Michael Ring (Mayo, Fine Gael)
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Question 204: To ask the Tánaiste and Minister for Enterprise, Trade and Employment the legal position in respect of persons being temporarily laid off; the length of time an employee may be temporarily laid off; when the anomaly in the legislation in this regard will be dealt with, whereby an employee may be temporarily laid off forever; her plans to deal with the loop hole in the legislation; and if she will make a statement on the matter. [3033/10]

Dara Calleary (Mayo, Fianna Fail)
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A lay off situation arises where an employee's employment ceases by reason of his/her employer being unable to provide the work for which the employee was employed and where it is reasonable in the circumstances for that employer to believe that the cessation of employment will not be permanent. The employer must however give notice to that effect to the employee prior to the cessation. If the lay-off continues, the question arises as to whether it is in fact a temporary measure or could potentially be a redundancy rather than a lay-off situation.

Assuming an entitlement to redundancy exists in line with the eligibility criteria set down in Redundancy legislation, the employee can by law, serve written notice (Form RP 9) on the employer, claiming redundancy because of the lay-off situation. Notice must be submitted not later than four weeks after the lay-off ceases. A copy of the RP 9 form may be had from my Department or may be downloaded from the Department's website at www.entemp.ie.

There is no statutory maximum period for lay off situations as this could unnecessarily interfere with the need for flexibility in a lay-off situation which can, in reality, extend for some time or indeed for different protracted periods of time. However, the Redundancy Payments Acts provides a necessary safeguard in that, where an employee has been laid off for four consecutive weeks, or for a series of six or more weeks (of which not more than three were consecutive) within a 13-week period, the employee may file a notice claiming redundancy.

Provided that the employer does not counter claim by offering 13 weeks continual employment, starting within four weeks of the date of receipt of the notice and notified to the employee within seven days of receipt of the notice, the employee may be entitled to claim redundancy.

Payment of statutory redundancy is, in the first instance, a matter for the employer and it is the employer who initially decides whether or not there is a redundancy situation. In the case of a dispute regarding entitlements under the Redundancy Payments Acts, the matter may be referred for adjudication by the Employment Appeals Tribunal (EAT).

It is important to note that an employee must make application for a redundancy payment or seek a determination from the EAT within twelve months of ceasing his employment. The 12 month deadline applies both to the making of a claim to the employer and to the making of a claim to the EAT in a situation where the employer disputes payment of redundancy.

Róisín Shortall (Dublin North West, Labour)
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Question 205: To ask the Tánaiste and Minister for Enterprise, Trade and Employment the safeguards which are in place to ensure that companies do not cease trading in order that staff receive statutory redundancy payments from her Department while continuing to operate under a new name. [3063/10]

Dara Calleary (Mayo, Fianna Fail)
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Under the Redundancy Payments Acts 1967 - 2007, the objective is to ensure that statutory redundancy payments, due to eligible employees on being made redundant, are made in accordance with the legislative provisions. The legislation places the onus, in the first instance, on the employer to discharge the obligation to pay redundancy entitlement to employees. On so doing, the employer is entitled, by virtue of the pay related social contributions made to the State, to recover 60% of the lump sum redundancy payments paid out to employees.

In the case of liquidations/receiverships, the Department acts in locus of the employer and pays the redundancy lump sums directly to the employees and then seeks to recover from the appointed liquidator/receiver the 40% which the employer would have been due to pay to the employees.

In instances where the employer does not formally wind the company up but goes into informal insolvency and is unable to pay the statutory redundancy entitlements, the Department seeks from the employer evidence of inability to pay the entitlements to the employees. This involves requesting a statement from the company's Accountant or Solicitor attesting to the inadequacy of assets to make the redundancy payments and, the latest set of financial accounts for the company. The employer is also asked to admit liability for the 40% liability attaching to the company arising from the redundancy payments. If this information is provided to the Department, the employees are paid their redundancy entitlement from the Social Insurance Fund. Upon payment, the Department pursues the company for the 40% share which the company would ordinarily have been expected to pay to the employees. In this instance, the Minister becomes a preferential creditor in a winding-up situation in recovering amounts paid from the Social Insurance Fund and this debt stands against a company for as long as it is live on the Companies Register at the Company Registration Office.

Of course it is the case that company failures are a normal facet of business life and it would be unduly penal if, due to a company failure, all the directors and officers of that company were to forever more be prevented from setting up again. That is, provided it is clear that their actions resulted from genuine business failure as opposed to acts of recklessness or inappropriate behaviour.

Under Company law, there are provisions dealing with companies who fail and re-engage in trading under a new name in particular, under the provisions of Part V of the Company Law Enforcement Act 2001. Under section 56 of the Act, Liquidators of insolvent companies are required to submit a report to the Director of Corporate Enforcement within 6 months of their appointment. This report outlines the circumstances of the insolvency and addresses whether the directors acted honestly and responsibly in relation to the conduct of the company's affairs. Liquidators are further obliged to bring High Court proceedings for the restriction of such directors unless relieved of that obligation by the Director of Corporate Enforcement.

A restriction declaration, if made, prohibits an individual from acting, either directly or indirectly, as an officer of a company or from being involved in its formation or promotion for five years, unless the company is adequately capitalised.

The Director of Corporate Enforcement has the power to bring any other prosecution for breaches of the Companies Acts as deemed appropriate in any individual case. If the Deputy is aware of any activities in which the Director may have an interest, I would encourage him to have that information forwarded to the Director of Corporate Enforcement.