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1 Click here for Explanatory Memorandum AN BILLE UM ÍOCAÍOCHTAÍ IOMARCAÍOCHTA 2003 REDUNDANCY PAYMENTS BILL 2003 Mar a tionscnaíodh As initiated ARRANGEMENT OF SECTIONS Section 1. Short title, commencement, collective citation and construction. 2. Interpretation. 3. Expenses. 4. section 2 of (Interpretation). 5. section 4 of (Classes of persons to which this Act applies). 6. section 7 of (General right to redundancy payment). 7. section 9 of (Dismissal by employer). 8. section 17 of (Notice of proposed dismissal for redundancy). 9. section 25 of (Employment wholly or partly abroad). 10. section 39 of (Redundancy Appeals Tribunal and appeals and references thereto). 11. Transitional arrangements. 12. Enhanced redundancy payments. 13. Schedule 3 to (Amount of lump sum). 14. Increase in penalties for certain offences. 15. section 10 of Redundancy Payments Act [No. 21 of 2003]

2 Section 16. section 6 of Protection of Employees (Employers Insolvency) Act Repeal of section 17(4) of Employment Equality Act Acts Referred to Adoptive Leave Act , No. 2 Carer s Leave Act , No. 19 Civil Service Regulation Act , No. 46 Employment Agency Act , No. 27 Employment Equality Act , No. 21 Industrial Relations Act , No. 26 Local Government Act , No. 37 Maternity Protection Act , No. 34 National Minimum Wage Act , No. 5 Parental Leave Act , No. 30 Protection of Employees (Employers Insolvency) Act , No. 21 Protection of Employees (Employers Insolvency) Acts 1984 to 2001 Redundancy Payments Act , No. 21 Redundancy Payments Act , No. 20 Redundancy Payments Act , No. 7 Redundancy Payments Acts 1967 to 2001 Social Welfare (Consolidation) Act , No. 27 2

3 AN BILLE UM ÍOCAÍOCHTAÍ IOMARCAÍOCHTA 2003 REDUNDANCY PAYMENTS BILL 2003 BILL entitled 5 10 AN ACT TO AMEND AND EXTEND THE REDUNDANCY PAYMENTS ACT 1967, TO AMEND THE REDUNDANCY PAYMENTS ACT 1971, THE PROTECTION OF EMPLOYEES (EMPLOYERS INSOLVENCY) ACT 1984, THE SOCIAL WELFARE (CONSOLIDATION) ACT 1993 AND THE EMPLOYMENT EQUALITY ACT 1998 AND TO PROVIDE FOR RELATED MATTERS. BE IT ENACTED BY THE OIREACHTAS AS FOLLOWS: (1) This Act may be cited as the Redundancy Payments Act (2) This Act shall come into operation on such day or days as the Minister may appoint by order or orders generally or with reference to any particular purpose or provision and different days may be appointed for different purposes or different provisions. (3) This Act and the Redundancy Payments Acts 1967 to 2001 may be cited together as the Redundancy Payments Acts 1967 to 2003 and shall be construed together as one. Short title, commencement, collective citation and construction. 2. (1) In this Act Interpretation. Minister means the Minister for Enterprise, Trade and Employment; 25 means the Redundancy Payments Act (2) In this Act (a) a reference to a section is to a section of this Act, unless it is indicated that reference to some other enactment is intended, and 30 (b) a reference to an enactment shall be construed as a reference to that enactment as amended, adapted or extended by or under any subsequent enactment including this Act. 3

