Wednesday, 14 May 2003
Redundancy Payments Bill 2003: Second Stage.
Mary Harney (Tánaiste; Minister, Department for Enterprise and Employment; Minister, Department for Enterprise, Trade and Employment; Dublin Mid West, Progressive Democrats)
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I am pleased to be in the Seanad to propose this important legislation. The Bill provides for the implementation of the enhancements to redundancy payment levels and other improvements to the operation of the redundancy scheme that are provided for in the partnership agreement, Sustaining Progress, and the report of the redundancy review group. It will also amend the insolvency payments legislation to allow employees of insolvent companies to claim their minimum notice entitlements under the insolvency payments scheme through a liquidator or receiver without first having to obtain an award from the Employment Appeals Tribunal.
In April 2002, the Government established a review group, in the context of social partnership, to examine the operation of the statutory redundancy payments scheme so as to ensure the scheme best meets the requirements of employers and employees. The group, which reported back to me and the Government in July 2002, agreed a range of changes to the redundancy scheme, including: a simpler method for calculating service; changes in the treatment of absences form work; treatment of service abroad; simplification of application forms; and a new IT system, which includes an e-government aspect. The group did not reach consensus on issues such as an increase in the level of statutory redundancy payments and size of rebate to employers. The partnership agreement, Sustaining Progress, endorsed the changes agreed by the redundancy review group and provided that, in addition, the distinction between service under and over 41 years will be removed, there will be two weeks pay for every year of service, the bonus week will be retained and the rebate of 60% to the employer will also be retained.
On 18 February 2003, the Government approved the drafting of a Bill, on a priority basis, to give effect to the new enhanced redundancy payments scheme. The Government decision also approved the provision of a sum of around €1 million, to cover the cost of supporting IT, the funding of administration costs and operational overheads – including the enhancement of supporting IT – to be made from the social insurance fund, with arrangements to be put in place with the Departments of Finance and Social and Family Affairs. The Government also agreed to amend the Protection of Employees (Employers' Insolvency) Acts 1984 to 2001 to enable employees of insolvent companies to make claims for minimum notice entitlements under the insolvency payments scheme without having to obtain an award from the Employment Appeals Tribunal.
On 30 April 2003, the Government approved the text of a Bill to give effect to the new enhanced redundancy payments scheme and the amendment to the insolvency payments scheme. The Government decision of 30 April 2003 also approved the presentation of the Bill to Seanad Éireann and its circulation to Senators. The Bill was published on 7 May 2003.
When the improved statutory redundancy payments come into operation, it is estimated that a full year's cost of payments from the social insurance fund, based on the 2002 level of redundancies – approximately 24,000 – will be in the region of €149 million. This is an increase of €96 million in the annual cost to bring the new enhanced rates into effect.
An amendment of the redundancy IT system will be required to implement the full range of changes set out in the Bill at a cost in the region of €1 million. It is anticipated that the new system, when it is fully operational, will simplify administration especially for employers. It will also bring improved efficiencies in administration by the Department.
Section 4 of the Bill provides that the administrative costs of redundancy and insolvency will be met from the social insurance fund by means of an appropriation in aid to the Department of Enterprise, Trade and Employment. This will provide greater accounting transparency, in that all costs – payments as well as administration – will be funded by the SIF. Detailed arrangements to implement these changes have been agreed between the Departments of Enterprise, Trade and Employment, Finance and Social and Family Affairs.
The legal advice from the Office of the Attorney General is that as the payment of a statutory redundancy lump sum is a legal requirement on employers, it could not be imposed on them with retrospective effect. In fact, employers are entitled to due notice of the intention to legally require them to pay enhanced rates. The new redundancy Act has to be brought into effect by ministerial order after enactment by the Oireachtas. This cannot be made retrospective.
I hereby give notice to all employers that it is my intention to make best endeavours so that the new redundancy payment levels will come into effect on Sunday, 25 May 2003, or as soon as possible thereafter. This will require swift passage of the Bill through the Oireachtas. Employees who are issued with notice of redundancy on that date or later will be entitled to two weeks pay for each year of service, plus a bonus week.
It is proposed that when this Bill has passed through both Houses of the Oireachtas and is enacted, a commencement order will be made so that most sections of the Bill will become effective, including the increased payment amounts. However, section 10 will be brought into effect on 30 January 2004, while sections 8, 12 and 13 will not come into effect until well into 2004 when the new IT system will become fully operational. A commencement order giving effect to these three sections will be made at that time.
I will now outline in detail the main provisions of the Bill, which are as follows. Section 1 is a standard provision, which provides for the Short Title of the Act and the collective citation of the Act with other relevant Acts and the standard commencement provisions. Section 2 provides definitions of terms used in the Act. Section 3 provides that the social insurance fund may cover the administration costs of the redundancy and insolvency schemes. Section 4 provides for the amendment of section 2(1) of the principal Act by inserting up to date definitions of "contract of employment", "employee" and "employer". These definitions are similar to those given in the Protection of Employees (Part-time Work) Act 2001 and other labour legislation such as the Organisation of Working Time Act 1997 and the Carer's Leave Act 2001.
Section 5 provides for the amendment of section 4 of the principal Act, which deals with the insurability of an employee. The purpose of amending this section is to add clarity to the insurability requirements in line with the Social Welfare Acts and the Protection of Employees (Part-time Work) Act 2001. Section 6 provides for the amendment of section 7(2) of the principal Act. The Employment Appeals Tribunal, when dealing with redundancy cases, has long been of the view that redundancy is impersonal. According to the tribunal, in St. Ledger v. Frontline Distributors Ltd., UD56/94, the statutory definition of "redundancy" has two important characteristics, namely "impersonality" and "change". This section is designed to provide certainty in this regard.
Section 7 provides for the amendment of section 9(1)(b) of the principal Act to include fixed purpose contracts. When the fixed purpose contract ceases there is redundancy. Section 8 provides for the amendment of section 17 of the principal Act. The position, at present, is that the three forms RP1, RP2 and RP3 are the main forms used for statutory redundancy. They contain much repetition and will be amalgamated into one form when the new IT system is available later next year. This one form will be the basis for any rebate or lump sum claim.
Section 9 provides for the amendment of section 25 of the principal Act to include an employee who started work in an employment abroad, is transferred to the company or associated company in this jurisdiction, works here for at least two years and is subsequently made redundant while working here. Such employees will be entitled to statutory redundancy for their entire service from the date of commencement of their employment in the company abroad.
Section 11 provides for the amendment of paragraph 1(a) of Schedule 3 to the principal Act by substituting "two weeks" for "one-half" and subparagraph (b) by inserting, after "product of", "two weeks of". These amendments are known as transitional arrangements which will allow for the payments of increased statutory redundancy levels as soon as the Act comes into force, following minor changes to the existing IT system. These arrangements will cease to have effect on the commencement of section 12. Section 12 provides for the amendment of schedule 3 to the principal Act by substituting new paragraphs for paragraphs 1, 2 and 3 to allow for enhanced redundancy payments of two weeks per year of service, plus one extra week's pay. Any "excess" days will be credited as a proportion of a year. These arrangements will come into force when a new IT system becomes fully operational.
Section 13 provides that continuity of service is preserved even when there are certain breaks in employment. It also provides that certain breaks in service are reckonable in the calculation of a lump sum, except breaks occurring in the three year period prior to the date of termination of employment. These arrangements will come into force when a new IT system becomes fully operational. Section 14 provides for penalties that may be imposed on people who defraud the system. Section 15 provides that the minimum rates of pay laid down in the National Minimum Wage Act 2000, as updated, will be taken into account when calculating a statutory redundancy lump sum.
