I move:
That this House approves the following Order in draft: Redundancy Payments (Weekly Payments) Order, 1976, copy of which Order in draft was laid before the House on 11 June, 1976.
Redundancy Payments Order: Motion.
The purpose of this order is to give effect to a decision of the Government that an unemployed person's after-tax income from benefits should not exceed 85 per cent of the average net weekly earnings after tax that he had received prior to unemployment. This decision, announced by the Minister for Finance when introducing the budget on 28th January, 1976, derives from public concern that the cumulative benefits and concessions available through different Government Departments to unemployed persons has left them with disposable incomes which are sometimes as great as, or even in certain instances higher than, their disposable incomes while at work.
This order concerns only redundancy weekly payments which are one of a number of benefits that an unemployed person may be entitled to receive. The other benefits which when added with redundancy weekly payment shall not exceed that 85 per cent are unemployment benefit, unemployment assistance, pay related benefit and any refund of income tax paid as a result of unemployment. However, if unemployment benefit or unemployment assistance by itself should exceed the 85 per cent, a person will receive only the unemployment benefit or assistance but without any diminution of it.
I would remind the House that in enacting the Social Welfare Bill, 1976, section 12, the Oireachtas has already provided the Minister for Social Welfare with the power to effect by regulations, in so far as pay related benefit is concerned, what this order will effect in so far as redundancy weekly payments are concerned, that is, to implement the Government's decision on the 85 per cent rule as outlined. I understand that the regulations under this Act that are necessary to implement the 85 per cent decision in respect of pay related benefit have been drafted, will shortly be made by the Minister for Social Welfare and duly laid before the House.
The necessary change in the redundancy payment scheme with which I am now concerned requires an amendment of Schedule 1 of the Redundancy Payments Act, 1967, the provisions of which apply to weekly payments. While section 30 of the Act empowers the Minister for Labour to amend Schedule 1 by order, section 5 of the Act requires that a draft of such an order must be laid before each House of the Oireachtas and a resolution approving of the draft passed by each House before the order is made.
The operation of the arrangements governing redundancy weekly payments under the redundancy payments scheme is carried out on behalf of the Department of Labour by the employment offices of the Department of Social Welfare. Under present arrangements payment of a redundancy weekly payment is subject to the rule that when combined with certain social welfare payments it must not exceed 100 per cent of normal weekly remuneration, namely, gross taxable weekly earnings, including regular bonuses and payments in kind, at the time of declaration of redundancy, or £48.08, whichever is the lesser. If the aggregate exceeds such limit, then entitlement to a redundancy weekly payment is reduced to keep the aggregate at that limit. It is now proposed in this draft order, in accordance with the Government's decision, to substitute a new limit of 85 per cent of net average weekly earnings, namely, net after-tax take home pay, or £50, whichever is the lesser. Where redundancy weekly payments are combined with disability benefit or maternity allowance the existing arrangement will continue except that the £48.08 limit will become £50. The exclusion of persons in receipt of disability benefit or maternity allowance, or persons on short time working, and persons whose entitlements have been determined before the operative date is unavoidable for practical administrative reasons, and the problems encountered in bringing such persons within the scope of the 85 per cent rule will be reviewed.
Persons who while in receipt of redundancy weekly payments reach pensionable age will as heretofore remain entitled to the residue of these payments.
Finally, I should add that the new 85 per cent limit will be applicable to those who become unemployed on or after 21st June, 1976, and who because they were not unemployed during the preceding 13 weeks submit a new claim.
We are not opposing this order. We are in agreement with it. It is time an order of this kind was made. The situation of the past six months has been ridiculous with people being able to obtain more money while not working than those who were working. The people who were working felt very sore about this. We are pleased that the order has now, even at this late stage, been introduced. The only thing I cannot understand is that it will only apply to people who become redundant after 21st June. That means there will be two sections. Those who are redundant for the last year or more are not going to be affected by this Bill. A person who is lucky enough to become redundant on 20th June is going to qualify for what he was getting all the time. I feel that even at this late stage the Minister should look into this. I believe anybody who becomes redundant should come under this order.
The Minister to reply—I would remind Senators that they should rise promptly in their places if they wish to have an opportunity to speak.
I am very surprised to find myself apparently concluding the contributions from the floor on this Bill. I wish to make two specific points in relation to this particular draft order. As the Minister has said, the net purpose of the order —and I do not oppose this purpose— is to provide that an unemployed person's after tax income from benefits should not exceed 85 per cent of the average net weekly earnings after tax that he has received prior to becoming unemployed. What I want to do is to draw the attention of the Minister, who is today deputising for the Minister for Labour, to two unacceptable anomalies at different ends of the scale in relation to unemployment and unemployment benefits.