4 Expenses. 3. Section 5 of the Social Welfare (Consolidation) Act 1993 is amended by inserting the following after subsection (5): (6) There shall be paid to the Minister for Enterprise, Trade and Employment out of the Social Insurance Fund, at such times and in such manner as the Minister for Finance may direct, the 5 sums that the Minister for Enterprise, Trade and Employment may estimate, on the basis that may be agreed upon between the Minister for Enterprise, Trade and Employment, the Minister and the Minister for Finance, to be part of the expenses incurred in carrying into effect 10 (a) the Protection of Employees (Employers Insolvency) Acts 1984 to 2001, and (b) the Redundancy Payments Acts 1967 to 2003, and any sums so paid shall be appropriated in aid of moneys 15 provided by the Oireachtas for carrying into effect the Acts referred to in paragraphs (a) and (b).. section 2 of (Interpretation). 4. Section 2(1) of the is amended (a) by inserting the following after the definition of business : contract of employment means 20 (a) a contract of service or apprenticeship, and (b) any other contract whereby an individual agrees with another person, who is carrying on the business of an employment agency within the meaning of the Employment Agency Act and is acting in the course of that business, to do or perform personally any work or service for a third person (whether or not the third person is a party to the contract), whether the contract is express or implied and, if express, 30 whether it is oral or in writing and references to contract shall be construed accordingly;, (b) by substituting the following for the definition of employee : employee means a person of 16 years and upwards 35 who has entered into or works under (or, where the employment has ceased, entered into or worked under) a contract of employment and references, in relation to an employer, to an employee shall be construed as references to an employee employed by that employer and, 40 for the purposes of this Act, a person holding office under, or in the service of, the State (including a civil servant within the meaning of the Civil Service Regulation Act 1956) shall be deemed to be an employee employed by the State or Government, as the case may 45 be, and an officer or servant of a local authority, a harbour authority, the Eastern Regional Health Authority, the Northern Area Health Board, the East Coast Area Health Board or the South-Western Area Health Board, a health board or vocational education committee shall 50 be deemed to be an employee employed by the authority, 4

5 health board or vocational education committee, as the case may be;, (c) by substituting the following for the definition of employer : employer means, in relation to an employee, the person with whom the employee has entered into or for whom the employee works under (or, where the employment has ceased, entered into or worked under) a contract of employment, subject to the qualification that the person who under a contract of employment referred to in paragraph (b) of the definition of contract of employment is liable to pay the wages of the individual concerned in respect of the work or service concerned shall be deemed to be the individual s employer;, and (d) by inserting the following after the definition of lay-off : local authority means a county council, a city council or a town council for the purposes of the Local Government Act 2001; Section 4 of the is amended by substituting the following for subsection (2): (2) This Act shall apply to an employee employed in employment which would be insurable for all benefits under the Social Welfare (Consolidation) Act 1993 but for the fact that the employment concerned is an excepted employment by virtue of paragraph 2, 4 or 5 of Part II of the First Schedule to that Act.. section 4 of (Classes of persons to which this Act applies) Section 7(2) of the is amended by inserting for one or more reasons not related to the employee concerned after if. 7. Section 9(1) of the is amended by substituting the following for paragraph (b): (b) where, under the contract under which the employee is employed by the employer the employee is employed for a fixed term or for a specified purpose (being a purpose of such a kind that the duration of the contract was limited but was, at the time of its making, incapable of precise ascertainment), that term expires or that purpose ceases without being renewed under the same or similar contract, or. section 7 of (General right to redundancy payment). section 9 of (Dismissal by employer). 8. Section 17 of the is amended (a) in subsection (1), by deleting: and send to the Minister a copy of that notice, section 17 of (Notice of proposed dismissal for redundancy). 5

6 (b) in subsection (2), by substituting the following for paragraphs (b) and (c): (b) the method of service of the notice., and (c) by inserting the following after subsection (2): 5 (2A) A notice under this section, a redundancy certificate and a claim for a rebate under section 36 may be combined in one document.. section 25 of (Employment wholly or partly abroad). 9. Section 25 of the is amended (a) in subsection (2), by substituting the employee was 10 insurable for all benefits under the Social Welfare (Consolidation) Act 1993 or would have been insurable for all such benefits but for the fact that the employment concerned was an excepted employment by virtue of paragraph 2, 4 or 5 of Part II of the First Schedule to that 15 Act and the employee for he was domiciled in the State and, and (b) by inserting the following after subsection (2): (2A) An employee who under a contract of employment has worked outside the State and was working in 20 the State for at least two years immediately prior to the date of termination of the employment concerned shall be entitled to redundancy payment in respect of all his employment with the employer concerned.. section 39 of (Redundancy Appeals Tribunal and appeals and references thereto). Transitional arrangements. 10. Section 39(2) of the is amended in paragraph 25 (b) by inserting who shall be practising barristers or solicitors of at least 5 years standing after vice chairmen. 11. (1) Paragraph 1 of Schedule 3 to the is amended (a) in subparagraph (a), by substituting two weeks for one- 30 half, and (b) in subparagraph (b), by inserting two weeks of after product of. (2) On the commencement of section 12 this section shall cease to have effect. 35 Enhanced redundancy payments. 12. Schedule 3 to the is amended by substituting the following for paragraphs 1, 2 and 3: AMOUNT OF LUMP SUM 1. (1) The amount of the lump sum shall be equivalent to the aggregate of the following: 40 6