Section 16 provides for the amendment of section 6 of the Protection of Employees (Employers' Insolvency) Act 1984 to 2001. At present, where a worker in an insolvent firm has not received statutory notice, it is necessary to take the case to the Employment Appeals Tribunal to determine the minimum notice entitlement. In order to streamline the process and relieve pressure on the Employment Appeals Tribunal, it is proposed to allow these employees to submit claims to the liquidator or receiver without having to go to the Employment Appeals Tribunal, thereby diverting these cases from the tribunal and ensuring a better service.
I wish to acknowledge the work done by the social partners within the redundancy review group, which reported to me last autumn. That group proposed several improvements to the operation of the scheme to make it more intelligible for employers and employees and to streamline the system. These improvements are included in the Bill and will improve efficiency and customer service. In the negotiations for Sustaining Progress, all social partners reached agreement to increase the level of statutory redundancy payments. This ability of the social partners to reach consensus shows the strength of our social partnership process.
I am very pleased to bring this Bill before the House today. The method of calculation of the statutory redundancy lump sum and the level of payments have not changed, except for the ceiling on the weekly wage, since the redundancy scheme came into operation in 1968. This is timely legislation which will give a reasonable level of increased statutory payments to employees who are unlucky enough to lose their jobs through redundancy. It is hoped that the increased lump sum payments will help to alleviate the financial hardship caused by redundancy until these employees find alternative employment. I commend this Bill to the House.
I welcome the Tánaiste to the House with this Bill. I join her in acknowledging the work of the social partners within the redundancy review group. I agree this shows the ability of the social partners to reach consensus, as they have done in the negotiations on the document, Sustaining Progress.
The Bill is somewhat like the proverbial curate's egg – it is good in parts. Before I become critical, I wish to list some of the things I welcome. The increased statutory payments to employees are very welcome, as is the provision for two weeks' statutory redundancy payment for every year of service, regardless of age. Equally, I welcome the abolition of the distinction between service under or over 41 years of age. The retention of the provision for payment of an additional bonus week is also welcome. The Tánaiste spoke of matters being simpler, speedier and more effective. That is welcome.
The Bill amends the insolvency payments legislation to allow employees of insolvent companies to claim their minimum notice entitlements under the insolvency payments scheme through a liquidator or receiver, without having first to obtain an award from the Employment Appeals Tribunal. That is an important and welcome provision of the Bill.
As the Tánaiste will be aware, I have a problem with the retrospection element in the legislation. I heard what she had to say on this matter but I understand that it runs contrary to assurances that were given by her or on her behalf, although I was not a party to that. I am relying on what I have heard and I know some of the companies involved, including Comerama in Castlecomer, County Kilkenny. If firm assurances were given about redundancy payments, I wonder why the State could not pick up the cost, as there were very few such instances. Perhaps there is a way around that problem, which we will be able to discuss on Committee Stage.
It is regrettable that the current sorry state of the economy has led to a situation where we have to discuss the protection of employees who are being made redundant. The Government was forced into taking this action on foot of the serious difficulties experienced by employees who were let go from the Irish Glass Bottle Company and Peerless Rugs, among others, including Square D in Ballinasloe and, as I have already mentioned, Comerama in Castlecomer.
It is quite clear that for many years there was a lack of foresight on the part of the Department, which did not anticipate a situation where employees would be made redundant frequently with a poor level of redundancy payments. This approach by the Government is not in keeping with the spirit of the legislation, which was intended to alleviate hardship caused to workers and their families as a result of redundancy and possible subsequent unemployment, compensate them for rights they had built up in their jobs, and reduce resistance to economic and technological change.
It is acknowledged that this legislation is an attempt on the part of the Government to increase the statutory redundancy payment from low levels to two weeks pay per year of service. A worrying feature of the Bill, however, is that there has been no attempt to include provisions which place an obligation on an employer to see if there is any suitable employment for an employee in the enterprise before that employee is declared redundant. Furthermore, there is no provision for a period of retraining for the employee prior to the redundancy taking effect. In other words, both management and trade unions should have some obligation in the workplace, not only to look after an employee's financial needs as best they can but also to look after his or her future so that they are kept up to date with all technological change.
The working group of the social partners on the Redundancy Payments Acts, which reported last year, published a table which showed that the social insurance fund was in surplus from 1997. I would be grateful if the Tánaiste could advise us in detail where these surpluses have been used in the 1997 to 2002 period.
It is acknowledged that the Tánaiste has attempted to depersonalise the definition of redundancy, in that a position will now be made redundant as opposed to an individual. While that is most welcome, it would be useful if the parliamentary counsel could revisit this definition as it appears to be excessively cumbersome.
I am also concerned about section 9 of the Bill, which contains an attempt to protect an employee who has worked abroad for an employer. It would appear that there could be an attempt on the part of an employer to avoid redundancy payment to an employee if he or she was not employed in the State for the two years prior to being made redundant. In other words, an employer could deliberately place an employee abroad for a period of time prior to redundancy, thus placing that employee in a very awkward position, to say the least.
I welcome the Bill, the purpose of which is to provide for the amendment and extension of the Redundancy Payments Act 1967, the amendment of the Redundancy Payments Act 1971, the Protection of Employees (Employers Insolvency) Acts 1984 to 2001, the Social Welfare (Consolidation) Act 1993, and the Employment Equality Act 1998, and to provide for related matters.
The Bill partly stems from the conclusions of the redundancy review group, which produced a number of areas of agreement. The group considered that increasing the upper age limit would not be a priority in the short term. It recommended that consideration should be given in the medium term to removing or raising the age cap in conjunction with similar changes to unfair dismissals, equality, social and family affairs legislation, as recommended in the recent report by the Equality Authority.
The group also agreed that insurability should continue to be a condition of eligibility for the redundancy scheme. The group endorsed the current criteria which are as follows: now or at any time in the past four years the person was in employment which is fully insurable for all class A benefits; now or at any time in the past four years the person was in employment which is not fully insurable for all benefits because his or her earnings are below the threshold for class cover, that is class J; and directors and other self-employed persons – class S – are excluded.
The group was of the view that the ceiling should be adjusted by statutory instrument at fixed intervals of three years for employers and two years for employees, in line with the transportable goods industries' index. Increases would be in discrete amounts, following consultations with the social partners, with the first revision to take place with effect from 1 April 2004. The group agreed that any extra resources should go to benefit people with two years' service, so that reducing the qualification period to one year would not be as high a priority.
On the issue of determination of pay, the group recognised that the use of the P60 form had many practical merits for clarity and the administration of the scheme. Nevertheless, it was generally felt that the loss of weekly earnings for an employee was too high to balance the practical merits. The group agreed that non-reckonable service should only be taken into account in the three years prior to redundancy, consistent with the provision in section 25 of the Organisation of Working Time Act, which deals with the retention of employees' records by employers.
On the issue of redundancy payment for working part of a year, the group agreed that if the total amount of reckonable service was not an exact number of years, the excess days would be credited as a proportion of a year to one decimal place. The group agreed that an employee's service working abroad for a company should be taken into account, provided that the two years immediately prior to redundancy were spent with a company in Ireland.
The group agreed that form filling should be minimised and that the use of e-government should be maximised. The group was also of the view that penalties under the Minimum Notice Act were sufficient. However, penalties must be provided for those people who defraud the system – the level to be decided following legal advice in the preparation of resulting legislation.
It was agreed that a new computer system would be needed to give effect to changes in the redundancy legislation and to enhance administrative efficiency and customer service. The group recommended that FÁS and other relevant agencies should continue to focus and give priority to retraining workers who have been made redundant for alternative jobs.
