Government bids to recover €80m statutory redundancy from employers

THE Government is trying to recover a staggering €80 million from employers who said they could not or would not pay out statutory redundancy to employees they were letting go.

In spite of the size of that figure — which has been mounting steadily, particularly in the last five years — the state has been repaid just €3.6m.

Under the Redundancy Payments Acts 1967-2007, the onus, in the first instance, is on the employer to pay the statutory redundancy entitlement to employees. After paying the monies, that employer is then entitled to claim back a 60% rebate on the figure paid out.

However, in cases of liquidations/receiverships or examinerships, or when the employer provides proof of inability to pay the redundancy entitlements to employees, the Government pays the lump sum directly to the employees from the Social Insurance Fund (SIF) and looks to recover 40% of the sum paid out, as that is the company’s share of the liability.

In cases where proof of inability to pay is not provided, or if the employer refuses to pay the lump sum, the Government refers the case to an Employment Appeals Tribunal to adjudicate on the matter. Where the EAT finds in favour of the state, the Government pays out the full amount from the SIF. It will look for 40% back from employers who could not provide proof of inability to pay and 100% back from the employers who refused to pay the entitlements in the first place.

According to figures obtained from the then Department of Enterprise Trade and Employment by Fine Gael TD Deirdre Clune, the Social Insurance Fund has been hit for hundreds of millions of euro each year. In 2005, the figure was €149,173,194. Last year it was an estimated €335,861,716.

The figures obtained by Ms Clune showed that at the end of 2009 the Government had recovered just €3,589,802 of the money employers owed it either because they could not or would not pay the statutory redundancy. They showed €78,673,864.61 was still outstanding.

“These figures, released to me in the Dáil, show the Government has almost lost control of the redundancy payment system,” said Ms Clune. “It is now in danger of collapsing under the weight of new redundancy payment claims unless the new Minister for Enterprise, Trade and Innovation, Batt O’Keeffe, breaks with the policy of his predecessor, Mary Coughlan, and accepts that a serious problem exists and starts to tackle it.”