The first relates to the end of the scale of retirement age. It is my understanding that there is an anomaly in relation to an unemployed person who reaches the age of 65, the age where he can opt to benefit under the contributory pensions scheme. He can continue to receive redundancy payments but he takes the decision that in fact he would like to retire and claim the contributory pension. It seems to me that that person is at a severe disadvantage if he does so retire instead of continuing to receive payment under the redundancy payments scheme. He will receive much less by opting for his retirement pension. It is my understanding that a number of people who are not advised of this put themselves in a very disadvantageous position and forego their redundancy payments which they would be entitled to until the age of 70.
It may be that the proper way to meet this problem and to cope with it is to ensure that every person who at the age of 65 is faced with this decision and inadvisably may be deciding to retire and to claim the contributory pension should be advised that it is to his disadvantage to do so. Alternatively, it may be that we should provide that the person who decides to retire should not suffer this diminution. It is an unfortunate anomaly. There are a number of people who have been caught by this who, by opting to retire, have placed themselves in a seriously disadvantaged position where they will only get what they are entitled to under the retirement scheme and will not continue to get the redundancy payments which they under the general redundancy legislation would be entitled to until the age of 70.
That is the first anomaly and I think it does create hardship. A person can inadvertently take a decision to retire and suffer the consequences of a substantial diminution in the amount that he would get from the State if he remained redundant. I would be grateful for the Minister's response to that particular problem.
The other anomaly is at the different end of the scale: the person starting off in Ireland who finds himself or herself unable to get a job and is therefore unemployed. The anomaly is the position that the young female school leaver finds herself in. I would like to ask the Minister when the Government intend to abolish Part II, section 10, subsection (3) (f) of the Unemployment Assistance Act, 1933, which discriminates against the young female school leaver? It is absurd, unfair and quite out of line with our commitments at European Community level, with our commitments as a society to bring about a fair access to employment: and access to unemployment benefits. There is blatant discrimination against "spinsters or widows," in that the Act prohibits spinsters or widows of 18 and over from receiving unemployment assistance unless they have 26 social insurance stamps. Their male counterparts are under no such constraints. In this order we are talking about the whole area of redundancy payments, what is recognised as the most serious problem facing our society—the problem of unemployment, the problem of providing jobs and expanding the employment sector over the next few years—and we must rule out anomalies at both ends of the scale, we must rule out the anomaly which will cause hardship to the ill-advised 65 year old who, perhaps encouraged to do so, decides to retire instead of continuing to receive redundancy payments until he is 70 and, therefore, only gets the pension under the Pension Contributions Scheme. We must remove the anomaly at the beginning of the scale where an 18 year old girl find herself at a decided disadvantage in comparison to her 18 year old male counterpart. I would be grateful for the Minister's reaction to these two anomalies, and I would hope for a firm intention to take action on both counts.
I am glad that the order is not being opposed. I note what Senator Ryan says about the fact that the order applies only to people who are redundant after 21st June. Of course the introduction of any reform at any point in time creates temporary anomalies. In this instance they are temporary because it is only during the period while people who have become redundant recently continue to draw redundancy pay that this anomaly can exist. That period is a maximum period of two years in extreme cases. In most cases it is very much shorter.
As I said in my opening statement, the Government are examining this question with a view to seeing whether it is practicable to bring the position in respect of people becoming redundant before 21st June into line with respect to those who are made redundant after that date. The problem is a practical one. It is a problem where there are a vast number of individual cases to be gone through. The process of identifying them and taking action is very laborious indeed and could be time consuming and, indeed, quite costly. The matter is being examined and if it is found practical to eliminate this anomaly it will be done. The Senator is quite right in identifying it as an anomaly but it is the kind of anomaly which arises when one introduces any reform whether it is going to benefit people or otherwise. I would suggest that there will be temporary difficulties in the period immediately after its introduction.
Senator Robinson raises what she describes as two unacceptable anomalies. The second one is an anomaly and she is entitled to think it unacceptable, but she is not entitled to raise it under this particular motion.
That is a matter for the Chair.
I appreciate that, but I am not sure that I am entitled to reply to it because, in fact, we are dealing here with redundancy. The one thing which school leavers cannot be is redundant. They are unemployed and they will find themselves in a very difficult position but it does not arise in relation to redundancy, which is a different matter from the social welfare code. I fear there are many other anomalies in the social welfare code also which could equally be raised and which need to be looked at but this is not one which I can deal with in this Bill because it is something which relates to the Department of Social Welfare. Whatever I am doing here I am doing it on behalf of the Minister for Labour who, I should say, is away because he is chairman of the International Labour Organisation and is unable to be here today and so I am appearing on his behalf.
