The extension is to help avoid further permanent job losses during the pandemic
The legal right of employees to demand redundancy after a certain period of lay-off has been suspended for a fifth time until 31 March 2021, following a Cabinet decision today.
The Department of Enterprise, Trade and Employment said the extended suspension would help to avoid further permanent job losses at a time when 350,000 people are receiving the Pandemic Unemployment Payment, and 41,200 employers have registered for the Employment Wage Subsidy Scheme.
“The Government agreed an extension of the end-date was required as crystalising a large number of redundancy claims now could cause hundreds of businesses to fail thus causing even more jobs to be lost. It also means that the redundancy extension date will be aligned with the date on which the PUP and EWSS is due to end,” the department stated.
This will bring to a year the period during which workers have been deprived of their right to claim a redundancy lump sum and to seek alternative employment after being laid off.
Tánaiste and Minister for Enterprise Trade and Employment Leo Varadkar acknowledged the difficulties both businesses and their staff had faced this year,
He added that the decision to suspend redundancy entitlements had been taken in the best interests of society as a whole to avoid triggering further business failures and job losses.
“I know this news will be really disappointing for some staff who were hoping to take redundancy before the end of the year. This was a really difficult decision for the Government to make and not one which was taken lightly,” Mr Varadkar said.
He forecast that the first quarter of 2021 will be particularly challenging for many businesses dealing not just with considerable trading difficulties due to Covid-19, but also with the added disruption and uncertainty of Brexit.
“We want to help businesses to survive this period so that we can protect as many jobs as possible and get people back to work as soon as it is safe to do so,” he said.
When the pandemic struck last March, there were fears of hundreds of thousands of sudden job losses – which could have triggered a tsunami of demands for redundancy lump sums.
That in turn would have had serious consequences both for the cashflow of individual employers, and for the State’s Social Insurance Fund where employers could not afford to pay.
To avoid this doomsday scenario, the March Covid-19 emergency legislation contained a provision which suspended the right of laid-off employees to demand redundancy, which has now been extended to next March.
Under the Redundancy Payments Act 1967, employees who have been laid off for at least four weeks have the right in certain circumstances to demand that their employer make them redundant – even where the employer has not formally done so.
If the employer cannot guarantee 13 weeks of full-time work within four weeks, the employee automatically becomes entitled to redundancy.
This was to avoid workers being left in indefinite “limbo”, where they were neither working and earning their full salary, nor able to terminate the employment, receive a redundancy lump sum, and move on to a new job.
Because laid-off workers (e.g. those claiming the Pandemic Unemployment Payment) have not been formally made redundant, the Covid-19 emergency legislation makes it impossible for them to force the employer or the State to pay the lump sum.
In addition, many workers fear that if they take an alternative job and come off welfare, they will lose out on their entitlement to what can be a significant termination payment from their pre-Covid employer.
However, earlier this year the Department of Social Protection confirmed to RTÉ News that if an employee chose to take another job during the period of temporary layoff, this did not affect their accrued redundancy entitlement – provided they remain available to resume work with the original employer if requested to do so.
It also noted that there is no provision in law preventing a person on temporary layoff from seeking alternative employment.
The basic statutory redundancy entitlement is two weeks per year of service capped at €600 per week plus a week – and while many workers in this unfortunate situation would hope an employer would boost their lump sum with an ex gratia element, there is no obligation on the employer to do so.
A worker employed by a company for ten years on a salary of €600 per week would be entitled to a lump sum of over €12,000, rising to over €24,000 for 20 years service, and €36,000 for 30 years service