7 5 10 (a) the product of two weeks of the employee s normal weekly remuneration and the number of years of continuous employment from the date on which the employee attained the age of 16 years with the employer by whom the employee was employed on the date of dismissal or by whom the employee was employed when the employee gave notice of intention to claim under section 12, and (b) a sum equivalent to the employee s normal weekly remuneration. (2) In calculating the amount of the lump sum, the amount per annum to be taken into account shall be that obtaining under section 4(2) of the Redundancy Payments Act 1979 at the time the employee is declared redundant If the total amount of reckonable service is not an exact number of years, the excess days shall be credited as a proportion of a year. 3. (a) For the purpose of ascertaining, for the purposes of paragraph 1, the number of years of continuous employment, the number of weeks in the period of continuous employment shall be ascertained in accordance with this Schedule and the result shall be divided by 52. (b) In ascertaining the number of weeks in the period of continuous employment, a week which under this Schedule is not allowable as reckonable service shall be disregarded Schedule 3 to the is amended (a) by substituting the following for paragraph 5: 5. Where an employee s period of service has been interrupted by any one of the following Schedule 3 to (Amount of lump sum). (a) any period by reason of (i) lay-off, (ii) holidays, (iii) service by the employee in the Reserve Defence Forces of the State, (iv) any cause (other than the voluntary leaving of the employment concerned by the employee) not mentioned in clauses (i) to (iii) but authorised by the employer, (b) a period during which an adopting parent was absent from work while on adoptive leave or additional adoptive leave under the Adoptive Leave Act 1995, 7

8 (c) a period during which an employee was absent from work while on (i) additional maternity leave, protective leave or natal care absence within the meaning of the Maternity Protection Act , (ii) parental leave or force majeure leave within the meaning of the Parental Leave Act 1998, or (iii) carer s leave within the meaning of the 10 Carer s Leave Act 2001, (d) any period during which an employee was absent from work because of a lock-out by the employer or because the employee was participating in a strike, whether such absence 15 occurred before or after the commencement of this Act, continuity of employment shall not be broken by such interruption whether or not notice of termination of the contract of employment has been given., 20 (b) by substituting the following for paragraph 8: 8. During, and only during, the 3 year period ending with the date of termination of employment, none of the following absences shall be allowable as reckonable service 25 (a) absence in excess of 52 consecutive weeks by reason of an occupational accident or disease within the meaning of the Social Welfare (Consolidation) Act 1993, (b) absence in excess of 26 consecutive weeks by 30 reason of any illness not referred to in subparagraph (a), (c) absence by reason of lay-off by the employer. 8A. The following absences shall be allowable as reckonable service: 35 (a) a period during which an adopting parent was absent from work while on adoptive leave under the Adoptive Leave Act 1995, (b) a period during which an employee was absent from work while on 40 (i) additional maternity, protective leave or natal care absence within the meaning of the Maternity Protection Act 1994, (ii) parental leave or force majeure leave within the meaning of the Parental Leave 45 Act 1998, or 8

