Redundancy revamp likely

REVIEW: The State's redundancy payments scheme could be subject to a major revamp in the coming year. A review group has been set up to examine the operation of the scheme, which has been in existence since 1967.

The Tánaiste and Minister for Enterprise, Trade and Employment, Ms Harney, said the review's purpose was to ensure the scheme best meets employers and employees requirements in an economic environment that has changed dramatically from when the scheme was first introduced.

"I believe that the time has come to fundamentally review the operation of the scheme so that employers and employees alike can be satisfied that the scheme is tailored to the demands of a modern economy," she said.

The Department of Enterprise, Trade and Employment has already reviewed the operation of the redundancy legislation from administrative efficiency and customer service perspectives and this is being broadened to include representatives of other Government departments and the social partners, Ms Harney said.

Under its terms of reference, the review group will:

review the operation of the scheme, which is funded from the social insurance fund and operates on the basis of the Redundancy Payments Acts 1967 to 2001;

identify the legislative, administrative and system requirements for a more effective, efficient, simpler and customer-driven scheme, adapted to an e-Government environment;

examine the benefits payable under the scheme and develop options for Government and social partner consideration; and

report to the Tánaiste within four months with recommendations and costings of the various proposals.

The review group will consist of representatives of IBEC, CIF and ICTU as well as the Departments of the Taoiseach, Finance, Social, Community and Family Affairs, and Enterprise, Trade and Employment.

Under the current scheme, the employer pays 100 per cent of the minimum statutory payment and obtains a 60 per cent rebate from the Department. The amount paid is related to the employee's length of service and his or her normal weekly earnings.

The redundancy fund set up under the 1967 scheme was initially financed by contributions from employers and employees. Employee contributions were abolished in 1979 and employer contributions were made by way of PRSI at a rate of 0.5 per cent.

In 1984, the fund was extended to include the insolvency payments scheme and in 1991 it was merged with the social insurance fund. All payments are now made from this fund.