ISME seeks redundancy cut derogation

ISME wants the Government to effectively exclude small firms from the redundancy rebate reduction scheme, as the resulting increase in costs will have a “devastating” effect on indigenous firms.

Before Christmas, the Government announced that it was slashing payments to employers announcing redundancies; reasoning that it would go some way to stopping big firms receiving refunds from the state when they decide to leave the country. Recent examples of this have been Talk-Talk, Dell and SR Technics. Larger firms have been able to claim back 60% of their statutory redundancy payments, but that rebate has been cut to just 15%.

However, ISME claims that the cut is simply increasing the costs of redundancy for most firms by 112% and is having a “devastating” effect on the SME community.

“The decision dramatically increases the net cost of statutory redundancy, an additional cost that is untenable and unsustainable and, ironically, threatens other positions within a company. The change is, effectively, another tax on jobs, a short-sighted move that will have the greatest impact on small and medium Irish enterprises, which don’t have the option to ‘up-sticks’ and leave,” said ISME chief executive, Mark Fielding.

A survey undertaken by the small firms lobby group shows nearly 80% of SMEs expect the cutting of the redundancy rebate to negatively impact on their future employment decisions, while 94% of respondents said they wish to see a derogation of the new Government policy for small and medium-sized firms.

Mr Fielding said that the derogation for SMEs and a reduction in the actual statutory payments to British levels, are the least the Government can do, and “will go some way to alleviating the substantial burden that has been placed on already struggling businesses”.