9 (iii) carer s leave within the meaning of the Carer s Leave Act 2001, (c) any absences not mentioned in paragraphs (a) or (b) but authorised by the employer., 5 and (c) by substituting the following for paragraph 10: During, and only during, the 3 year period ending with the date of termination of employment, absence from work by reason of a strike in the business or industry in which the employee concerned is employed shall not be allowable as reckonable service The, as amended, is amended by substituting (a) in section 17(3), \3,000 for 300, (b) in section 18(4), \3,000 for 300, and Increase in penalties for certain offences. 15 (c) in section 36(3), \3,000 for Section 10 of the Redundancy Payments Act 1971 is amended in paragraph (c) by inserting or the national minimum hourly rate of pay declared by order under the National Minimum Wage Act 2000 after Industrial Relations Act 1946,. section 10 of Redundancy Payments Act The Protection of Employees (Employers Insolvency) Act 1984 is amended (a) in section 6(2), by substituting the following for subparagraph (iii): (iii) at the election of the employee, either (I) any amount which an employer is required to pay, by virtue of an award under section 12 of the Act of 1973 made not earlier than the commencement of the relevant period, either for the period of notice required by section 4 of the Act of 1973 or by reason of a failure by that employer to give the notice required by the said section 4, or (II) any unpaid normal weekly remuneration certified by the relevant officer as being the amount of normal weekly remuneration due to the employee in lieu of the statutory notice prescribed in section 4 of the Act of 1973,, (b) in section 6(9), by substituting in paragraph (a) subparagraph (iii)(i), for subparagraph (iii), and section 6 of Protection of Employees (Employers Insolvency) Act

10 (c) in section 6(9), by inserting the following after paragraph (a): (aa) in relation to a debt referred to in subparagraph (iii)(ii), the date of termination of employment,. Repeal of section 17(4) of Employment Equality Act Section 17(4) of the Employment Equality Act 1998 is 5 repealed. 10

11 Click here for Bill AN BILLE UM ÍOCAÍOCHTAÍ IOMARCAÍOCHTA 2003 REDUNDANCY PAYMENTS BILL 2003 EXPLANATORY AND FINANCIAL MEMORANDUM Purpose of the Bill The Bill provides for the amendment and extension of the Redundancy Payments Act 1967, the amendment of the Redundancy Payments Act 1971, the Protection of Employees (Employers Insolvency) Act 1984 to 2001, the Social Welfare (Consolidation) Act 1993 and the Employment Equality Act 1998 and to provide for related matters. Provisions of the Bill Section 1 is a standard provision, which provides for the short title of the Act and the collective citation of the Act with other relevant Acts and the standard commencement provisions. Section 2 provides definitions of terms used in the Act. Section 3 provides that the Social Insurance Fund may cover the administration costs of the Redundancy and Insolvency schemes. Section 4 provides for the amendment of section 2(1) of the Principal Act by inserting up to date definitions of contract of employment, employee and employer. These definitions are similar to those given in the Protection of Employees (Part-Time Work) Act 2001 and other pieces of labour legislation i.e. Organisation of Working Time Act 1997 and the Carer s Leave Act Section 5 provides for the amendment of section 4 of the Principal Act, which deals with the insurability of an employee. The purpose of amending this section is to add clarity to the insurability requirements in line with the Social Welfare Acts and the Protection of Employees (Part-Time Work) Act Section 6 provides for the amendment of section 7(2) of the Principal Act. The Employment Appeals Tribunal when dealing with redundancy cases has long been of the view that redundancy is impersonal. According to the Tribunal in St. Ledger V Frontline Distributors Ltd UD56/94 the statutory definition of redundancy has two important characteristics, namely impersonality and change. This section is designed to provide certainty in this regard. Section 7 provides for the amendment of section 9(1)(b) of the to include fixed purpose contracts; when the fixed purpose contract ceases there is a redundancy situation. Section 8 provides for the amendment of section 17 of the Principal Act. The position at present is that the three forms RP1, RP2 and RP3 are the main forms used for statutory redundancy. They contain 1

