The 20 year-old cap on statutory redundancy payments is “completely out of sync” with current wage levels and needs to be updated in order to help those losing their jobs, Connect’s biennial conference heard over the weekend.
Delegates at the event in Athlone backed a motion calling for a campaign on the issue, which the union’s general secretary Paddy Kavanagh, said hit workers at a time they were already experiencing a “very traumatic period of their lives” due to the loss of their jobs.
Statutory redundancy is the minimum level of payment provided to eligible employees upon the loss of their jobs and is set at two weeks’ pay for every year of service plus one additional week’s pay. The weekly pay, however, is capped at €600 per week for the purposes of the calculation. That figure was set in 2004 and, even though the existing legislation obliges the Minister for Enterprise to take account of changes in average earnings recorded by the Central Statistics Office in specific sectors in any review of the payment, it has not changed in two decades.
Proposing a motion on the issue at the Connect conference over the weekend, delegate Terry Gregg, said that while the CSO recorded the average industrial wage in 2004 as €645.62 current data suggested the comparable figure would €1,014.69 per week by the end of this year.
“It is obvious that the statutory redundancy weekly calculation is completely out of sync with the average industrial wage and is severely disadvantaging workers who are losing their job and being made redundant,” he said as he called on conference to back the motion, which committed the union to campaigning for the cap to be increased to €1,015 per week. Connect represents craft workers across a wide range of sectors
“Many, if not most, redundancy situations involve a company not going out of business or indeed even experiencing a difficult period, rather they result from the reorganisation or rationalisation of profitable companies so they can create even greater revenues,” Mr Kavanagh said.
He said the union would pursue the issue until the link with the average industrial wage was restored.
While acknowledging the payment had not been updated in 20 years in the course of a recent response to a parliamentary question from Labour TD Ged Nash, however, the Minister for Enterprise, Peter Burke, said “there are no immediate plans for an increase”.
“A number of factors must be carefully balanced in any consideration of an increase to the €600 ceiling,” he said. “These include the rights of employees to a reasonable redundancy payment while also taking account of the potential increased costs to some businesses. Consultation with other Government departments, employer and employee representative groups and other relevant stakeholders would also be required.”
The Government was accused of double standards by Mr Nash. “We have heard all kinds of arguments by Fine Gael and Fianna Fáil that thresholds for inheritance tax for example should be amended to take account of the rising value of homes,” he said.
“However when it comes to amending the statutory cap for redundancy payments, then they dispense with that logic, when it suits. The inconsistency is obvious and the cap must be changed as a matter of urgency and in the interests of fairness and equity.”
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