State has paid €256m to firms who made redundancies

The Government has paid over €256 million in refunds to companies who have made staff redundant in the past three years.

The Government has paid over €256 million in refunds to companies who have made staff redundant in the past three years.

The new figures indicate that the money paid to companies has increased significantly since the workers' redundancy entitlements were improved in May 2003.

In a sign of the rising cost to the taxpayer of company closures and corporate downsizing, companies received €137.9 million in rebates last year - almost three times the €46 million received in 2002.

However, according to Central Statistics Office figures, while 25,300 redundancies were notified to the Department of Enterprise, Trade and Employment in 2002, this figure actually decreased by 2,000 last year.

READ MORE

Similarly, the amount paid out in 2003, when the new rates were introduced, also increased significantly, to €72.6 million. However, that year also saw an increase in the number of notified redundancies to 27,700.

Since May 2003, eligible employees have been entitled to a lump sum of two weeks' statutory redundancy for every year of service, plus a bonus week.

Previously, they were entitled to just half a week's pay for every year of service under the age of 41, and one week's pay for every year of service over 41 years of age, plus a bonus week.

At a time when the country is facing increasing global competition from low-cost economies, the figures, released by the Department of Enterprise Trade and Employment, also indicate the significant cost to the taxpayer when decisions are taken to outsource jobs.

Under the redundancy payments scheme employers are entitled to a rebate of 60 per cent of the cost of providing eligible employees with their statutory redundancy entitlements. However, this was subject to a weekly wage ceiling of €507.90 for the period in question. This ceiling has since been increased to €600.

A further € 38.6 million in lump sum payments was paid by the department to some 7,300 individuals in the past three years.

These payments are made where an employer is either unable or unwilling to meet its redundancy payment obligations under the law.

If this occurs, and ordinarily following a decision of the Employment Appeals Tribunal, the department pays the amount in question from the Social Insurance Fund.

The redundancy payments scheme is administered by the Department of Enterprise, Trade and Employment on behalf of the Department of Social and Family Affairs.

To qualify for the scheme employees must have at least two years' continuous service, must be between the age of 16 and 66, and must be in fully-insurable employment. They must also have been made redundant for a genuine reason. This usually means the job no longer exists and the employee is not replaced.