Redundancy Payments: 1 Jun 2010: Written answers (KildareStreet.com)

Dara Calleary (Mayo, Fianna Fail)
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My Department administers the Social Insurance Fund (SIF) in relation to redundancy matters on behalf of the Department of Social Protection. There are two types of payment made from the SIF – rebates to those employers who have paid statutory redundancy to eligible employees, and statutory lump sums to employees whose employers are insolvent and/or in receivership/liquidation.

I can confirm that my Department received a lump sum redundancy claim for the individual concerned on 14 November, 2008. Queries were raised on 9 December 2008 in relation to this claim which were finally resolved in April 2010. I am pleased to advise the Deputy that the claim is at an advanced stage of processing. Payment is expected to issue to the individual within the next two weeks.

Dara Calleary (Mayo, Fianna Fail)
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My Department administers the Social Insurance Fund (SIF) in relation to redundancy matters on behalf of the Department of Social Protection. There are two types of payment made from the SIF – rebates to those employers who have paid statutory redundancy to eligible employees, and statutory lump sums to employees whose employers are insolvent and/or in receivership/liquidation.

I can confirm that my Department received a lump sum claim for the individual concerned on 18 February, 2010. This claim awaits processing. In respect of redundancy lump sum payments paid directly to employees, such as in this instance, the Section is, in general, processing claims dating from September/October 2009.

The impact on business of the severe economic circumstances currently pertaining has resulted in an unprecedented increase in the level of Redundancy Payment claims lodged with my Department. This has impacted significantly on the capacity to maintain the customer service targets that previously obtained. The scale of the challenge on the Redundancy side is evident from the statistics that show incoming redundancy claims in 2009 amounted to 77,001 which represents a threefold increase over the level of claims lodged in 2007 and earlier years. In 2007, claims received were of the order of 25,000.

Efforts continue to be made by my Department to deliver more acceptable turnaround processing times for Redundancy payments given the difficulties that this gives rise to for both individual employees and the business community. Measures already taken in the Department in 2009 to alleviate the pressures on the Payments area include:

Almost doubling the number of staff through reassignment to a current level of 52 full time equivalents;

Prioritisation of the Department's overtime budget towards staff in the Section to tackle the backlog outside normal hours;

Establishment of a special call handling facility in NERA to deal with the huge volume of telephone calls from people and businesses concerned about their payments.

Better quality information relating to current processing times on the Department's website;

Engagement with the Revenue Commissioners to facilitate the offset of redundancy rebate payments by employers against existing outstanding tax liabilities, which those employers owe to the Revenue Commissioners.

The backlog and waiting times remain at unacceptable levels. However, improvements are evident. I should point out that my Department has, in 2009, processed 50,664 claims, up 70% on 2008. During the period 1 January 2010 to 30 April, 2010, 23,593 claims were received and 27,592 were processed. In the year to date, inroads have been made on the backlog of claims on hand, which reduced from 41,168 at the end of January to 36,333 at the end of April 2010.

Responsibility for the payment functions arising under the Redundancy and Insolvency payment schemes is due to be transferred to the Department of Social Protection with effect from 1 January 2011. In transferring the functions between Departments, it is the intention that this will operate seamlessly and without any adverse impact on the service levels being experienced by individuals or the business community awaiting payment of redundancy claims.

Michael D'Arcy (Wexford, Fine Gael)
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Question 114: To ask the Minister for Enterprise, Trade and Innovation his views on whether it is acceptable that persons made redundant in the past two years have to wait for more than a year for their statutory payments; and if he will make a statement on the matter. [23265/10]

Dara Calleary (Mayo, Fianna Fail)
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I propose to take Questions Nos. 113 to 115, inclusive, together.

The impact on business of the severe economic circumstances currently pertaining has resulted in an unprecedented increase in the level of Redundancy Payment claims lodged with my Department. This has impacted significantly on the capacity to maintain the customer service targets that previously obtained. The scale of the challenge on the Redundancy side is evident from the statistics that show incoming redundancy claims in 2009 amounted to 77,001 which represents a threefold increase over the level of claims lodged in 2007 and earlier years. In 2007, claims received were of the order of 25,000.

