John Brady (Wicklow, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

149. To ask the Minister for Social Protection the mechanisms in place to recoup money owed by companies that become insolvent after his Department intervenes and covers all the necessary costs; and if he will make a statement on the matter. [22208/17]

John Brady (Wicklow, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

150. To ask the Minister for Social Protection if his Department follows up with companies that start trading again after a period of insolvency to recoup costs paid by his Department on behalf of the same company; the way in which this process is undertaken by his Department; and if he will make a statement on the matter. [22209/17]

John Brady (Wicklow, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

151. To ask the Minister for Social Protection the amount of money spent by his Department in each of the years 2014 to 2016 for covering all necessary costs for companies that become insolvent; and if he will make a statement on the matter. [22210/17]

Leo Varadkar (Dublin West, Fine Gael)
Link to this: Individually | In context | Oireachtas source

I propose to take Questions Nos. 149 to 151, inclusive, together.

The purpose of the redundancy payments scheme is to compensate employees for the loss of their jobs when the employer is unable to pay statutory redundancy due to financial difficulties or insolvency. The purpose of the insolvency payments scheme is to pay outstanding wage-related entitlements due to employees in the event of the insolvency of their employer.

The total expenditure on the redundancy and insolvency payments schemes, including payments for insolvent companies, for the years 2014 to 2016 is outlined in the table below. Expenditure fell from €88.2 million in 2014 to €38.3 million in 2016.

When a payment is made from the redundancy and insolvency payments schemes from the Social Insurance Fund a debt is raised against the employer, which is reported in the Social Insurance Fund (SIF) financial accounts. The total employer debt to the Social Insurance Fund at 31 December, 2016 stood at €459 million. Almost two-thirds of the debt originated during the recession years of 2008 to 2013 and three-quarters of current outstanding employer debt is in respect of insolvent companies – companies who are no longer trading.

Debt relating to insolvent companies is unlikely to be recoverable as the reason that the Department stepped in to pay the redundancy payments to employees is that the employer did not have the means itself to cover these payments. Once a business enters the liquidation process the Department’s recourse is then with the liquidator. Notwithstanding that at best only a partial recovery of the debt can be expected as any assets are liquidated the full debt remains on the books of the Department until the winding-up process is completed, which on average will take six or seven years.

The Department has a dedicated debt management unit in the redundancy and insolvency section which has responsibility for managing employer debt in line with the Department’s debt management policy. The debt is managed through the department’s Debt Recovery and Accounting System (DRAS), which issues automated reminders and annual statements on outstanding debt.

In most cases recovery of debt is pursued with liquidators through the liquidation process. In cases where employers are not insolvent and are still trading the Department engages directly with the employers concerned. In these cases the Department is mindful that an overly aggressive process in pursuing debt with companies that are still trading, but are nevertheless in a financially precarious position, might result in those companies being pushed into an insolvency situation which could result in further job losses. Accordingly the unit engages with employers to establish the situation on a case by case basis and seeks to recover debt on a mutually agreed basis, including setting up repayment by instalment where appropriate. The unit has a staff of six and the total cost of running the unit (including management costs) is c €310,000 per annum. A total of €10.5 million of employer debt was recovered by the unit in 2016.

Total Expenditure on the Redundancy and Insolvency Payment Schemes for 2014-2016

*The 2016 figures are provisional pending the finalisation of the SIF Financial Statements.