The Redundancy Payments Acts will be amended to implement the recommendations that have been agreed in the Report of the Redundancy Review Group. In the context of this Agreement, it is agreed by the Government that it will enhance statutory redundancy terms to provide for 2 weeks pay per year of service, with the abolition of differentiation by age and to retain the bonus week in the calculation of payments. The rebate of 60% of the statutory redundancy payment from the Social Insurance Fund will apply to this revised level of statutory payment. It is acknowledged by the parties to this Agreement that the above adjustment is intended to provide a basic statutory minimum redundancy payment for all workers covered by the Acts. It will not be used to increase the cost of redundancy payments as may be already provided for by agreements at enterprise level. The parties agree that no repercussive claims related to or following on from this adjustment to the statutory minimum provisions for redundancy payments will be made by trade unions or employees. Where a dispute about the appropriate level of redundancy payment arises directly from this adjustment of statutory provisions, both parties will refer the matter for interpretation by the Labour Court and be bound by its recommendation on the matter.
I welcome the legislation before the House, which makes a number of important reforms in an effort to improve consistency, clarity and certainty on the subject of redundancy payments. Employment legislation in Ireland has developed considerably over the last 30 years, in response to economic development, social reform and membership of the European Union. In the area of redundancy payments, it has been argued that the Redundancy Payments Acts 1967-91 dealt with an economy very different from that which exists today and that major improvements are needed to meet the demands of a modern economy.
The aim of this legislative reform is to strengthen the rights of employees while maintaining a competitive labour market. In response to the demand for reform, the Government established a review group to examine the operation of the redundancy payments scheme and to ensure that the scheme best meets the requirements of employers and employees. The review group's results were incorporated in the social partnership agreement, Sustaining Progress. This Bill will introduce a simpler, speedier and more efficient system of redundancy payment. A number of important changes has been proposed.
The economic downturn has increased competition in the labour market. An improvement in redundancy payments is required in the wake of such economic uncertainty. One of the partnership agreement's key commitments is to increase the level of statutory redundancy payments. This Bill will provide for two weeks' statutory redundancy payment for every year of service. This is an improvement on the current requirement of one week of redundancy payment for every year of service for those aged 41 or over and half a week's payment for every year of service for those aged under 41. The substantial increases in redundancy payments represent a clear illustration of the Government's commitment to social inclusion and protection.
The vice-president of SIPTU, Jack O'Connor, pointed out that the measures provided for in the new Bill will improve the circumstances of working people at one of the most vulnerable times in their lives – when they are faced with redundancy. The current legislation has been criticised as going against the spirit of the Employment Equality Act 1998, which outlawed discrimination on the basis of age. As section 17(4) of the 1998 Act specifically excludes the age-related provisions in the redundancy Acts, the distinction between the service of those under the age of 41 and those over that age is being abolished. This reform marks a positive and progressive step to support all those faced with the uncertainty of redundancy and unemployment.
The Government has a strong commitment to maintaining a high level of employment and to ensuring that the rights of employees are protected. It has increased the minimum wage, introduced regulations aimed at safeguarding employees' rights when ownership is transferred and committed to a Bill that will give employees the right to fixed-term contracts. In an effort to bolster support for those facing redundancy, the existing provision for the payment of an additional bonus week is being maintained.
This Bill will amend the insolvency payments legislation to allow employees of insolvent companies to claim their minimum notice entitlements under the insolvency payments scheme without first having to obtain an award from the Employment Appeals Tribunal. The rebate of 60% to the employer will be maintained. This allows employers who have paid their employees their correct statutory redundancy lump sums to apply to the Department of Enterprise, Trade and Employment for a 60% rebate within six months of payment. If employers have failed to pay employees their statutory redundancy entitlements, employees can apply to the Department for direct payment from the social insurance fund.
The system of redundancy payment will be fundamentally reformed by the simplification of calculation methods and application forms, the introduction of a new and more efficient IT system and the tweaking of definitions in line with labour-related legislation, such as the Social Welfare Acts and the Protection of Employees Acts. The Government's commitment to safeguarding employees' rights is illustrated by improved redundancy payments provision, the elimination of age discrimination and enhanced functional operation of the scheme, as introduced under this Bill. The reforms that were agreed in the social partnership agreement, Sustaining Progress, improve the simplicity, efficiency and consistency of the redundancy payments scheme. I welcome the Bill before the House.
When I addressed a large demonstration outside Buswell's Hotel last November in support of the Irish Glass Bottle workers, redundancy was a huge issue. I gave a commitment at the meeting, on behalf of the Irish Congress of Trade Unions, to make redundancy a key issue during any new negotiations. In welcoming the Minister for Enterprise, Trade and Employment to the House this afternoon, I did not fully expect that such progress would have been made in such a short period. Arguments are often made about people being on the left or the right of politics, but on behalf of Congress and on my own behalf, I would like to make clear that there is always room for partnership and that people can always find a coincidence of objectives and do business on that basis.
This Bill represents the outcome of long days and late nights of seemingly intractable argument. I would like to put on the record that the Tánaiste has shown an interest, an involvement and a commitment in relation to this issue in the course of the discussions. Negotiations were not easy – they never are in these situations – as we were debating a key issue for the trade union movement. Some people ask if the labour movement can do business with the Tánaiste and, without a doubt, the answer is that we can and we do, not just on this issue, but regularly in relation to many issues. Those of us who deal with her have found her to be honourable and committed in our dealings with her. We very often have disagreements which cannot be sorted out, but that is in the nature of solid relationships. Having finally reached a position on this matter late one night in Government Buildings, the Tánaiste shook hands on it. Today she has delivered on the promises she made.
This Bill is record-breaking in many ways. It has proceeded from conception to delivery in the shortest time I can recall. It represents the greatest increase in redundancy payments in the history of these payments. This legislation either doubles or quadruples the entitlements of workers at a vulnerable stage, when they are being laid off from companies. Huge issues relating to redundancy have to be looked at and avoided, of course, but this Bill is superb in the interests of reaching that point.
I thank the Tánaiste and Minister for Enterprise, Trade and Employment for bringing this Bill through so quickly and congratulate her officials for bringing it forward with such expediency. She made a commitment to seek Government priority for this legislation and she achieved it. More importantly, this Bill is a huge confidence-boosting measure. Every journalist who telephoned me during the negotiations presumed that I was having great difficulty with the Tánaiste and the Minister for Finance. I said on every occasion that I was not having any particular difficulty with the two Ministers and felt that I could do business and negotiate with them.
No. As I said here last night, I am prepared to go on the record as honestly as I can in relation to issues. That is the position. As I said to the Tánaiste, if this was Boston, we could do with a little more of it. If we can double or quadruple payments to workers at any stage, I am prepared to consider this whether it comes from Boston, Berlin, Brussels or otherwise.
I have been a constant critic on many issues. All that I ask in regard to business is that the Government does the business and delivers. Many awkward union meetings around the country in the last seven months, and also long before, reached a point – we have all done this in the context of our political parties – where somebody at the back of the hall said: "Can you trust those people to deliver?" In such cases, one has to take one's heart in one's hand and say: "Yes, I trust those people to deliver until such time as they do not." That is the reason I go on the record.
I am sure the Senator will put this in another context when he gets the opportunity, and will be quite right to do so. There is a huge imperative to get this legislation through the House as quickly as possible, to which I realise Members have today committed. This is a confidence boosting measure in regard to Sustaining Progress. It is the first legislative measure to come from it and there will be others. It is the first clearly defined outcome under which we can draw a line and, in that sense, was required.
We should also address the reasons we find ourselves in such situations. With regard to the case of the Irish Glass Bottle Company, for example, it is appalling that it should be left to the Government to pick up the pieces. The holding company has made a huge amount of money from the closure and sits on huge assets. While I welcome what we are doing today, it is a disgrace and unacceptable that we are spending taxpayer's money while those who unnecessarily closed this company and failed to provide for the workers despite having plenty of money – the holding company, not the operating company – made tens of millions of pounds.