My Department administers the Social Insurance Fund (SIF) in relation to redundancy matters on behalf of the Department of Social and Family Affairs. There are two types of payment made from the SIF – rebates to those employers who have paid statutory redundancy to eligible employees, and statutory lump sums to employees whose employers are insolvent and/or in receivership/liquidation.

The Redundancy Payments Section of my Department is currently processing rebate applications received in November 2009, so that the waiting time is approximately 6 months. In respect of lump sum payments paid directly to employees in instances where employers are unable to pay the statutory redundancy entitlements, the Section is, in general, processing claims dating from September/October 2009. In some instances where the necessary supporting documentation for claims is not provided to my Department, or where queries arise, processing of claims can be further delayed until the required documentation is provided and/or outstanding queries are resolved.

Efforts continue to be made by my Department to deliver more acceptable turnaround processing times for Redundancy payments given the difficulties that this gives rise to for both individual employees and the business community. Measures already taken in the Department in 2009 to alleviate the pressures on the Payments area include:

almost doubling the number of staff through reassignment to a current level of 52 full time equivalents;

prioritisation of the Department's overtime budget towards staff in the Section to tackle the backlog outside normal hours;

establishment of a special call handling facility in NERA to deal with the huge volume of telephone calls from people and businesses concerned about their payments.

Better quality information relating to current processing times on the Department's website;

Engagement with the Revenue Commissioners to facilitate the offset of redundancy rebate payments by employers against existing outstanding tax liabilities which those employers owe to the Revenue Commissioners.

The backlog and waiting times remain at unacceptable levels. However, improvements are evident. I should point out that my Department has, in 2009, processed 50,664 claims, up 70% on 2008. During the period 1 January 2010 to 30 April, 2010, 23,593 claims were received and 27,592 were processed. In the year to date, inroads have been made on the backlog of claims on hand, which reduced from 41,168 at the end of January to 36,333 at the end of April 2010.

Responsibility for the payment functions arising under the Redundancy and Insolvency payment schemes is due to be transferred to the Department of Social Protection with effect from 1 January 2011. In transferring the functions between Departments, it is the intention that this will operate seamlessly and without any adverse impact on the service levels being experienced by individuals or the business community awaiting payment of redundancy claims.

Dara Calleary (Mayo, Fianna Fail)
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My Department administers the Social Insurance Fund (SIF) in relation to redundancy matters on behalf of the Department of Social Protection. There are two types of payment made from the SIF – rebates to those employers who have paid statutory redundancy to eligible employees, and statutory lump sums to employees whose employers are insolvent and/or in receivership/liquidation.

The Statutory Redundancy Payments Scheme is operated strictly in accordance with the provisions of the Redundancy Payments Acts 1967-2007.

Under the Redundancy Payments Scheme all eligible employees are entitled to a statutory redundancy lump sum payment on being made redundant. Statutory Redundancy is an employment right, and any employee over the age of 16 who is in insurable employment with the relevant employer for two years prior to the date of termination of the employment, is eligible. An employee is entitled to two weeks pay for every year of service, plus a bonus week, subject to a maximum weekly ceiling of €600 gross pay.

A redundancy situation arises in general where an employee's job no longer exists and he/she is not replaced. It is up to the employer concerned in the first instance to determine whether or not in fact a redundancy situation obtains. Application should be submitted to my Department on an RP50 form completed and signed as appropriate by the employer and the employee. This form can be completed online or downloaded from the Department's website at www.entemp.ie. In the case of forms submitted online, it is necessary also to submit a signed hardcopy of the form. Disputes arising in relation to statutory redundancy entitlement can be referred to the Employment Appeals Tribunal (EAT) for adjudication.

Under the Redundancy Acts, 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 a rebate of 60% of the lump sum redundancy payments paid out to 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 confirmation from the company's Accountant or Solicitor attesting to the employer's inability to pay the redundancy entitlements and, requesting the latest set of financial accounts/statement of affairs 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 documentation is provided to the Department, the employees are paid their redundancy lump sum 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.

If supporting documentation required from the employer is not provided to my Department, the employee will be advised by my Department to take a case to the Employment Appeals Tribunal (EAT) against the employer to seek a determination establishing the employee's right and entitlement to redundancy. Once such a determination is available, the Department is then in a position to make the payment to the employee concerned. Should the outstanding documentation be provided by the employer during the period while the case is pending a hearing before the EAT, this would allow the claim to be processed by my Department in the usual way.