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Redundancy scheme announced for workers laid off during pandemic

The State will make a special payment of up to a maximum of €1,860 under the scheme.

Image: Sam Boal

Updated Sep 21st 2021, 1:26 PM

UNDER NEW PLANS a once-off payment will be made available for employees who were made redundant while in receipt of social welfare payments – including the Pandemic Unemployment Payment (PUP) – during the pandemic.

Workers who were temporarily laid off or put on short-time work have been unable to claim redundancy since the introduction of the Section 12A provision of the Redundancy Payments Act 1967 in March 2020.

The provision, which will be lifted after 30 September, was introduced to reduce the pressure on employers “who were already struggling and to reduce the number of insolvencies and permanent job losses over the course of the pandemic”.

Tánaiste Leo Varadkar said “it’s impossible to know” how many jobs will be gone but the government believed the time was right to remove the emergency provision as 90% of the population over 16 are now fully vaccinated and the vast majority of restrictions are being lifted from 22 October.

The plans were discussed at Cabinet today and will require legislation which the government hopes to have passed by Christmas. 

The plan will “ensure workers aren’t left short and employers aren’t burdened with heavy costs,” Varadkar said, adding that he State will make a special payment of up to a maximum of €1,860 to workers who have lost out on reckonable service while temporarily laid off over the course of the pandemic and who are made redundant.

“Reckonable service” refers to the service that is taken into account when calculating a redundancy lump sum payment.

Varadkar also said that the period an employee was on PUP will be counted as part of the calculation of their redundancy entitlements due to “the very unusual circumstances caused by Covid-19″.

The statutory redundancy payments will be taken from the Social Insurance Fund on behalf of employers who are unable to meet their financial obligations in paying statutory redundancy to their employees.

The government said a “flexible and discretionary approach” will be taken in relation to repayment of the redundancy debt and in many cases the debt can be repaid over a number of years.

“I want to reassure workers who have spent the last few months on the PUP or another job seekers payment because of the pandemic, that in situations of redundancy we will provide you with a payment up to a maximum of €1,860, to compensate for the reckonable service that you have lost due to no fault of your own,” said Varadkar.

“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 number of people receiving the PUP fell to 114,600 this week, the lowest number since the scheme was introduced in March 2020.

Varadkar said there are only “estimates” as to how many people will be made redundant when government Covid supports for businesses come to an end. 

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“We just don’t know for sure to be honest how things are going to crystallise over the next few months, but we have estimates based on it being 24,000 people, 40,000 people, 56,000 people, we can provide them for you but it’s just impossible to know how many redundancies will crystallize the next few months,” he said. 

We do have a situation where there is still over 100,000 people on the PUP, some of them are kind of caught in limbo, they might like to take up  new employment elsewhere but if they do they would forfeit their redundancy payment and you can understand why they would not do that. This will change that calculation for them and they’ll be able to say to their employer ‘either take me back on or essentially make redundant to release me’. And that’s essentially what this does.

Cuts of €50 to the three PUP rates also came into effect this week, seeing the rates fall to €300, €250 and €203 respectively.

From late October, anyone on the €203 rate, the standard jobseeker’s rate, will be moved to the jobseekers’ payment and will have to demonstrate that they were seeking work or doing training.

Two further PUP rate reductions are slated for 16 November and 8 February ahead of the scheme’s expected closure at the end of February 2022.

The PUP figures published this week are in addition to the 179,761 people who were on the Live Register at the end of August.

- With reporting by Rónán Duffy

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