Cost of redundancy rebates falls to €49.5m

The decision by the Government to no longer pay a rebate to employers for statutory redundancy payments has seen the cost of the refunds fall from €373m three years ago to just €49.5m last year.

Cost of redundancy rebates falls to €49.5m

Figures released by Joan Burton, the social protection minister, show the State paid out almost €470m from the Social Insurance Fund.

That was made up of some €373m in rebates to employers as well as almost €97m in lump sum statutory redundancy payments to employees.

Fast-forward three years to 2013 and the total fell to just over €126m — €49.5m in employer rebates and €76.6m in lump sum payments to employees.

The State pays out the statutory redundancy to workers when their employer proves an inability to make the payments.

The Department of Social Protection insisted the money is considered a debt against the employer which it will try to recover.

Up to Jan 2012, an employer making statutory redundancy payments to its former employees was able to claim back a 60% rebate from the exchequer.

However, the budget at the end of 2011 reduced that percentage to 15%. Then in the budget at the end of 2012, it was wiped out completely for any redundancies occurring after Jan 1, 2013.

The only reason there was any rebate in 2013 was because employers had six months from the date on which they made the redundancy payment to claim the rebate so rebate claims continued to be received and paid last year.

The rebate has seen huge sums of money paid out by the State in recent years, more than €1.3bn since 2007.

Head of industrial relations at employers’ body Ibec, Maeve McElwee, said the eradication of the rebate had caused difficulties for employers.

She said redundancy rates and ex-gratia payments in Ireland had almost always been in excess of the statutory minimum and were high by international standards, but she said they had been built around the expectation of the rebate that employers could then expect from the exchequer.

Furthermore, the number of redundancies had been higher in recent years due to the financial challenges faced across the economy.

She said the reality now was that, with the reduction and then ending of the rebate, the entirety of the cost was having to be borne by employers.

In a number of cases, where employers had tried to reduce the package on offer, they had come in for criticism.

However, Ms McElwee said Ibec had found industry standards in general had not fallen and employers were generally continuing to maintain the redundancy payment levels.

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