The first point, however, is relevant to this motion but I cannot quite go along with what the Senator said, if I have understood it correctly. The Senator's statement seemed to imply that people are entitled at 65 to opt to be redundant. It may be that by an abuse involving collaboration between an employer and an employee——
They are redundant, not opting.
The Senator spoke in terms that implied there was an option. If somebody is found redundant, say, at 64 and had been working for a long period of time and has 18 months redundancy pay to come, when he or she becomes 70 he or she can choose either a contributory pension which, by definition is payable to people not available for work, or can choose to continue to draw redundancy pay on the basis of being available for work.
What would be very difficult to sustain is that people who are in receipt of a pension, a condition of which is, or the whole purpose of which is and arises from not being available for work, should be getting a payment which is designed to compensate them for the fact that though available for work they have not got work. It is that I think which creates the problem. The two codes are of their nature different and are designed to deal with different situations. I do not think a right of option here could possibly arise in the matter. Nobody opts to be redundant or if they do opt to be redundant as a result of an abuse of collaboration with their employer, it is not the purpose of the State to facilitate this operation. I think that if somebody faces this situation, if they have to opt between continued redundancy payments and contributory pension and the two of these are designed to meet totally different situations, it is right that they should have to opt in that way. If I have misunderstood the Senator or have not taken her point fully, I would be more than happy to concede to her to put her point further. But as I have understood her I find myself not in sympathy with her proposition.
Very briefly, as the Minister has kindly given me an opportunity to explain, I will outline the essence of what I regard as the unfairness to the individual and therefore the anomaly in the circumstances. It occurs where somebody is redundant and then comes to be 65 and is getting redundancy payments. Then that person might decide to retire and therefore benefit from the contributory pension scheme, but would be dramatically worse off than the accumulation of what social benefits he would be entitled to plus weekly redundancy payments. I think that there are people who do this. Once they have benefited from the retirement pension scheme they are no longer redundant but retired. They then realise that they have made a mistake but they cannot go back on it. It is the sort of problem that the Redundancy Tribunal considers from time to time. Therefore, it is either something which should be very specifically brought to the attention of the particular individual or else it should be catered for in the actual legislation and implementation of redundancy policy.
Many people who retire are worse off and some dramatically worse off in the nature of the climate. We have not yet reached the point where pensions, private or public, leave people as well off as when they were at work. I think the Senator may have a point in that some people may be badly advised in this matter and may not realise that by postponing applying for and receiving their contributory pension, they could continue to receive redundancy payments and when it is finished then get the pension. I think that the Senator in raising this point, has usefully drawn attention not to an anomaly in the system but to, perhaps, a situation where individuals misunderstand their rights and may not in fact be receiving the full advantage of the rights to which they are entitled. To that extent the Senator's intervention, I think, is very welcome. It is giving publicity to this particular aspect of the problem. It is important that people who come to that point should be advised that if they wish to continue to receive redundancy payment, they should postpone seeking the contributory pension until the redundancy payment runs out. That, as I understand it—I am subject to correction here—is entirely proper. Perhaps the raising of the matter here may help some people to avoid making a mistake. But it is not that there is an anomaly in the system. It is that some people make mistakes in how they use the system. Of course one of the problems of our very complex social welfare code to which we are trying to make some adjustments here is that its complexity often defeats the people who are the beneficiaries and this imposes the onus of any Government to try to simplify the system for that and many other reasons.
The fact that we have to introduce such a complex order is a reflection of the complexity of the system as inherited which involves so many different elements which in the particular instances we are dealing with here can be accumulated to create an anomalous situation in which people are better off if they do not work. That is something to be avoided. The purpose of this order is to achieve that. But I think in the longer run we must look to a simplification of the whole system so that this kind of anomaly does not arise.
My own personal view, which I simply offer as I am standing in here for the Minister, is that really what we should work for is a system of income supplementation and minimum income, regardless of the cause of lack of income. Whether it is a case that people who are paid too little or whether it is that people fall through some gap in the social welfare code or whether it is that people are retired or unemployed, the purpose of the system is that they should all be treated equally so that their income is supplemented in relation to their family responsibilities if it is inadequate. We have so many different systems, all accumulating, clashing with each other, overlapping, and involving anomalies. This is part of a historical heritage: we have inherited it. Over a period of what cannot be less than a number of years we must try to amend it and improve it and simplify it into a single system. But that is for the future. For the moment we have to undertake this very technically complex adjustment designed to achieve a fair and equitable result.
Question put and agreed to.