State redundancy claims fall by 90%

The economic recovery has seen a more than 90% reduction in the last five years in the number of people having to claim redundancy from the State because their employer was in financial difficulty or insolvency.

State redundancy claims fall by 90%

In 2011, there were 49,762 claims to the State under the redundancy payments scheme and that saw €312m deducted from the country’s social insurance fund (SIF).

The number of claims has been falling consistently since then and, in 2016, the number was 4,347 at a cost of €31m to the exchequer.

The Redundancy Payments Acts give a minimum entitlement for employees who are made redundant and are eligible — two weeks’ statutory redundancy payment for every year of service, plus a bonus week.

Ordinarily, it is the responsibility of the employer to make statutory redundancy payments to employees who qualify under the legislation.

However, in cases of liquidation, the statutory lump sum payment is paid in full to the employee from the Social Insurance Fund (SIF) through the Redundancy Payments Scheme.

In such cases, the Department of Social Protection becomes a preferential creditor of the liquidation.

In cases where the employer satisfies the department that it is in financial difficulty and unable to make the redundancy payment, the statutory lump sum is paid in full to the employee from the SIF.

In such cases, a debt is raised against the employer and the department seeks to recover the monies paid from the SIF.

“The ending of the economic crisis and the subsequent improvement in the economy have led to a significant decrease in the number of claims for redundancy payments,” said Social Protection Minister Leo Varadkar.

“In addition, in 2013, a legislative change abolished rebate payments to employers who were in a position to pay statutory redundancy payments.”

He said he was confident the continued improvement would keep the number of claimants at a “low level”.

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