The Government has estimated that up to 56,000 lay-offs could be “crystallised” in a worst case scenario following its decision to restore workers’ rights to claim redundancy benefits after being laid-off from the end of this month.
Tánaiste Leo Varadkar said restoring these rights would cost between €30 million and €130 million.
The right to demand redundancy payments was paused due to fears there would be a large number of applicants during the Covid-19 pandemic and that the need to pay out would endanger the viability of companies.
However, the suspension of the right is to be lifted from September 30th and employees will again be permitted to seek such payments if laid-off or placed on short-term working for a period.
While Mr Varadkar said it was “just impossible” to be certain how many redundancies might follow, the costs had been estimated based on 24,000, 40,000 or 56,000 lay-offs arising.
“We hope it’s going to be at the lower end, my officials say to me they think the lower end estimate is more likely, but for budgetary reasons we have to prepare for the possibility that the number of redundancies crystallising will be greater than we currently project,” he said.
Special payment
The Government is to provide a special payment to ensure those workers who had to rely on the Pandemic Unemployment Payment (PUP) or other jobseekers’ payments during the pandemic will not lose out on part of any redundancy entitlement for this period.
The move, agreed at Cabinet on Tuesday, will apply until 2024 and a maximum payment of €1,860 per worker will be made. Employers will be able to get a loan from the Social Insurance Fund to help meet their obligations, Mr Varadkar said. The payment will be available in the first half of next year.
The Tánaiste said a similar issue with redundancies was likely to occur when the Employment Wage Subsidy Scheme was phased out.
“We just don’t know how many of those jobs will be viable without the wage subsidy scheme, but these were only ever temporary measures and they have to be phased out at some stage.”
Minister for Public Expenditure Michael McGrath said: “It would be very wrong having denied people the opportunity to trigger redundancy over the last 18 months to then also deny them the right to redundancy payments.”
He said, however, that it was the right time to do so as “the economy has essentially fully reopened and there is a strong economic recovery underway”.
‘Flexible’
The special payment aims to address concerns raised by trade unions and employment lawyers during the pandemic that thousands of workers could potentially lose out on redundancy money if their employment was terminated in the months or years ahead because time spent claiming the PUP did not count when calculating entitlements.
“Our objective here is to ensure workers aren’t left short and employers aren’t burdened with heavy costs,” Mr Varadkar said. “I also know many businesses are still struggling to get back on their feet and I want to assure them that the Social Insurance Fund is available to help if an employer is unable to pay and we will be very flexible when it comes to repayments.”
The Government said “a flexible and discretionary approach will be taken in relation to recovery of the redundancy debt and in many cases the debt can be repaid over a number of years”. Details of how scheme will work have not yet been set out.
PUP figures
Meanwhile, the Department of Social Protection said that 110,700 people would receive the PUP this week, a fall of 3,842 on last week. This is in addition to the 179,761 people who were on the live register at the end of August.
Minister for Social Protection Heather Humphreys said there were now about 500,000 fewer people receiving the pandemic unemployment payment that at the peak of the scheme in April and May of last year.