Nonetheless, in the context of how we have done business over the past 35 years, this Bill is progress, particularly for those in the trade union movement who put huge pressure on its leadership and said this was an issue on which progress must be made. Another was trade union recognition, on which we have made progress, not as much as I would want but more than has ever been made previously. It is a positive and welcome development.
Whereas redundancies are something we seek to avoid, they are not always a negative reflection on the economy. With a quickly modernising economy in which workplaces, work practices, products and services are changing, and with the recognition that people will no longer spend their whole career in one area of work, there will be increasing change. It will increasingly be found that because of age, geographical location or family situation, some will not be able to take the opportunity of retraining or re-employment. In that sense, the Bill is a very important part of a modernising economy and a requirement in that area.
I regret that the Bill cannot be made retrospective in the way I would have wished but that has not proved possible. Nonetheless, it is a good day's work when I can walk out of negotiations having doubled or quadrupled the input to the workers. For this, I thank the Tánaiste for delivery on her commitment.
I welcome the Tánaiste in circumstances where there has been a significant leap forward in terms of providing adequate protection for those unfortunate enough to lose their jobs. I note that there will be a fourfold increase in entitlements for those under 41 years of age, from half a week to two weeks, and a twofold increase for those over 41 years, from one week to two weeks. By any standards, that is a quantum leap forward and one to be welcomed.
I wish to comment, as Senator O'Toole did, on the speed with which this measure has been implemented. It is characteristic of the Tánaiste's understanding of the difficulties in the area and the need to act quickly and effectively to deal with them. I note that the Bill was approved for drafting by the Government on 18 April, the text was approved on 30 April, the Bill was published on 7 May and it is intended to bring it into effect on 25 May following early signature by the President. By contrast with the timescale of the legislative process to which we have grown accustomed in the Houses, that is close to breaking the sound barrier or, perhaps, going to Mach two. It is extraordinarily speedy for the passage of legislation.
The review group made certain recommendations but did not reach consensus on the increase in the level of statutory redundancy payments and the size of the rebate. It was through the partnership agreement, Sustaining Progress, that the changes agreed by the review group were accepted. However, in addition, as the Tánaiste explained to the House, the distinction between service under and over 41 years of age would be removed, there would be two weeks' pay for every year of service, the bonus week would be retained and the rebate of 60% to the employer retained. All of these measures are to be welcomed.
It saddens me that these measures were not available to the workers in Peerless Rugs in Athy or other companies who suffered redundancy and received minimal payments and protection. The workers at Peerless Rugs were badly treated by their employers, particularly in circumstances where they had given many years of service. I regret that the protection and statutory payments for them were not adequate. I regret also that when they went to the Labour Court, its recommendation, which would have improved their payments from the company, was not accepted by the company.
There is a wider dimension with regard to the rights of employees in the event of liquidation. In the case of Peerless Rugs, workers with mortgages had money deducted from their wages by the company for payment on their behalf to building societies. That was a sensible approach from the workers' point of view as the money routinely went to the building society. However, when the company went into liquidation, the cheques sent to the building society were no good. It is to the Tánaiste's credit that on several occasions she spoke to the relevant parties and was ultimately successful in getting the company to honour the cheques. In addition, weekly deductions from wages were being made by the company towards a holiday fund, which was also prudent financial management on the part of the employees. They lost everything they had saved. We must look at the law with regard to such matters, in terms of how employees rank with other creditors when it comes to liquidation.
We must also look at situations, perhaps also with regard to the Peerless Rugs case, where companies have various arms or branches. It is easy, from an accounting point of view, to show a bad scenario in one aspect of a company's activities and have it as a stand-alone subsidiary company. That company can then be folded and the machinery moved, and business continued in another location. If there is evidence of this sort of activity, there must be strong legislative measures to prevent it taking place.
I would like to see, as I am sure would the Tánaiste, retrospection with regard to several of the companies in which people lost their jobs but I accept the reality of the legal position that it is not possible. I thank the Tánaiste for the time and effort she put into dealing with the problems in that particular company. I am sure she has done the same in many others throughout the country and it is a measure of her commitment in the area. In the spirit of what was said on the Order of Business over the past two days, we now ask her to move on from there and provide us with industry in Athy. Everybody wants some office to decentralise to their particular town.
It is important that the fundamental obligations of employers to their employees are honoured and that there are no loopholes in the legislative framework that can be used to escape from fulfilling those obligations. I particularly welcome the fact that people are no longer required to go to the Employment Appeals Tribunal and that section 16 deals with that referral aspect under the Protection of Employees (Employers' Insolvency) Acts 1984 to 2001. We all appreciate the trauma of someone losing their job. Additional bureaucratic burdens have to be avoided to ensure people do not have to do unnecessary form filling or fulfil other obligations imposed upon them. I note what the Tánaiste said about the rationalisation of the forms in that three will now be reduced to one and there is capacity to complete them by electronic means.
It is evident, and Senator O'Toole touched on this point, that society is changing rapidly and that what might have appeared to be reasonable and desirable protection ten years ago needs to be reviewed now. Legislation of this nature must be kept under constant review. As recently as ten years ago it would have been regarded as normal practice for somebody to take up a job in their mid or late teens and remain in that job until retirement at age 65, but people are now retiring earlier. The classic cycle of growth and decline in companies is much more rapid now than ten or 15 years ago and people have to be mobile within the workplace and even within the country in terms of moving to employment. There is evidence of that in the greater Dublin area, particularly in Kildare where people have moved in significant numbers over recent years.
Given all the changes taking place with regard to age profile within industry – the age at which people retire, the rapidity with which economic circumstances change, the change in classic company cycles and the need for simplification – it is important that legislation of this nature be kept under review. It is an important step forward, however, and I commend the Tánaiste for the quick and decisive action she has taken in this area because it will mean a great deal of help to many people. I hope the Bill will pass through both Houses, that it will receive early signature by the President and that it will be possible to implement it by the end of May.
I will not say anything about that. I will start by stating the obvious. The position of people who lose their jobs will be improved once this Bill is enacted. The fact that we have not reviewed the major provisions of the 1967 Act in 36 years is remarkable because it has been calling out for revision for some time.
I am sorry Senator O'Toole has left the House. I sometimes think his vision is clouded by a residue of the smoke that fills the rooms in which he does these deals.
While it is appropriate to say there has been a significant improvement in the Bill before the House, it by no means does all that Congress has been looking for over a number of years, and Senator O'Toole knows that better than most. Even in terms of the timescale, my current party leader, as our party's then spokesperson on enterprise and employment, dealt with this issue over a number of years with the Tánaiste in the other House. It is over a year since the redundancy review group was set up by the Tánaiste. It was set up in April of last year and reported in October last. It will have taken over a year to get it on the Statute Book and a significant number of groups of workers will have lost out by virtue of that fact. I will deal with that aspect later.
The redundancy review group, which the Tánaiste set up largely as a delaying mechanism before the election, did not reach agreement on many key issues. It reached agreement on a number of issues. I am reading from the press release the Tánaiste issued which states that agreement was reached in terms of non-reckonable service, service abroad, which I welcome, computerising the system, which everybody would welcome, the number of forms used and the upper age limit. It did not reach agreement at that stage, and this is the important point, on the amount of the payments to be made, the refund that will be made to employers at a later stage and a number of other important matters.
