Damien English (Meath West, Fine Gael)
Link to this: Individually | In context

Question 373: To ask the Minister for Social Protection the position regarding redundancy repayments in respect of persons (details supplied); and if she will make a statement on the matter. [32197/12]

Joan Burton (Dublin West, Labour)
Link to this: Individually | In context

The purpose of the redundancy payments scheme is to compensate workers, under the Redundancy Payments Acts, for the loss of their jobs by reason of redundancy. Compensation is based on the worker's length of reckonable service and reckonable weekly remuneration subject to a ceiling of €600.00 per week. It is the responsibility of the employer to pay statutory redundancy to all their eligible employees. An employer who pays statutory redundancy payments to their employees is then entitled to a partial rebate from the State. Where an employer can prove an inability to pay statutory redundancy payments to its eligible employees, lump sum payments are paid directly to those employees. Both rebates and lump sums are paid from the Social Insurance Fund.

I am very concerned about the deficit in the Social Insurance Fund. While the Social Insurance Fund is constituted primarily from employer contributions, the taxpayers' contribution is also significant. Significant and increasing amounts have been paid out in redundancy rebates to employers from the SIF in recent years. €152.2 million was paid out in rebates to employers in 2006; €167.4 million was paid in 2007; €161.8 million was paid in 2008; €247.9 million in 2009; €373.2 million in 2010 and €185.3 million in 2011. The amounts paid out in lump sums to employees have also increased.

One of the factors which influenced the Government's decision to revise the rebate rate was the significant cost. In the context of the Budget 2012 deliberations it was decided that the 60% rebate was not sustainable in the current economic climate. As a result, the level of the rebate was reduced to 15% where the date of dismissal for the purposes of redundancy occurred on or after 1 January 2012. In the case of the company concerned the redundancies occurred after that date. While the reduction in the rebate rate may cause difficulties for employers it should be noted that redundancy rebate payments to employers are not common in many EU and other jurisdictions. The new arrangements bring Ireland more closely into line with practice in other countries.