Damien English (Meath West, Fine Gael) | Oireachtas source

I move: "That the Bill be now read a Second Time".

I am very pleased to introduce the Redundancy Payments (Amendment) Bill today. The Tánaiste was very anxious that we get the legislation in place. I thank all involved in the Labour Employer Economic Forum, LEEF, process who have been working on it for the last year and everyone who was involved in my Department and in the Department of Social Protection. I want to single out Ms Clare Dunne, an assistant secretary general who retired before Christmas. She was instrumental in making sure this legislation, among many other pieces of legislation, were brought through the Houses. I want to recognise her work and retirement. I want to thank Dara Breathnach for her assistance here today. I am conscious that many colleagues across the House will have raised this as an issue that needed to be dealt with in a timely manner. The Bill reflects the concerns that most people have raised with us in the last year.

This short and technical Bill will resolve an issue arising for some employees who were laid off during the period of greatest Covid-19 related restrictions or who may be laid off over the next three-year period. The Tánaiste was clear that this had to be dealt with and clearly so this Bill sets out to do that.

This Government has provided an extensive range of supports for businesses and employees affected by sometimes prolonged closures during the pandemic. We have made every effort, with significant cross-party support, to assist workers and employers. We have provided the pandemic unemployment payment to workers who were laid off. We have supported businesses in maintaining the employer-employee relationship, first through the TWSS and then the EWSS. When restrictions have eased and businesses have reopened, we have supported them by providing extensive sector-specific guidance and reopening grants. While we all recognise that these supports go a long way to help maintain businesses and jobs we do recognise that no matter what supports we put in place, they cannot replace all the lost revenue and all the grief and hassle that businesses and employees have gone through over the last two years. I want to recognise again the efforts by all those in the work environment, employers and employees, who went to great lengths to try to provide services and reach their customers and maintain business as much as they possibly could during Covid and who did follow all the procedures set out by the Government and the Department of Health in trying to protect themselves, their employees and their customers from the virus. That came at a great cost to businesses and I want to recognise that.

Despite a difficult few weeks after the arrival of the Omicron variant, the results are clear. Many sectors of the economy have bounced back remarkably quickly. Our public finances are in a far better position than we could have reasonably expected last summer, although they are still under pressure and we have had high costs to deal with Covid. However, conditions are certainly improving. Government supports have played their part, but most of all this is a credit to the resilience of businesses and workers, especially in our domestic SME sector. Omicron was a setback. The number of people in receipt of PUP increased from 55,000 at the end November, to almost 67,000 in early January. This was an inevitable result of the new precautions to reduce the spread of Omicron when the scientific information was not available to tell us how serious it would be. However, we should put this in context. The highest-ever number of people on PUP was more than 600,000 back in May 2020. The highest number last year, back in February, was more than 486,000. The reduction in PUP claimants late last year was not just because the payment level was being tapered off but was mainly because of people returning to employment. The most recent figures available show that in quarter 3 of last year we had the largest number of people ever in employment, at more than 2.47 million people. As we move in the coming days and weeks to ease the Omicron precautions and back towards full reopening, we have good reason to be optimistic for recovery.

However, we acknowledge that the recovery will not be universal and sustained over all businesses in all sectors. Some businesses will not resume with their previous capacity. Some may fail entirely. Some of this is simply a normal part of the economic cycle but some will be the result of the fall-out from Covid over the past two years. Whether it happens as part of the normal economic cycle or because of the pandemic, business downsizing or closure usually leads to redundancies. This takes me to the point of this Bill.