On the amount of the payment, it had become ludicrous and risible that workers under the age of 41 got half of one week's payment per year of service. Nobody could stand over that and we have been aware for many years that that needed to be revised. It is now two years of service, irrespective of age. That is a four-fold improvement for those under the age of 41 and a two-fold improvement for those over 41 years of age. The fact remains, nonetheless, that it is dwarfed by severance arrangements typically made by companies in reasonably good financial standing and dwarfed more spectacularly by the arrangements made in recent years by semi-State companies, many of which have gone to six or eight weeks' payments for years of service. Some of those arrangements made by semi-State bodies were excessive. The important point about a redundancy payment is that it is intended to tide people over while they are between jobs and to give them a lump sum, particularly in later years, with which they might be able to set up in private employment in terms of giving them the seed capital to establish an enterprise.
In regard to some of the semi-State companies, people walked out of a job on Friday with a substantial body of money from the taxpayer and started a new job on Monday. I found that close to obscene on occasions and it is not something for which I would argue. I do argue for a generous payment for people who will find difficulty in getting another job, either because of their level of training, their age, the number of years they spent in the particular company or the industry they worked in which may have become out-moded.
Most of us would agree there is a clear argument for the need to modulate these payments in some way to take into account the circumstances of the workers concerned. Two weeks pay per year of service, irrespective of the job, the industry or the circumstances of the individual, is very cruel. After 36 years' experience of redundancy payments, perhaps it is time to examine that in more detail to see if we can develop some method whereby we would take into account the needs of individual workers or workers in particular industries. The Bill does not seek to do that.
The Labour Party published a Bill some time ago which sought to increase the statutory redundancy payment to three rather than two weeks, which would have been an even more considerable increase. I will not quibble with the deal that has been done between the Minister and Senator O'Toole and his colleagues in the trade union sector because it will not be undone at this late stage. It does not matter very much whether we go on about it at length.
I refer to the distinction between people aged 40 years and over and those aged 40 years and under. I understand the reasoning behind the elimination of the distinction but the logic to it was that older people who lost their jobs were likely to have greater training needs and more difficulty in getting a job. Whatever the Employment Equality Act states, it is still more difficult for people made redundant in their forties or fifties, having worked for a company for 20 or 30 years, to get a job. They are more legitimately in need of a significant payment to tide them over or give them a seed capital boost. There was, therefore, a logic to the age distinction in the previous legislation.
The Minister has stated she has been advised that legally the distinction does not sit with the Employment Equality Act. I am not persuaded that is the case but can see how some might see it runs against the spirit of the Act. However, I am not at all convinced, from a legal perspective, that it could not have sat reasonably comfortably with it. I regret its passing. That is not the view of everybody in the Labour Party or the labour movement but the distinction was meaningful and should have been retained. I am sorry the Minister is getting rid of it.
I welcome the acknowledgement of fixed purpose contracts. People sign contracts to do particular jobs and when the contracts end because they have been breached and terminated prematurely or their purpose has been fulfilled, the people concerned find themselves frequently caught out under the provisions of the current Act. The clarification of this issue in the legislation is helpful.
The issue of retrospection will dog the Minister for the next few days and beyond. The two questions in this regard are whether it is possible to make payments retrospectively and whether the Minister made a commitment to workers in Comerama, for example, that she would do so. I am not persuaded by the Attorney General's argument in this regard.
Even if we take that as a given, it must be possible for the Minister or the Government to make payments on a non-statutory basis that would be equivalent to redundancy payments and backdate them six or 18 months to meet the commitment she made. A similar payment has been provided, for example, under the taxi licence hardship arrangements. No legislation governs that scheme and I do not know whether it is intended to place it on a statutory footing. Legislation is probably not necessary because payments can be made on the basis of regulation. Even if it is accepted that the legal argument holds, the Minister could approach the Minister for Finance and say she has given commitments to a number of workers over a period that need to be fulfilled. It will not be a great cost to the Exchequer but, in terms of good faith, I am sure the Minister would acknowledge privately that the commitments should be met.
I refer to a number of memoranda that deal specifically with the Comerama case. The Minister, undoubtedly, will recall a meeting she had on 12 December with a large number of people, including representatives of the workers—
I have copies of the note the Minister kindly sent to Deputy Howlin, my party's spokesperson on the issue, the note made by Mike Jennings, the trade union official who attended the meeting, a letter written by a Fianna Fáil Deputy and comments attributed to another Fianna Fáil Deputy.
The departmental report on the meeting stated, "The Tánaiste said that talks were ongoing in relation to the statutory redundancy issue. She gave an undertaking that if the legislation is changed she would do everything she could to ensure that the Comerama workers would be included in any amendment." The Minister has put a spin on this. I have no doubt she will say she has done everything she can and it is not possible to make the legislation retrospective. Nonetheless, those who attended the meeting and the workers who relied on the word of those who attended were under the impression that the Minister had given an explicit and unambiguous commitment to make payments retrospective and ensure those workers would receive the additional payments which everybody at the meeting, including the Minister, accepted they should get. Whether she says she has done her best, she is seen by the workers in Comerama as having breached her word.
The comment was made on 12 December 2002. Deputy Aylward, a member of Fianna Fáil and one of the Minister's Government colleagues, stated on 15 January 2003, at which stage the social partnership talks were well advanced, that he was satisfied and had checked that an unambiguous commitment had been made. Deputy McGuinness of Fianna Fáil wrote to the representatives of Comerama workers on 20 January 2003 and stated the Minister had given "a commitment at our meeting on 12/12/02 to ensure the workforce of Comerama are included in any new deal which would be agreed." He went on to welcome this saying it was positive news.
The Minister is saying she did her best and retrospection is not possible. Given the commitment made and the number of workers involved, natural justice demands that if the Minister and the Government cannot make payments within the statutory framework, there is an obligation on them to find another way to do so. The Minister is seen by the people of Kilkenny to have given her word on the issue and it is important that she should deliver on it. If the Attorney General is telling her that she cannot make retrospective provision under this legislation, she needs to find another way to do so soon. This is only one case. There are other cases in which she has been less directly implicated because Government backbenchers have given commitments on her behalf which may have been authorised.
Mary Harney (Tánaiste; Minister, Department for Enterprise and Employment; Minister, Department for Enterprise, Trade and Employment; Dublin Mid West, Progressive Democrats)
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They were not authorised. The Senator must accept that to say one will do one's best is not the same as giving a categorical assurance.
There must be another way to address the issue. The Minister has found a way to accommodate taxi drivers. Therefore, she can find a way to compensate those who have lost their jobs in the past six months, whether that is within the statutory framework.
The line certainly had not been drawn before 12 December last when the Minister made a commitment to the 160 workers in Castlecomer, County Kilkenny and that must be met.
I welcome the provision that a number of factors that meant one broke service are no longer reckonable provided they took place more than three years previously. Most of the causes of breaching reckonable service should not have been included in the first place and, while I accept three years is an improvement, it could be reduced to one year because the principle would hold equally well.
I welcome the Bill because it represents an improvement for workers who are in a vulnerable position. However, we need to re-examine how we deal with redundancy and find a way to gear the payments made to the needs of workers in particular industries. We are not doing this as the Bill does not set out to do so. However, it is something we need to examine. I plead with the Tánaiste to make good on the undertakings she is seen to have made last December.
I welcome the Tánaiste. In fairness to her, she had the good intention of endeavouring to achieve retrospection, if possible. Where do we draw the line as far as legislation is concerned? The Tánaiste expressed her concerns about the issues which apply to most constituencies where industries close. Can anybody say what date should be applied in terms of retrospection or that we should go back two or three years or six months?
The Tánaiste clarified the matter. She tried to find a way out of the situation and assist workers made redundant over that period. I recall situations where ex gratia payments were made. The Talbot workers in Dublin were well looked well, before the Senator's time. Also, in the Minister of State's constituency – I welcome Deputy Michael Ahern – Irish Steel had special arrangements.
