker would be entitled under the Social Welfare code.
The figures which I have given show clearly that the redundancy payments scheme has been of great benefit in reducing the hardships resulting from redundancy for many workers and their dependants.
I am glad also to be able to say that the redundancy fund from which the scheme is financed is in a very sound condition. Despite the substantial outgoings on lump sums and weekly payments since 1st January, 1968, the fund had a credit balance of approximately £1,750,000 on 31st December last. While it is prudent to build up and maintain a reserve in the fund against unforeseen contingencies, I am satisfied that it is possible to introduce improvements in benefits without the risk of serious depletion of the fund.
I now propose to describe the main provisions of the Bill. The decision to amend the definition of redundancy arose following a High Court judgment in 1969 which had the effect of interpreting the definition of "redundancy" in a restricted way which was not intended when the Act was drafted. If this interpretation were allowed to stand, certain workers who are dismissed as surplus to their employers' requirements and 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 and I publicly announced this decision in October, 1969. I also announced then that it was proposed to provide for payment from the redundancy fund of compensation to workers debarred from receiving redundancy payments following the High Court decision in the period before the new definition of redundancy comes into effect. The Bill now before the House provides for these matters. In fact payments have been made from the fund to 20 workers in anticipation of this legislation.
Turning now to improvements in the redundancy payments scheme the following are the main improvements in the Bill:
(i) reduction in the period to qualify for benefit from 208 weeks— four years—continuous service with the same employer to 104 weeks— two years—;
(ii) an increase in the maximum lump sum, at present the equivalent of 20 weeks pay, to 30 weeks pay;
(iii) each year of continuous employment over the age of 41 years to count for two weekly payments instead of each period of two years over 41 counting 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 weeks 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
(viii) persons will continue to be covered by the Act for four years after they exceed the insurable limit under the Social Welfare Acts instead of for two years at present.
Under these provisions every worker who becomes redundant from the date of the new Act will secure some additional benefit. It will be clear that the main emphasis in the new benefits is directed towards older and long service workers who will gain from the higher maximum 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 qualifying service to two years and the minimum of four weekly payments. The higher rebates will largely reimburse employers for extra costs arising for them as a result of the additional benefits for workers.
The proposal to extend from two to four years the period for which workers are eligible for benefits under the Act after they cease to be insurable under the Social Welfare Acts is mainly relevant to non-manual workers who at present cease to be insurable when their pay is increased to over £1,200 a year. I may say that this income limit for social insurance is at present under review by the Government. While no final decision has been taken as to how it should be revised, Deputies can be assured that it will not stay at its present level for much longer.
Most of the other amendments which I am proposing to the existing Redundancy Payments Act are of a technical nature. I do not propose to deal with these in detail at this point, as they can be debated more appropriately on the Committee Stage, except to say that they are desirable in the interests of the more efficient administration of the existing legislation, to remove anomalies and to provide for matters not covered in the existing Act. I would like, however, to mention some of them briefly.
Workers will be facilitated in pursuing legitimate claims under the Act by provision laying down a presumption in the workers' favour in the event of a dispute as to whether dismissal was due to redundancy or service was continuous. The time limit for claims is also being extended and strengthened provision made to protect a workers' right where there is a change of ownership. Another provision covers 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.
Apart from the redundancy payments scheme, I propose to introduce an amendment relating to the resettlement allowances scheme which was authorised by the Redundancy Payments Act, 1967. 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 takeup 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. Since the resettlement allowances scheme came into effect in January, 1968, the demand for assistance under it has developed, though the number availing of it is still comparatively small—186 persons in the period from 1st January, 1970, to 31st December, 1970. I am satisfied that the limited use made of this scheme was caused mainly by the fact that there is little tradition of geographical mobility of labour within this country except to the cities— mainly Dublin.
I consider that the scheme should be extended to enable it to be applied (i) to persons already in employment to facilitate them in moving to new areas in order to take up other jobs and (ii) to Irish emigrants to assist them in returning to this country in order to take up jobs which are available here. I feel that there are good grounds for extending the scheme also to assist persons who have to travel from their normal place of residence in order 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 propose to clarify that the scheme may be applied to persons other than persons who are insured for all benefits under the Social Welfare Acts. Provision is made in the Bill for the necessary enabling powers which will be put into operation in due course by regulations.
Before this Bill was drafted, my Department had consultations as to its provisions with various representative bodies, including, in particular, the Irish Congress of Trade Unions and the Federated Union of Employers. I will not be letting you into any great secret if I reveal to you that the Bill does not go as far as Congress would wish but goes a great deal further than the FUE would like. It is the lot of the Minister for Labour to be in the middle and he must make his own judgment as to what is to be done, with a special eye on what the fund can afford.
I am sure the main criticism which will be directed at the Bill in this House is that it does not go far enough in extra benefits. I expect also that I will be asked to apply some or all of the new benefits retrospectively. In the hope of discouraging some of the advocates of higher benefits and retrospection, I want to argue the case for prudence. The redundancy fund is in a healthy state but there is no guarantee that this will continue. Wages are going up all the time and these will be reflected in higher benefit payments—but contributions are at flat rates. When the social insurance limit is raised, many better paid people will qualify for 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 free trade with an enlarged EEC are approaching. It is far better to approach these contingencies with something in the kitty. I am completely against retrospection because 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. The additional benefits I am proposing will cost the fund over £450,000 a year, assuming that the rate of redundancy stays about the same as we have experienced in the last few years. This is as far as I think it prudent to go in the present situation.
The benefits could, of course, be further improved if contributions were increased substantially but I have no wish to add, at this particular time, to indirect charges on employers and workers. I do, of course, propose to keep the situation under continuing review and if I am satisfied that further improved benefits are justified by reference to the position of the fund I will take steps to introduce them. I might mention that the 1967 Act gives powers to vary rates of benefits in a flexible manner, by orders approved by both Houses of the Oireachtas.
I wish to make it clear that I do not regard the proposed improvements in the Redundancy Payments Act outlined in this Bill as the final solution to all the problems associated with redundancy. A national scheme of redundancy payments for workers is an important part of the Government's overall manpower policy but it is only a part. It is obviously not sufficient merely to compensate a worker for the loss of his job. Every effort must be made to obtain for him new employment. With this aim in view, the benefits available for redundant workers under the Redundancy Payments Act are being supplemented by the improved placement and guidance facilities being made available by the reorganised and strengthened national manpower service.
An Chomhairle Oiliúna, set up under the Industrial Training Act, 1967, is also making an increasing contribution to the re-absorption of redundant workers into the labour force with schemes for training and retraining. The improvements proposed under this Bill should, nevertheless, help to protect further workers' interests in this time of economic and technological change, and also encourage workers to accept the inevitability of change in the interest of national economic progress. Accordingly, I commend the Bill to the House.
