Employers pay into the Social Insurance Fund (SIF) at a rate of up to 10.75% of employee salaries. This payment is designed to contribute to the cost of benefits paid out of the social insurance fund.
One of the benefits funded by the SIF is the provision of redundancy related payments in circumstances where the employer making the redundancies is unable to fund these payments itself – in the majority of cases because the employer concerned is insolvent.
In this way the payments made into the SIF by all employers help to protect the interests of workers when any individual employer cannot meet its obligations under law to pay salary arrears and redundancy settlements to employees who lose their jobs.
Notwithstanding that payments out of the SIF are properly made in accordance with this insurance principle the Department pursues recovery of the amounts paid. The Department has a dedicated debt management unit which has responsibility for recovering as much as possible of the amount paid out in redundancy related payments. It does this through raising a debt against the employer concerned and then seeking payment of this debt either directly from the employer (typically by means of an agreed repayment schedule) or from any liquidator that may be appointed to wind up the affairs on an insolvent business.
A total of €10.5 million in funds paid out of the SIF to cover redundancy related payments was recovered by the Department in 2016. The balance of any funds paid out but not recovered is recorded and disclosed as a debt in the financial accounts of the SIF. Debt is only written-off at the conclusion of the liquidation process – a process that can take up to seven years.
The total employer debt to the SIF at 31 December 2016 stood at €459 million. This debt is comprises 13,400 individual debts owed by employers - many of whom ceased trading during the period of the recession 2008 – 2013.
Fifty percent of the individual debts owed to the SIF comprise of amounts of less than €10,000. A further 35 per cent relate to individual amounts of between €10,000 and €50,000. The remaining 15 per cent relate to debts in excess of €50,000.
The table below details the distribution of debt by individual amounts owed by employers as of March 2017.
|
Debt Amount
|
Number of Debts
|
|
less than €10,000
|
6822
|
|
€10,000-€50,000
|
4746
|
|
€50,000-€100,000
|
983
|
|
€100,000-€500,000
|
757
|
|
€500,000-€1m
|
64
|
|
€1m-€5m
|
27
|
|
Greater than €10m
|
1
|
|
Total
|
13400
|