12 a lot of repetition and will be amalgamated into one form: this one form will be the basis for any rebate/lump sum claim. Section 9 provides for the amendment of section 25 of the Principal Act to include an employee who started work in an employment abroad, is transferred to the company or associated company in this jurisdiction, works here for at least two years and is subsequently made redundant while working here, he will be entitled to statutory redundancy for his entire service from the date of commencement of his employment in the company abroad. Section 10 provides for the amendment of section 39(2) of the Principal Act to allow for Vice-chairmen of the Employment Appeals Tribunal to be practising barristers or solicitors of 5 years standing at least. Section 11 provides for the amendment of paragraph 1, subparagraph (a) of Schedule 3 to the by substituting two weeks for one-half and subparagraph (b) by inserting after product of two weeks of. These amendments are known as Transitional Arrangements, which will allow for the payments of increased statutory redundancy levels as soon as the Act comes into force following minor changes to the existing IT system. These arrangements will cease to have effect on the commencement of section 12. Section 12 provides for the amendment of Schedule 3 to the Principal Act by substituting new paragraphs for paragraphs 1, 2 and 3 to allow for enhanced redundancy payments of 2 weeks pay per year of service plus one extra week s pay. Any excess days will be credited as a proportion of a year. These arrangements will come into force when a new IT system becomes fully operational. Section 13 provides that continuity of service is preserved even when there are certain breaks in employment. It also provides that certain breaks in service are reckonable in the calculation of a lump sum except breaks occurring in the 3 year period prior to the date of termination of employment. Section 14 provides for penalties that may be imposed on people who defraud the system. Section 15 provides that the minimum rates of pay laid down in the National Minimum Wage Act 2000 as updated, be taken into account when calculating a statutory redundancy lump sum. Section 16 provides for the amendment of section 8 of the Protection of Employees (Employers Insolvency) Act 1984 to At present, where a worker in an insolvent firm has not received statutory notice, it is necessary to take the case to the Employment Appeals Tribunal, to determine the Minimum Notice entitlement. In order to streamline the process and relieve pressure on the Employment Appeals Tribunal it is proposed to allow these employees to submit claims to the liquidator/receiver without having to go to the Employment Appeals Tribunal, thereby diverting these cases from the Tribunal and ensuring a better service. (The Employment Appeals Tribunal was established under the Redundancy Payments Act 1967.) Section 17 provides for the repeal of section 17(4) of the Employment Equality Act This section exempted the existing calculation of a statutory redundancy lump sum, which differentiates 2

13 between service under and over the age of 41, from the provisions of the Employment Equality Act Financial and Staffing Implications Social Insurance Fund When the improved statutory redundancy payments come into operation it is estimated that a full year s cost of payments to the Social Insurance Fund (based on the 2002 level of redundancies at c. 24,000) will be in the region of \149 million. This is an increase of \96 million in the annual cost to bring the new enhanced rates into effect. Administrative implications An amendment of the redundancy IT system will be required to implement the full range of changes set out in the new Bill at a cost in the region of \1 million. It is anticipated that the new system, when it is fully operational, will simplify administration especially for employers. It will also bring improved efficiencies in administration by the Department. These administration efficiencies in the Department will arise from: The amalgamation of the three main input forms will be made possible by the new legislation this will reduce the amount of data entry and checking that will be required. The calculation of redundancy entitlement will be simpler this will reduce errors and queries. The use of e-government to submit claim forms should yield further economies in data entry costs. The cost of administration (salaries and overheads) of the redundancy scheme was around \1.3m in The extent of the administrative savings, which will be achieved with the new IT system, will be worked out over the coming months in conjunction with the outline specification of the new IT system. At this stage it is clear that the potential savings are significant. Section 4 of the Bill provides that the administrative costs of redundancy and insolvency be met from the Social Insurance Fund by means of an Appropriation in Aid to the Vote of the Department of Enterprise, Trade and Employment. This would provide greater accounting transparency, in that all costs (payments as well as administration) would be funded by the SIF. Detailed arrangements have been agreed between the Departments of Enterprise, Trade and Employment, Finance and Social and Family Affairs to implement these changes. An Roinn Fiontar, Trádála agus Fostaíochta, Bealtaine, 2003 Wt /03. Cahill. (X44444). Gr