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Explanatory Memorandum

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AN BILLE UM IÓCAIÓCHTAI´ IOMARCAIÓCHTA 2003 REDUNDANCY PAYMENTS BILL 2003

———————— Mar a tionscnaı´odh As initiated ———————— ARRANGEMENT OF SECTIONS Section

1. Short title, commencement, collective citation and con-struction.

2. Interpretation.

3. Expenses.

4. Amendment of section 2 of Principal Act (Interpretation).

5. Amendment of section 4 of Principal Act (Classes of persons to which this Act applies).

6. Amendment of section 7 of Principal Act (General right to redundancy payment).

7. Amendment of section 9 of Principal Act (Dismissal by employer).

8. Amendment of section 17 of Principal Act (Notice of pro-posed dismissal for redundancy).

9. Amendment of section 25 of Principal Act (Employment wholly or partly abroad).

10. Amendment of section 39 of Principal Act (Redundancy Appeals Tribunal and appeals and references thereto).

11. Transitional arrangements.

12. Enhanced redundancy payments.

13. Amendment of Schedule 3 to Principal Act (Amount of lump sum).

14. Increase in penalties for certain offences.

15. Amendment of section 10 of Redundancy Payments Act 1971.

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Section

16. Amendment of section 6 of Protection of Employees (Employers’ Insolvency) Act 1984.

17. Repeal of section 17(4) of Employment Equality Act 1998.

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Acts Referred to

Adoptive Leave Act 1995 1995, No. 2

Carer’s Leave Act 2001 2001, No. 19

Civil Service Regulation Act 1956 1956, No. 46

Employment Agency Act 1971 1971, No. 27

Employment Equality Act 1998 1998, No. 21 Industrial Relations Act 1946 1946, No. 26

Local Government Act 2001 2001, No. 37

Maternity Protection Act 1994 1994, No. 34 National Minimum Wage Act 2000 2000, No. 5

Parental Leave Act 1998 1998, No. 30

Protection of Employees (Employers’ Insolvency) Act 1984 1984, No. 21 Protection of Employees (Employers’ Insolvency) Acts 1984 to 2001

Redundancy Payments Act 1967 1967, No. 21 Redundancy Payments Act 1971 1971, No. 20

Redundancy Payments Act 1979 1979, No. 7

Redundancy Payments Acts 1967 to 2001

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BILL

entitled

AN ACT TO AMEND AND EXTEND THE REDUNDANCY 5

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 10

PROVIDE FOR RELATED MATTERS.

BE IT ENACTED BY THE OIREACHTAS AS FOLLOWS:

1.—(1) This Act may be cited as the Redundancy Payments Act

2003.

(2) This Act shall come into operation on such day or days as the 15

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 20

2003 and shall be construed together as one.

2.—(1) In this Act—

‘‘Minister’’ means the Minister for Enterprise, Trade and Employment;

‘‘Principal Act’’ means the Redundancy Payments Act 1967. 25

(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

(b) a reference to an enactment shall be construed as a refer-30

ence to that enactment as amended, adapted or extended by or under any subsequent enactment including this Act.

Short title, commencement, collective citation and construction.

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Expenses.

Amendment of section 2 of Principal Act (Interpretation).

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 Mini-ster and the MiniMini-ster 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).’’.

4.—Section 2(1) of the Principal Act 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 25 1971 and is acting in the course of that busi-ness, 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 ‘‘con-tract’’ shall be construed accordingly;’’,

(b) by substituting the following for the definition of ‘‘employee’’:

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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 per-5

son with whom the employee has entered into or for whom the employee works under (or, where the employ-ment has ceased, entered into or worked under) a con-tract of employment, subject to the qualification that the person who under a contract of employment referred to 10

in paragraph (b) of the definition of ‘contract of employ-ment’ is liable to pay the wages of the individual con-cerned in respect of the work or service concon-cerned shall be deemed to be the individual’s employer;’’,

and 15

(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 Govern-ment Act 2001;’’.

5.—Section 4 of the Principal Act is amended by substituting the

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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 25

of paragraph 2, 4 or 5 of Part II of the First Schedule to that Act.’’.

