Government criticised for taking six months to process redundancy payment rebates for SMEs

THE Government has been accused of double standards in its approach to the small business community by taking up to six months to process redundancy payment rebates for small to medium-sized enterprises.

The Small Firms Association (SFA) said yesterday that many SMEs are experiencing serious cashflow difficulties due to “government ineptitude” and warned that more jobs will be lost if the payment process is not overhauled.

“While on the one hand, theGovernment is emphasising the need to support small businesses’ cashflow and putting rightful pressure on the banks; on the other hand, it itself is adding substantially to the problem by holding out on money it owes to small businesses for as long as six months,” said SFA director Patricia Callan.

Under the current payment structure, employees with more than two years continuous service are entitled to a tax-free lump-sum payment on the termination of their employment — due to redundancy — of two weeks’ pay per year of service plus one bonus week. Of this, 60% can be reclaimed by employers from the social insurance fund, which is directly funded by employers’ PRSI contributions on an ongoing basis.

“Instead of a lengthening in process times, we expect to see the times speeded up — in an acknowledgement by Government that most small businesses, who are actually implementing redundancies are the very ones most desperate for cashflow. This is either Government ineptitude of the highest order, or a deliberate effort by the Government to smooth its own cashflow by delaying payments to small businesses. Either way, it demands immediate action by the Minister for Enterprise, Trade and Employment,” Ms Callan added.

As part of its pre-mini-budget submission to the Government, the SFA reiterated its call for a comprehensive support package to be put in place that will enable viable SMEs stay in business.