Thursday, 11 July 2019
Department of Employment Affairs and Social Protection
913. To ask the Minister for Employment Affairs and Social Protection the estimated cost of restoring redundancy rebates to businesses by 25%, 50%, 75% and 100%; and if she will make a statement on the matter. [31104/19]
It is an employer’s responsibility to pay statutory redundancy to eligible employees. Previously employers were entitled to a rebate from the state of 60% of the relevant redundancy payment. These rebates were abolished from 2013 due to the high cost to the Social Insurance Fund. These Employer rebates were paid to employers regardless of the financial situation of the company and their ability to make statutory redundancy payments.
The Department receives some information form employers through notifications of collective redundancies and also has data on applications received under the redundancy payments scheme. However, this data does not reflect the total number of actual redundancies that take place across the workforce.
The cost to the Social Insurance Fund arising from the restoration of redundancy rebates to employers may also be impacted by the overall performance of the economy and how that performance impacts on the labour market and whether decisions taken by employers would lead to redundancies, temporary lay-offs or putting workers, for example, on a 3 day week.
For these reasons I am advised that my Department is not in a position to provide an accurate estimate of the cost of restoring redundancy payments to businesses.
914. To ask the Minister for Employment Affairs and Social Protection her views on restoring redundancy rebates to businesses which previously facilitated small and micro-sized businesses to hire staff; and if she will make a statement on the matter. [31105/19]
The purpose of the redundancy payments scheme is to compensate employees for the loss of their jobs, where the employer is unable to pay statutory redundancy due to financial difficulties or insolvency. The scheme was never intended as a support to businesses to hire staff. The scheme is funded from the Social Insurance Fund (SIF).
Up to 2011, the scheme provided a rebate of 60 per cent to employers who provided statutory redundancy payments to their employees. I am advised by my Department that in Budget 2013, the rebate payment was abolished. This decision was made because of the high cost of the rebate and its impact on the financial sustainability of the social insurance fund at the time of the economic crisis. Furthermore, the rebate to employers was paid regardless of a company’s financial situation and ability to pay, thus benefitting viable and profitable companies, including multinational companies. It was not a targeted use of the resources of the Social Insurance Fund.
The redundancy payments scheme as it now operates benefits employees whose employers are unable to make statutory redundancy payments. Employers who declare they cannot sustain the cost of redundancy payments, while continuing to trade, are required to submit verified financial information to prove this and are liable to the Social Insurance Fund for any redundancy payments made on their behalf. This ensures that the current scheme takes into account both an employer's ability to pay redundancy payments and that the Social Insurance Fund can be reimbursed in the future, through debt repayment if an employer's financial position improves.
Any proposals to restore the redundancy rebate scheme and any development of policy in this area would have to have regard to: the level of costs involved in restoring the rebate; the many other demands on the Social Insurance Fund including this Government's decisions to extend social insurance benefits to self-employed workers and to provide for paternity benefit and parental leave benefit; and other supports available to businesses who wish to hire staff.