John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context

Question 127: To ask the Tánaiste and Minister for Enterprise, Trade and Employment if her preferential claim against a company (details supplied) under the Redundancy Payments Acts will be struck out; and if she will expedite a response in view of the circumstances of the case. [27817/09]

Dara Calleary (Mayo, Fianna Fail)
Link to this: Individually | In context

It is up to the employer in the first instance to pay statutory redundancy entitlement to employees. When an employer does so, he is entitled to claim a rebate of 60% from the Social Insurance Fund. If the employer is unable to pay the statutory amount, then the employee can, ultimately, be paid directly by my Department from the Fund. In such cases, 40% of each statutory redundancy lump sum paid is recoverable from the assets of the employer by the Department for the Fund.

This statutory Redundancy Recoveries function is provided for in Sections 42 and 43 of the Redundancy Payments Act, 1967 (as subsequently amended). Section 42 of the Redundancy Payments Acts 1967 – 2007 confers on the Minister, preferential creditor status in a winding-up situation in recovering amounts paid from the Social Insurance Fund. Thus, a redundancy lump sum (or part thereof) is made a priority debt under Section 285 of the Companies Act, 1963, in cases of winding-up, and a priority debt under Section 81 of the Bankruptcy Act, 1988, in cases of a bankrupt or arranging debtor. Section 43 of the 1967 Act also makes general provision whereby all monies due to the Fund (whether in a winding-up situation or not) are debts, which can be recovered in any court of competent jurisdiction.

In the present case, my Department paid a statutory redundancy lump sum in favour of a former employee of the company from the Social Insurance Fund and the Department was involved in written communication with the company at the time. The company was also advised of the fact that given that the payment was made directly from the Social Insurance Fund, the Minister, in line with the provisions of the Redundancy Payments Acts referred to, had preferential creditor status.

The Minister has no discretion with regard to the 40% due to the Social Insurance Fund in terms of any legal powers to divert, from the Social Insurance Fund, monies which may be recovered from the assets of the company at some future point and the Minister is not in a position to strike off the outstanding liability to the Social Insurance Fund.