In regard to retrospection, I accept that it would be almost impossible to impose the requirement on employers who could not be legally responsible for financing it. Under the law, there is a 60:40 divide as between the Government and employers. We cannot impose this responsibility retrospectively on employers but we may not be tied to the same extent and could make an ex gratia payment of our percentage if required. I make that point to the Minister of State and his officials.
I accept the bona fides of the Minister of State and the Tánaiste. Senator McDowell will accept that if one was addressing a group of workers affected by a difficult redundancy situation, one would endeavour to assist them in any way possible. I concede the difficulty and accept the situation but from my experience the Government could make ex gratia payments in difficult circumstances. In the taxi drivers case there was hardship involved arising from the sale of taxi plates. A forum has been set up to establish a compensation fund from which ex gratia type payments will be made.
Between now and Committee Stage in the Dáil, I ask the officials to look at the arrangement agreed for the Talbot workers, which was unique and satisfactory in the resolution of a major issue, and also at Irish Steel. In a redundancy situation in my constituency I pointed out there might be some way of coming up with an ex gratia payment.
The new legislation will come into force on 25 May. This is fast-tracked legislation. On a technical point, Senators may recall legislation to introduce the representative allowance for members of local authorities, from which I benefited. That allowance was made payable from the date the Bill was published. It was funded by the State whereas 40% of redundancy payments are funded by employers. The Attorney General advised the Tánaiste that the Bill would only come into force, as far as payments were concerned, when passed by both Houses and signed by the President. The earliest date is 25 May.
I am delighted the Tánaiste and the Minister of State came to the House today to cover this important legislation. I hope the media will recognise the work and contribution of the Tánaiste, the Government and the social partners in bringing forward the Bill. The social partners, including Senator O'Toole, president of the ICTU, played an important role in this development. There has been a radical change from a figure of half a week's per year to two weeks per year plus a week's bonus. The Bill also dispenses with the criteria relating to those aged over and under 41 years of age.
The original motivation for introducing new legislation in this area arose from the increased number of redundancy claims since the initial conception in the 1960s. Nowadays the needs of employees and employers have changed to which the Government has responded as well as to calls to improve legislation in this area. My opinion, like that of many others, is that the key focus should be on job protection and creation. I know the Minister feels the same way. Legislation is certainly needed, especially when we consider that there was an almost 50% increase in the number of redundancy claims during 2001 compared to 2000.
It was in this setting that the Department of Enterprise, Trade and Employment carried out an internal review of the redundancy payments scheme early last year. It reviewed the operation of the scheme from an administrative efficiency and a customer service perspective. The purpose was to examine its rationale and continued relevance. It examined whether the delivery of the scheme could be made more customer-friendly or make greater use of information technology. It also suggested ways in which its operation could be streamlined. It aimed to develop a vision of an improved scheme which would involve appropriate, yet affordable, payments to redundant workers to meet the principles of the original Act, be simple to understand and provide administrative arrangements which would maximise the use of e-government to deliver the scheme quickly and efficiently.
I have come across a situation where if an employee does not sign, the employer does not receive the refund. If an employee is disgruntled by the redundancy arrangement, he or she could prevent the employer from receiving a refund by refusing to sign. Will the Minister check this arrangement? It is reasonable to expect that if a redundancy payment is issued, the employer will get the 60% refund. Nobody should be able to prevent the employer from getting this.
It is a credit to the Tánaiste, the Minister of State, the Department and officials that they have brought the Bill so quickly through the process of consultation between all the social partners. It is an enormous breakthrough and will give tremendous support to employees facing redundancy. I suffered myself when I was made redundant from this House in 1993. It is important that anyone facing redundancy has some cushion to help him or her overcome his or her difficulties until he or she is in a position to find alternative employment.
Many will be disappointed on the question of retrospection, which I am aware presented difficulties for the Minister. The Labour Party probably promised the sun, moon and stars without regard for the coffers of the State as it will not have responsibility for the matter during this Administration. Many promises were made by the Fine Gael Party to which Senator Ulick Burke belongs. I recall its promise to compensate Eircom shareholders—
I thank the Cathaoirleach for stopping Senator Leyden in his tracks before he could pursue that line again. While I welcome the Minister of State, I regret the Minister had to leave. As in the case of undertakings given in the case of the company in Kilkenny which has been mentioned frequently, similar, less forthcoming undertakings were given with regard to another company. It is ironic that the lights went out as the Minister left the House, given that when she visits east Galway on errands, the lights usually go out after her departure.
I previously raised the sad cases of AT Cross in Ballinasloe and, more recently, Square D, an excellent employer in an excellent industry in which 385 people unfortunately lost their jobs. As I am unable to ask the Minister directly, I ask the Minister of State to seek clarification regarding the date of 25 May on which the provisions concerning redundancy payments will take effect. Only a skeleton workforce will remain in the Square D manufacturing outlet on that date. Will the Minister of State indicate whether workers who remain in the company after 25 May will benefit from the provisions of the Bill, while many others who will have already left by then as part of a process of downscaling agreed by workers at all levels will not? Will the Minister take special notice of this case in which an agreed procedure of staggering closure will leave some who are still working in the company eligible to benefit from the new provisions, as they are not due to become redundant until mid-June, while others, who left at an earlier stage, will not? This is a unique case which demands her special attention, regardless of commitments given.
Will the Minister of State ask the Minister to provide me with information on the commitments she made to take urgent action during her various visits to Ballinasloe following the terrible news, which broke on 15 January, that Square D was to cease production and close? The closure was followed by an action programme to replace a task force, established following the closure of AT Cross, which failed miserably, despite the many undertakings given by the Minister at the time regarding replacement jobs, none of which has materialised.
I welcome the measure to eliminate the distinction between workers under and over 41 years which I never understood. In traditional and long-established companies such as Square D the majority of the workers displaced as a result of the closure will probably receive the redundancy package as a golden handshake, as they will, given the current climate, probably find themselves unemployed indefinitely. Many who have given upwards of 30 years of service will go into retirement. It appears the Bill will not cater for the ongoing and unusual case of Square D and may result in discrimination against one group as a result of choices made earlier. I ask the Minister to address this issue.
I noted the Minister carefully set out the phased basis on which the Bill will come into operation. I have seldom heard a Minister, in a Second Stage speech, outline in such detail the progressive implementation of a Bill – I appreciate the fact that Senator O'Toole welcomed it given his involvement. It appeared to be an effort by the Minister to cover her tracks with regard to the undertakings allegedly given in the case of the workers in Kilkenny referred to. This would be unfortunate if it was the case.
Was the Minister aware of the Attorney General's advice when she met the Kilkenny workers and allegedly gave them an undertaking? She must have been aware of it. She made the statements in question, which appeared to indicate strong support for the workers in their tragic loss, to get out of a difficult position. Closures are always very traumatic for the workers affected. In fairness, at the time of the AT Cross closure in Ballinasloe, I was present when the Minister indicated she would make available whatever resources and agencies were necessary to help the workers in the company get over the traumatic position in which they found themselves by helping them to apply for redundancy and retraining. She promised to call in additional resources from FÁS for a retraining programme, which was difficult to understand given that most of the community employment schemes in the county were being severely cut at the time. No such structures have been put in place since. Why?
I specifically request that the Minister inform me, in writing and at the earliest convenient date, of the progress she has made on the undertakings she gave to workers, management and the public representatives of east Galway at the time. I am certain all the workers in Square D would have remained in the company until 25 May had they been aware they would not benefit from the provisions of the Bill by taking redundancy beforehand. The terms of reference of the Bill were in place on 15 January. I cannot sufficiently emphasise the importance of the Minister giving special attention to this case in which redundancies are ongoing.