As it stands, a person who qualifies for redundancy under the Redundancy Payments Acts is generally entitled to two weeks pay per year of service, plus a week extra. This statutory entitlement is capped at pay up to €600 per week. This is known as statutory redundancy, and is the minimum owed to the employee by the employer. Periods spent on short time imposed by the employer are counted as normal service for these purposes, and do not reduce the amount owed to the employee. However, and here is why this Bill is needed, periods spent on lay-off within the final three years of an employee’s service do not count as reckonable service for the purposes of statutory redundancy payments. This means that a person who was laid off because of the essential Covid-19 related restrictions will not have that period counted as reckonable service if they are made redundant within three years of the end of the emergency period. This Bill addresses that issue. It strikes a careful balance. We could simply deem the period to be reckonable service, but that would make the employer liable for the redundancy payment in the first instance. That would not be fair, as the Covid restrictions were completely outside employers’ control. We have had legal advice that explained that not only was it unfair, it would not be correct legally either. Furthermore, making an employer liable could potentially risk their viability. Everyone across the Houses wants to support businesses to support those jobs, not jeopardise them. If we do not support businesses and put too much pressure on them, the knock-on effect can be job losses. Instead, we provide for a payment by the State to the employee. This will be known as the Covid-19 related lay-off payment. The payment will cover the difference between the statutory redundancy payment due to the employee, and the amount to which they would have been entitled had they not been laid off due to public health restrictions during the emergency period. The "emergency period" is the period from 13 March 2020 to 30 September 2021, inclusive. This is the period during which restrictions were at their greatest.

Employees were also restricted from invoking their normal right to trigger a redundancy to help preserve the employer-employee relationship. That right was restored from 1 October 2021. The criteria for accessing the Covid-19-related lay-off payment will be first, that the employee qualifies for redundancy; second, that the employee was laid off due to Covid-19 restrictions for a period or periods between 13 March 2020 and 30 September 2021; and finally, that the employee is made redundant before 30 September 2024.

There is an in-built sunset clause in the legislation by virtue of the fact that only periods of lay-off in the final three years of employment are disregarded as reckonable service. That is why the date of 30 September 2024 has been selected.

The Department of Social Protection will administer the payment scheme on my Department’s behalf, as the funds will be coming through the Social Insurance Fund. I want to thank the officials in both Departments for their work on their work on this over the last 18 months or so and all those who fed into the conversation. I recognise that employers and unions were anxious that this was resolved. In the early stages of restrictions, when section 12A kicked in, no one expected that the emergency would continue for as long as it did. We probably all assumed that it would be temporary and that it would not arise as an issue.

They are at an advanced stage in the development and resourcing of the necessary systems. I would like to take the opportunity to thank them and the Minister, Deputy Humphreys, for the tremendous work they have put into this. They hope to have that system up and running in quarter 2 so that they can administer payments from there. The scheme will be employer-led in the first instance. This should not be onerous for them as many employers are already very familiar with Department of Social Protection processes. There will also be provision for an employee to make direct application if, for whatever reason, their employer fails or refuses to do so. This includes, for example, where an employer may already have closed permanently. There have been some casualties over the last two years already from the pandemic.

We expect that payments should be able to commence in the first half of this year, after the passage and commencement of this Bill. It is very difficult to say what the costs of this will be, as they will be demand driven. We will not see the full picture until September 2024. Hopefully, the numbers will be much less than what any of us would have feared at the start.

As I noted at the outset, our businesses and employees have shown themselves to be remarkably resilient in the face of a very challenging period. We have many reasons for optimism that suggest the costs should be manageable.

Initial funding of €10 million has been allocated for 2022. However, the costs will be demand-driven, and funding will be available to match the drawdown. The Department of Social Protection and my Department will monitor the position carefully as applications come in.

This Bill is short and technical but it will make a clear and positive difference to people's lives. It acknowledges and compensates for reckonable service that employees have been unable to accrue due to pandemic closures. It protects businesses from additional costs as they strive to regain their footing in a still-difficult environment. It is business and worker friendly and recognises the tremendous impact of Covid-19 restrictions on everybody concerned.

I intend to amend the Bill on Committee Stage or Report Stage to correct a cross-referencing error in the recently enacted Companies (Corporate Enforcement Authority) Act 2021. The Government will be asked to agree to that amendment. The relevant provision has not yet been commenced. I would like to use the early opportunity presented by the Bill to make the necessary minor amendment. I will talk to Members when I have the wording for them.

I look forward to Deputies' contributions on this Bill. I thank Deputy O'Reilly and others who have contributed to the conversation on this challenge over the past two years as we have tried to find the best way to deal with the issue arising from the temporary lay-offs.

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