21st September 2021
Up to €1,860 for workers made redundant who have lost reckonable service
Government confirms Section 12A provision will end on 30 September 2021
Social Insurance Fund available for employers who are unable to make redundancy payments
The Government today agreed a special payment for employees made redundant who have lost reckonable service while in receipt of the PUP or another jobseekers payment over the pandemic. This payment will come from the Social Insurance Fund (SIF) and will ensure workers won’t be left short of their redundancy entitlements.
Section 12A provision of the Redundancy Payments Act 1967 (as amended), will end on the 30 September 2021, as previously agreed. The Section 12A provision was introduced as an emergency measure in March 2020 and has been extended six times. The purpose of the amendment was to effectively suspend an employee’s right to seek redundancy if they had been laid off or put on short-time work due to the measures required to limit the spread of COVID-19 for the duration of the emergency period. This was to reduce the pressure on employers who were already struggling and to reduce the number of insolvencies and permanent job losses over the course of the pandemic.
The State will make a special payment of up to a maximum of €1,860, to workers who have lost out on reckonable service while temporarily laid off over the course of the pandemic and who are made redundant.
To support employers, where they are unable to meet their financial obligations in paying statutory redundancy to their employees, the State will fund statutory redundancy payments from the Social Insurance Fund on their behalf. A flexible and discretionary approach will be taken in relation to recovery of the redundancy debt and in many cases the debt can be repaid over a number of years.
The Tánaiste Leo Varadkar TD said:
“The Section 12A emergency provision was put in place at a time when many thousands of businesses were forced to close or severely reduce their operations because of Covid-19. Throughout the pandemic, our economic priority has been to reduce the number of jobs lost and permanent business closures.
“Our objective here is to ensure workers aren’t left short and employers aren’t burdened with heavy costs. I want to reassure workers who have spent the last few months on the PUP or another job seekers payment because of the pandemic, that in situations of redundancy we will provide you with a payment up to a maximum of €1,860, to compensate for the reckonable service that you have lost due to no fault of your own.
“I also know many businesses are still struggling to get back on their feet and I want to assure them that the Social Insurance Fund is available to help if an employer is unable to pay and we will be very flexible when it comes to repayments.
“With 90% of the population over 16 double jabbed and the vast majority of restrictions being lifted from 22 October, we think now is the right time to remove this provision and that this solution is balanced and provides the best outcome for both employers and workers, after what has been an exceptionally difficult and uncertain period.”
Minister Heather Humphreys TD said:
“From the very start of the pandemic, the Government has not been found wanting in protecting our workers and our businesses.
“Today’s package of measures is a continuation of that approach – ensuring that we restore people’s right to claim redundancy while also ensuring that businesses are not unduly impacted.
“This is a fair and balanced approach as we move from the emergency stage of this pandemic to the recovery stage.
“The economy is now substantially reopened, and it is really encouraging to see businesses actively advertising for and hiring new staff.
“However, some jobs, unfortunately, will not return and some people may face redundancy. The new redundancy measure on reckonable service will provide further financial support to people in this difficult situation.
“Through the government’s Pathways to Work strategy we want to support people through training, further education and reskilling opportunities to give them the tools and most importantly the confidence to get back to work.”
Minister Michael McGrath TD said:
“The measures introduced to curtail the spread of Covid-19 brought great disruption to people’s livelihoods and businesses throughout the country. In response, the Government put in place far reaching and critical supports to save jobs and businesses. The Section 12A emergency provision was one of those measures introduced to protect employers.
“Due to the incredible efforts of everyone involved with the vaccination roll out we are now in a position to start unwinding the many restrictions that were in place to fight Covid-19. However, the period ahead is one of transition and businesses and workers still require Government support as we return to normality.
“That is why today we have announced further measures to help businesses and workers through this period. For workers who have been temporarily laid off during the pandemic the State will make a payment of up to €1,860 in order to compensate them for the reckonable service they would have lost as a consequence of being temporarily laid off. For employers who struggle to meet redundancy costs, they will be able to avail of support through the Social Insurance Fund”.
Once section 12A is lifted on 30 September next, workers will be enabled to trigger redundancy and to access redundancy payments in the usual way. In respect of this additional element of a redundancy payment, it is intended payments will become operational in the first half of 2022.
During 2020 and 2021, €38 billion has been provided for COVID-19 related supports for businesses. These have been vital in sustaining workers and businesses through the various levels of restrictions. The Economic Recovery Plan set out the Government’s intention to invest in businesses and workers; help people get back into work, training, or education; provide enhanced and more targeted support for sectors that may lag behind and invest in infrastructure and reforms that enhance our capability and long-term capacity for growth.
ENDS
Notes for Editor
Reckonable service - employees
“Reckonable service” is the service that is taken into account when calculating a redundancy lump sum payment. It is important to note that reckonable service is a separate and distinct matter from the qualification threshold. An individual must first meet statutory qualification criteria before becoming eligible to receive a lump sum. As matters stand, a period of lay-off within the final three years of service before redundancy is not allowable as reckonable for the purposes of the calculation of this payment. Furthermore, it is the employers’ responsibility to pay statutory redundancy payments in the first instance.
The Department of Enterprise, Trade and Employment has received legal advice to the effect that imposing the cost of the layoff period (if it were to be allowable as reckonable service) on employers would give rise to constitutional issues and is fraught with legal risk. Such an approach is also in direct conflict with the strategic aim of wider Government policy since the start of the pandemic to minimise financial hardship on businesses with a view to preventing permanent job losses.
Department of Enterprise, Trade and Employment (DETE)
The Department of Enterprise, Trade and Employment (DETE) plays a key role in implementing the Government’s policies of stimulating the productive capacity of the economy and creating an environment which supports job creation and maintenance. The Department has lead responsibility for Irish policy on global trade and inward investment and a remit to promote fair competition in the marketplace, protect consumers and safeguard workers.
For further information please contact the Enterprise Information Centre, infobusinesssupport@enterprise.gov.ie or (01) 631 2002.
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