I want to discuss four points – the national minimum wage, insolvent companies, rebates paid to employers and severance packages. I know from listening to Senator Ulick Burke on many occasions that he articulates extremely well the trauma faced by people who lose their jobs. I agree with him that it is a traumatic experience. Senator McDowell seems to think there is a conspiracy among companies to go out of business. There is a myth that companies gain something by doing so. However, companies want to continue to trade.
I have experience of business and I have dealt with people who have been unemployed for periods of time. A work ethic is like a gift from God or Allah, depending on one's religion. People want to work to survive and to pay their way in society. We started our business in 1987 when there was 18% unemployment. People came to our company on the East Wall Road who did not have a job. Young people who get a job are transformed after a year or two when they settle down and get some money. They are able to buy nice clothes and to have a decent standard of living. Their self-confidence improves when they take up employment.
Companies do not want to go out of business and they cannot survive without their workers or staff. Employers, management and workers work together to grow a business and to increase profits. If companies do not get sales and cannot make profits, they will not survive and jobs will be lost.
We spoke earlier about Ireland being a small open economy with a population of four million people. We need trade and sales to get employment. We must be able to sell out of Ireland. There are not enough sales in the country to grow business. We must increase trade from outside the country which will enable us to create jobs.
There was an increase of almost 50% in the number of redundancies during 2001 compared to 2000. The Department of Enterprise, Trade and Employment reacted quickly and set up a review group to study the existing redundancy legislation from an administrative, efficiency and customer service point of view. I was impressed when I read in the review group document that the person losing his or her job was seen as a customer rather than a number who must be looked after by the Department. That is part of what Sustaining Progress is about. We must ensure that the public service improves and lives up to the public's expectations. I commend the language used in the review group document. It is critical that we deal quickly and efficiently with people who experience the trauma of losing their jobs.
GDP was 10% in 2000, but it contracted to 6% in 2001. The United States economy and all industry stalled during 2000 and 2001. That was the reason there was a 50% increase in the number of redundancies between 2000 and 2001. Everything stalled because there was a slow down in growth. The average European growth is 1.9%, while our growth is twice that rate. We are still doing well, although we have contracted. If there is a contraction, business will slow down and people will be laid off.
If a worker in an insolvent firm does not receive statutory notice, it is necessary to take the case to the Employment Appeals Tribunal to determine the minimum entitlement. I compliment the Department because in order to streamline the process, it is proposed to allow employees to submit claims to the liquidator or receiver without having to go to the Employment Appeals Tribunal, thereby diverting these cases from the tribunal and ensuring a better service for the person who is made redundant. That shows common sense. I want to draw attention to that issue rather than repeating the old issues of age, etc.
The statutory redundancy payment is two weeks for every year of service. People do not realise that many companies give multiples of the statutory payment. Every company does not make only the statutory payment. The food, drink and tobacco industries give two to four weeks' payment in addition to the statutory payment. People who work in the computer and electronics industry do not receive only the statutory payment; they also get four to six weeks' payment. When people who work in the financial services industry are made redundant, they get packages of between three to four weeks' payment in addition to the statutory payment. The two weeks' payment is given by many traditional companies.
I feel strongly about the way the management of Irish Glass treated its staff. I had a pain in my heart when I saw the workers having to march in the street to get that company to pay them a proper redundancy package. It was appalling. We spoke at the parliamentary party meeting about IFI. The Minister of State defended it, but the workers did not seem to understand what redundancy they were getting or when they were getting it. As an employer, our company would not be able to employ 50 people today unless there was mutual respect between us and our staff. Companies do not succeed unless there is mutual respect. I detest the macho management style between workers and management.
In 1980 my husband won an award to carry out a study of what industry Ireland should focus on in the future. Fortunately, the American fund paid for me as well. We spent three and a half months studying many big international electronics companies in the United States. I wrote to my colleagues in the National Building Agency where I had previously worked stating that there was more socialism in American companies than we, in Ireland, dreamed about. The management of these fast growing companies realised one had to communicate with one's staff if one wished to go forward.
Our staff in East Wall, many of them local, worked hard to build up the company, though it remains small. There has always been a tremendous work ethic in East Wall as a result of the availability of jobs, casual or permanent, in the port. Many of those employed in our company are those we started off with. We work together. I dislike the coldness of the approach used in Irish Glass.
I welcome the Minister of State and the introduction of this legislation. It is not always that I concur with Senator White, who made a good contribution. This is important legislation. I referred earlier on the Order of Business – many Senators have previously referred to this – to a particular aspect which may be the nub of any problems that may arise with this legislation, namely, retrospection.
Castlecomer is a unique part of the country in many respects.
I am glad Senator Mansergh is aware of that. Long ago, there was an established tradition of coal mining in north Kilkenny and the greater Castlecomer area in particular. However, the mines in that district became redundant in the 1960s and 1970s. As a result there is no longer a coal mining industry in the Castlecomer area. The population in that corner of north Kilkenny is quite large. I was recently told by the local council that it is the most densely populated rural part of Ireland. It has unique settlement patterns and is a unique community primarily made up of working class Church of Ireland people who came to the area when the mines were operational. That is unique when one looks at it in the context of a 26 county Ireland. Such communities are not found in many areas.
We were informed before Christmas that Comerama, a factory set up in the area when the mines closed, was to close. The loss of that factory in an area which traditionally has a higher level of unemployment than the rest of Kilkenny, and considerably higher than the national average, was particularly hard. Following that announcement, I attended a meeting in the Department of Enterprise, Trade and Employment with the Tánaiste, Deputy Harney, the Minister of State at the Department of Agriculture and Food, Deputy Aylward – a Member of the Dáil representing Carlow-Kilkenny – Deputies John McGuinness, Phil Hogan and Seamus Pattison, Senator Fergal Browne, two local councillors, representatives of the workers of Comerama and officials from that Department.
It was my understanding from that meeting that this Bill would apply retrospectively to the workers in Comerama. That view was clearly spelled out at the meeting. I understand Deputy McGuinness circulated a letter to the workers of Comerama – I hold up my hands, I should have done likewise – stating that this legislation would look favourably on their predicament and would apply retrospectively. He did so on the clear understanding that what the Minister said would hold. It now appears that does not hold. I find that extraordinary.
I have often pointed out that people have a cynical attitude towards politics and politicians. People will quite rightly be cynical of politics and politicians if, following publication of relevant legislation, what was promised is not to be delivered upon. I am in complete agreement with Deputy McGuinness's understanding of what was promised. I am concerned that the Minister appears to be back-tracking on what she said at that meeting.
I also agree with Senator White's remarks in relation to the Irish Glass factory in Dublin and the predicament in which workers there find themselves. I have never had the experience of losing a job and I hope I never do. It is a stressful time for all concerned. Commitments entered into following that stressful period should be honoured. For the Tánaiste and Minister for Enterprise, Trade and Employment, as deputy leader of the Government, to give an understanding at a meeting and then to renege on it is completely wrong and unjustifiable. I stand four-square behind the workers in Castlecomer who feel aggrieved that their legitimate claims are to be ignored.
The Minister's speech referred to legal advice she had received from the Attorney General's office. That advice may be accurate and true but why was it not sought prior to the meeting in question? To build up people's expectations and to cut them down shortly afterwards is not a nice thing to do, to say the very least. I regret that retrospection will not apply. I appeal to Government Senators to look favourably upon the amendment in the name of my colleague, Senator Coghlan, which deals with this issue. It is not too much to ask that some leeway be given on such a sensitive issue.
