Study reveals differences in redundancy claim settlements

AMID the ever-rising numbers of people joining the dole queues, a study has exposed discrepancies in the amounts companies are willing to pay in redundancy when letting their staff go.

Industrial Relations News (IRN) has compiled a review of severance claims settlements for the first seven months of this year.

These are amounts that companies have paid after unions have referred their redundancy packages to a third party.

The study came days after Element Six initially offered staff in Shannon just one week’s pay per year of service, plus statutory entitlement. That compared with the six weeks’ pay per year of service offered six months earlier.

According to the IRN statistics, the discrepancies appear to be on an industry -by-industry basis.

It found some of the highest terms were in non-union multinationals such as Dell, where workers were given six weeks’ pay per year of service including statutory entitlement, with a cap of 104 weeks, plus a choice of inclusion of shift allowances worth 12%-20% on top of basic pay or the extension of health insurance and life assurance for six extra months.

In the engineering and electronics sectors the average severance pay was 5.5 weeks’ pay per year of service, inclusive of statutory entitlement.

“Redundancies in the food and drink sector were less numerous, with smaller deals in most cases, attracting an average of over six weeks’ pay per year of service (inclusive of statutory),” said IRN. “The largest collective redundancies were in the drinks sector, where Bulmers, Britvic and Beamish & Crawford cut almost 400 jobs between them. The Beamish package included a significant contribution towards maintaining the pension scheme after the closure of the Cork-based brewery.”

In the pharmaceutical and healthcare sector, the average redundancy payment was over seven weeks’ pay per year of service, inclusive of statutory.

The number of people who faced redundancy in the first six months of this year (42,724) was 2,000 more than in the whole of 2008 (40,607).

Issues remain over company pension schemes and whether or not workers will receive their full pension entitlement if the scheme falls into insolvency.

Measures to address that shortfall are the subject of stalled negotiations between the Government and the social partners and until proposals are agreed the uncertainty will remain.