Ms Dara Breathnach:

I am the head of the redundancy and insolvency policy unit in the Department of Enterprise, Trade and Employment. I am accompanied by my colleague, Ms Orla Mulready. As the Minister of State, Deputy English, is unfortunately not available because of other parliamentary commitments, I am pleased to present the general scheme of the redundancy payments (amendment) Bill 2021 for the committee’s consideration.

As we all know, the Government’s Covid-19 pandemic response has had enormous impacts on virtually every aspect of life in the State over the past 20 months. Its impact on work and employment has been particularly substantial. Many people lost their jobs, either temporarily or for a longer period, owing to the pandemic. While we are now experiencing a significant economic resurgence, unfortunately some jobs will not return, and some workers have been made redundant already or will become so in the time ahead. This general scheme is designed to mitigate a particular issue arising for workers who become redundant after being laid off because of Covid restrictions for some part of the Covid emergency period. The issue is that under the Redundancy Payments Acts, statutory redundancy is based on duration of service. A qualified employee is entitled to two weeks of pay per year of service, plus a bonus week, subject to a cap of €600 in earnings per week. However, periods of lay-off in the final three years of service do not count as reckonable service. This means that in the case of redundancies now arising, where the qualified employee may have been on Covid-related lay-off for protracted periods, his or her redundancy entitlement will not factor in those periods. For an employee normally earning in excess of €600 a week who has been on lay-off for, say, 12 months cumulatively and is subsequently made redundant, this could mean a reduction of €1,200 in his or her statutory redundancy entitlement. The provisions set out within this general scheme are designed to plug that gap through a direct payment from the Social Insurance Fund. The payment will ensure that the employee being made redundant will receive the same overall redundancy payment as though he or she had not been laid off during the pandemic.

In the normal course of events, employers are liable for the cost of lump sums on redundancy, and this continues to be the case. However, the cost of this additional payment covering Covid-related lay-off periods will not be imposed on employers because the pandemic-related restrictions were outside of their control. Furthermore, were the cost imposed on them, that could endanger the viability of some businesses that would otherwise be able to recover. All qualified employees will benefit from the proposals in the general scheme. They do not need to have gone onto any particular form of State payment on being laid off. The criteria are simply that the person qualifies for redundancy in the usual way and was laid off because of Covid restrictions during the emergency period.

I would like to explain how we are defining the emergency period. In normal times, an employee who is on protracted lay-off has the right to trigger a claim for redundancy. This right is set out in section 12 of the Redundancy Payments Act. The right was suspended as part of the Government’s pandemic response. This was part of a package of measures to help preserve employer-employee relationships and safeguard business viability, as an otherwise viable business could be driven into insolvency if a large proportion of employees claimed redundancy. The right was suspended from 13 March 2020 until 30 September 2021. An employee’s right to claim redundancy is now fully restored. The emergency period for the purposes of this general scheme is aligned with the period during which the right to claim for redundancy was suspended. This corresponds with the period of greatest pandemic-related restrictions and uncertainty. An employee who has been laid off for protracted periods now has again the right to trigger a redundancy claim, which carries with it a corresponding possibility for an employer to bring back the employee. With the reopening of large sectors of the economy, the rules regarding redundancy and the mutual rights and responsibilities of employees and employers are normalised. Because periods of lay-off within the last three years of employment do not count as reckonable service towards the statutory redundancy lump sum, the people who will benefit from these proposals are employees who have been made redundant over the course of the pandemic or who are made redundant within three years of the end of the emergency period, having been laid off for some part of the emergency period. Therefore, the general scheme refers to 30 September 2024 and this is essentially a built-in sunset clause. It means that the exposure of the Social Insurance Fund to claims for this additional payment will cease for redundancies occurring from October 2024 onwards.

Turning to the overall cost of the proposals, I have to say that this remains quite uncertain for a number of reasons. While the economic bounce-back has been significant, many people have already been made redundant. We can also unfortunately expect that some businesses will not survive, leading to further redundancies. However, one measure of returned employment is the number of people exiting the pandemic unemployment payment, PUP, and not entering the live register, and those figures are encouraging. For example, in the first transition of PUP recipients to the live register, PUP claims fell by almost 13,000 but live register claims rose by only 2,600. In the second phase in mid-November, PUP claims fell by over 14,000 and the live register also fell. This makes it very difficult to quantify the overall likely cost. What we can say with certainty is that the maximum sum to which any one employee will be entitled is €1,860. This is based on an employee normally earning more than €600 per week, who was laid off for the entirety of the emergency period and is subsequently made redundant. The worst-case scenario, modelled about six weeks ago but possibly already out of date, was that the maximum redundancies at the higher end of the scale would see a total exposure of almost €150 million. The Department already thinks that is very much on the high side. However, I stress that this is not the expected outturn, given the significant reopening of economic sectors and return to employment that is already in evidence.

I know there have been some concerns raised about the effect of short time on redundancy entitlements. I am happy to confirm that periods on short time are reckonable service for the purposes of statutory redundancy entitlements. I thank members for their attention and I am happy to take any queries.