Written answers

Tuesday, 21 February 2012

Department of Social Protection

Social Welfare Code

9:00 pm

Photo of Nicky McFaddenNicky McFadden (Longford-Westmeath, Fine Gael)
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Question 320: To ask the Minister for Social Protection if any derogation from the reduced employers’ redundancy rebate will be introduced for small and medium sized enterprises; and if she will make a statement on the matter. [9150/12]

Photo of Joan BurtonJoan Burton (Minister, Department of Social Protection; Dublin West, Labour)
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The primary purpose of the redundancy payments scheme is to compensate workers, under the Redundancy Payments Acts, 1967 to 2011, for the loss of their jobs by reason of redundancy. Compensation is based on the worker’s length of reckonable service and reckonable weekly remuneration, subject to a ceiling of €600 per week.

It is the responsibility of the employers to pay statutory redundancy to all their eligible employees. An employer who pays statutory redundancy payments to the employees is then entitled to a rebate from the State. Rebates to employers and lump sums paid directly to employees are paid from the Social Insurance Fund (SIF). Significant and increasing amounts have been paid out in redundancy rebates to employers from the SIF in recent years. While the SIF is constituted primarily from employer contributions, the taxpayers’ contribution is also significant. One of the factors which influenced the Government’s decision to revise the rebate rate was the increasing costs of rebates in recent years.

The deficit in the Social Insurance Fund is a matter of concern. Prior to the implementation of the revised rebate, the Social Insurance Fund refunded employers 60 per cent of the cost of making people redundant. €152.2 million was paid out in rebates to employers in 2006; €167.4 million was paid in 2007; €161.8 million was paid in 2008; €247.9 million in 2009; €373.2 million in 2010 and €188.2 million in 2011. The amounts paid out in lump sums to employees have also increased.

As part of the deliberations on Budget 2012 it was decided that the 60% level of rebate is not sustainable in the current economic climate. While I acknowledge that this may cause difficulties for employers it should be noted that redundancy rebate payments to employers are not common in many EU and other jurisdictions.

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