6.—Section 7(2) of the Principal Act is amended by inserting ‘‘for

one or more reasons not related to the employee concerned’’ after ‘‘if’’.

30

7.—Section 9(1) of the Principal Act 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 35

of such a kind that the duration of the contract was lim-ited but was, at the time of its making, incapable of pre-cise ascertainment), that term expires or that purpose ceases without being renewed under the same or similar contract, or’’.

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8.—Section 17 of the Principal Act is amended—

(a) in subsection (1), by deleting:

‘‘and send to the Minister a copy of that notice’’,

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Amendment of section 25 of Principal Act (Employment wholly or partly abroad). Amendment of section 39 of Principal Act (Redundancy Appeals Tribunal and appeals and references thereto). Transitional arrangements. Enhanced redundancy payments.

(b) in subsection (2), by substituting the following for para-graphs (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 cer-tificate and a claim for a rebate under section 36 may be combined in one document.’’.

9.—Section 25 of the Principal Act 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 employ-ment 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.’’.

10.—Section 39(2) of the Principal Act 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 Principal Act 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

12.—Schedule 3 to the Principal Act 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

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(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 5

the date of dismissal or by whom the employee was employed when the employee gave notice of inten-tion to claim under secinten-tion 12, and

(b) a sum equivalent to the employee’s normal weekly remuneration.

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(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.

2. If the total amount of reckonable service is not an exact 15

number of years, the ‘‘excess’’ days shall be credited as a pro-portion 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 20

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 25

Schedule is not allowable as reckonable service shall be disregarded.’’.

13.—Schedule 3 to the Principal Act is amended—

(a) by substituting the following for paragraph 5:

‘‘5. Where an employee’s period of service has been 30

interrupted by any one of the following—

(a) any period by reason of—

(i) lay-off,

(ii) holidays,

(iii) service by the employee in the Reserve 35

Defence Forces of the State,

(iv) any cause (other than the voluntary leav-ing of the employment concerned by the employee) not mentioned in clauses (i) to (iii) but authorised by the employer, 40

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(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 5 1994,

(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 partic-ipating 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 subpar-agraph (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,

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(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.’’,

and 5

(c) by substituting the following for paragraph 10:

‘‘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 indus-try in which the employee concerned is employed shall 10

not be allowable as reckonable service.’’.

14.—The Principal Act, 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

(c) in section 36(3), ‘‘\3,000’’ for ‘‘£300’’. 15

15.—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,’’.

16.—The Protection of Employees (Employers’ Insolvency) Act

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1984 is amended—

(a) in section 6(2), by substituting the following for subpara-graph (iii):

‘‘(iii) at the election of the employee, either—

(I) any amount which an employer is required 25

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 30

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 35

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) ‘‘subpara-graph (iii)(I),’’ for ‘‘subpara‘‘subpara-graph (iii),’’ and

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Repeal of section 17(4) of Employment Equality Act 1998.

(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,’’.

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Click here for Bill

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EXPLANATORY AND FINANCIAL MEMORANDUM

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Purpose of the Bill

The Bill provides for the amendment and extension of the Redun-dancy Payments Act 1967, the amendment of the RedunRedun-dancy Pay-ments 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

Princi-pal Act by inserting up to date definitions of ‘‘contract of employ-ment’’, ‘‘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 2001.

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 require-ments in line with the Social Welfare Acts and the Protection of Employees (Part-Time Work) Act 2001.

Princi-pal 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 Dis-tributors 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

Principal Act to include fixed purpose contracts; when the fixed pur-pose contract ceases there is a redundancy situation.

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a lot of repetition and will be amalgamated into one form: this one form will be the basis for any rebate/lump sum claim.

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.

Prin-cipal 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,

subpara-graph (a) of Schedule 3 to the Principal Act 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

Princi-pal 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

Protec-tion of Employees (Employers’ Insolvency) Act 1984 to 2001. At present, where a worker in an insolvent firm has not received statu-tory 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 Employ-ment 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

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between service under and over the age of 41, from the provisions of the Employment Equality Act 1998.

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 Depart-ment 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 redun-dancy scheme was around \1.3m in 2002. The extent of the adminis-trative 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, Tra´da´la agus Fostaı´ochta, Bealtaine, 2003