I welcome the Minister's speech. I also welcome the Minister of State to the House. For the purposes of moving the debate, I wish to pick up on some points made by Senator John Phelan. As I said earlier, Castlecomer is an attractive place. Any time I want to avoid the main Dublin-Cork road I go through Castlecomer and Athy. Senator Phelan made some interesting points about Castlcomer's history. However, he is being unfair to the Tánaiste.
Every elected representative is in the position where they have to listen sympathetically to cases where serious difficulties have arisen. One often undertakes to look into something, to do the best one can and to give sympathetic consideration to a proposition. To be fair to Senator John Phelan, he used the word "appears". It is quite clear that if the Tánaiste had made a commitment, she would have said so and the Senator would be able to document and prove it. However, it is clear from the language he is using that the Tánaiste did not make any such commitment.
I would be sympathetic, in abstracto, to Senator Coghlan's amendment about retrospective payments. I wonder, apart from the legal advice, whether, even in a practical industrial relations sense, it would be practicable. What point in the past would one select? In some cases, companies may have dissolved or disbanded and, in such circumstances, would responsibility revert to the State? If one adopts different dates or different places, difficulties of equity would arise. Unless the Government can persuade me otherwise, I would have thought a start-up date is the best basis on which to operate.
I welcome the legislation, which I see as one of the fruits of social partnership and, in particular, the most recent social partnership agreement. There is a pre-history to this matter because, as redundancies started arising, the statutory minimum payment was becoming increasingly out of line with reality. Employers always had the option of returning to the minimum requirement, but the statutory redundancy payments given in the vast majority of cases were way above that requirement.
I recall having a considerable number of discussions on this matter with the Minister of State's predecessor, Deputy Tom Kitt, when the Fianna Fáil manifesto was being drawn up. The manifesto stated that the statutory redundancy scheme would be comprehensively reviewed with a view to implementing key improvements. Great though the temptation was to include the term "two weeks", the latter was not actually done. Opposition Members occasionally claim that all sorts of specific promises were made which, in fact, was not the case. This is an illustration of an instance where a degree of due caution was exercised.
If that was cautious, the programme for Government was even more cautious because it stated that, under the section on improving the conditions of employment, "the recommendations of the review of the statutory redundancy scheme will be examined with a view to implementation". Everyone understood that this was something that had to be negotiated between employers and trade unions. The outcome is a real and satisfactory achievement.
Unfortunately, more jobs are likely to be lost now than was the case two or three years ago when the Celtic tiger economy was at its height. It is important that when tragic events – tragic for the individuals involved, in any event – such as plant closures occur, the situation should not be made worse with industrial relations disputes over redundancy payments. As sure as hell that is not an advertisement for a particular location for which replacement industries are being sought. That is the situation in many parts of the country.
Senator Ulick Burke referred to Ballinasloe, while Senator John Phelan spoke about Castlecomer. I am going to refer to Tipperary, where two thirds of the jobs at the PAL factory were recently lost. When we went to the factory after the announcement was made, a trade union representative – a Labour Party councillor who worked there – told us that at least the redundancy payments were reasonably generous and that they would not be an issue. That is important because the objective in these situations is for communities and workforces to pull themselves up on to their feet as quickly as possible. It is also important for the State agencies concerned to come together to find promptly replacement employment for Ballinasloe, Castlecomer, Tipperary and other areas. Messy situations should be avoided.
The Bill provides a much better floor than previously existed. Senator White has said that, in a large number of cases, it is a bit like the statutory minimum wage. Employers in general pay their workers far more than the statutory minimum wage. Similarly, most of them will pay more than the statutory redundancy allowance. Nonetheless, it is important to have a more realistic floor than exists at the moment.
I welcome this timely legislation. I also welcome the fact that all Stages are being dealt with in the House this week. I hope the Bill has a speedy passage through the Houses because sensitive redundancy negotiations are taking place in Letterkenny at the Unify plant, where 250 workers were laid off three weeks ago.
Senator Mansergh asked where the cut-off point in terms of retrospective redundancy allowances should be located. Perhaps we could start with Castlecomer, where people were made redundant before Christmas. In light of those recent redundancies and the fact that the legislation could have been before the House two to three weeks ago, I support Senator Coghlan's amendment on retrospective payments for people who were made redundant at the beginning of the year.
Members are being very parochial by referring to counties Tipperary, Kilkenny and Galway. People in County Donegal are suffering from serious difficulties as a result of the decline of the traditional textile sector. This is the situation which we have been faced with over these last five or six years, even during the so-called Celtic tiger period. The Celtic tiger did not arrive in County Donegal. Perhaps it visited Bundoran on one of the hot days during the summer, but it did not come to the county during the boom years.
We set up a task force under the leadership of the Tánaiste, Deputy Harney. The document produced by that task force outlined how we would face the challenges ahead of us, how we would develop more sophisticated and new products and how we would move away from sectors – such as the textile sector – which were in decline. That document is collecting dust on a shelf in the county council office in Lifford. Donegal suffered tremendously during the years of the Celtic tiger and it is mired in quicksand in terms of the provision of jobs in the future. That is not to mention retaining the employment that exists in the county at present.
The Tánaiste must take this situation seriously. We must sit down with our local authorities, possibly using the forum of the Seanad, to consider the possibility of providing alternative industries in County Donegal. We must look at high-tech and high-value industries and also at the tourism product on offer in the county. We need to tap into existing resources and move away from the declining traditional sectors of employment.
I have no wish to speak only in bleak terms. Opportunities exist in County Donegal. For example, a 144 kilometre stretch of the county lies adjacent to the North and a number of cross-Border opportunities exist. There are business opportunities and investments that can be made through the peace process. I referred to the spirit of the Good Friday Agreement on this morning's Order of Business, which is very much in evidence in County Donegal through its working relationship with Derry. However, we must explore fresh opportunities.
I welcome this legislation, so fundamental for people losing their jobs. As Senator Mansergh said, it is a sensitive and delicate area and we have to be sympathetic. I would like this Bill to go through the other House by next week and to be signed off as quickly as possible, because there are people depending on it.
Minister of State at the Department of Enterprise, Trade and Employment (Mr. M. Ahern): I thank all the Senators who have contributed to the debate this afternoon, especially the Opposition Members welcoming this legislation. It is recognised by all Members of the House and the social partners that there is a need to update the statutory redundancy provisions, which is the purpose of this Bill.
A number of questions were raised by speakers. The first, by Senator Leyden, related to the repayment of the 60% should an employee refuse to sign the document. The Department will repay the amount provided that the employer can demonstrate that the amount was paid. For example, if one had the returned pay cheque – which one would now have to request from the banks since they have changed their system – that would be proof that the money was paid.
Senator Ulick Burke asked when the Bill would come into effect. For the employees to qualify for the changes in the Bill, the date is 25 May, and employees issued with notice of redundancy on that date or later will be entitled to the enhanced payments, i.e. two weeks' pay for each year of service, plus the bonus week. Senator Burke also raised questions regarding retrospection. It has been explained by the Tánaiste that the legal advice from the Office of the Attorney General is that the payment of statutory redundancy lump sums is a legal requirement for employers and could not be imposed on them with retrospective effect. Employers are entitled to due notice of the intention to legally require them to pay enhanced rates. The new Redundancy Act has to be brought into effect by ministerial order after enactment by the Oireachtas, and this cannot be made retrospective.
Senator John Phelan referred to the meeting with the public representatives from Kilkenny. As was eloquently noted by Senator Mansergh, Senator Phelan said the "impression" he got was that the Tánaiste promised retrospection. According to the minutes, what the Tánaiste actually said was that she would use her best endeavours to get the best possible deal for workers. The impression being given by some people that there was a cast-iron commitment to retrospection does not hold water. Otherwise I am sure that Senator Phelan and his colleagues would be declaring that from the mountain-tops.