Seanad Éireann - Volume 186 - 21 March, 2007
Protection of Employment (Exceptional Collective Redundancies and Related Matters) Bill 2007: Second Stage.
Question proposed: “That the Bill be now read a Second Time.”
Mr. Killeen Mr. Killeen
Mr. Killeen: I am pleased to deal with this important Bill in the Seanad. As a result of the recent partnership talks, Towards 2016, it was agreed that this Bill should be enacted to provide for the establishment of a redundancy panel, for the reference to it of certain proposed collective redundancies and for related action by the Minister for Enterprise, Trade and Employment. Members will recall this arose from the Irish Ferries case and other matters. The Bill provides for the removal of the upper age limit for entitlement to redundancy payments. It will also give effect to the judgement of the European Court of Justice in the Junk v. Kuhnel case regarding consultation with employees as required under Directive 98/59/EC being completed before notice of dismissal is given. The Bill makes consequential amendments of the Protection of Employment Act 1977, the Redundancy Payments Act 1967, the Redundancy Payments Act 1971, the Redundancy Payments Act 1979, the Unfair Dismissals Act 1977 and the Employment Equality Act 1998 and makes further amendments of those Acts to update penalties and in other formal respects.
The opening up of the Irish labour market arising from the decision to permit direct access by citizens of the new EU member states has given rise to concerns about the possibility of the collective compulsory replacement of workers by lower paid workers from these states or elsewhere, either directly or through the use of other replacement workers within the jurisdiction. The parties to Towards 2016 are agreed that this has the potential in certain circumstances to be harmful to the maintenance of good industrial relations in this country. At the same time, the parties are fully agreed on the need for co-operation with ongoing change in response to competitive pressures, as well as the need for adaptation and flexibility when market conditions require, since this will underpin sustainable employment and conditions in enterprises. The parties recognise and fully accept that each side carries a responsibility to ensure their conduct is reasonable and that they act in good faith in dealing with the timely development, processing and implementation of competitive measures that may arise, as a consequence of which the best possible levels of employment and conditions can be ensured.
The Secretary General of the Department of Enterprise, Trade and Employment will arrange for the provision to the redundancy panel of all secretarial and other services necessary for its efficient operation. The fees and expenses of the redundancy panel are expected to be minimal. This is provided for in section 5. The costs to the social insurance fund of bringing in those over 66 under the Redundancy Payments Acts is estimated to be in the region of €2.4 million per annum.
I wish to outline some of the main provisions of the Bill to the House. Section 1 is a standard provision which provides for the Short Title of the Act and the collective citation of Acts affected by it. Section 2 provides definitions of terms used in the Act. The definition of “industrial action” combines the content of the definition of “strike” in section 8 of the Industrial Relations Act 1946 and that of “lock-out” in section 6 of the Redundancy Payments Act 1967.
Section 3 provides for the duration of the redundancy panel and related matters. Under this section, the redundancy panel has effect only for the period of three years from the commencement of this Act. The Minister may, by order made before the expiration of that period or any extension of it, extend that period for a further period of three years if both the Irish Congress of Trade Unions and the Irish Business and Employers Confederation have requested the extension and the Minister is satisfied that the continued operation of the redundancy panel would be conducive to the continued orderly conduct of industrial relations.
Section 4 sets out what constitutes exceptional collective redundancies for the purposes of this Act by reference to the Redundancy Payments Act 1967. Section 5 provides for the establishment of the redundancy panel, procedures to be followed in appointing members to the redundancy panel and their reappointment. The conditions of membership are also set out in this section.
Section 6 provides for referral of cases to the redundancy panel by employee representatives or the employer concerned by notice given in writing. The panel will inform the Minister of the fact and invite affected parties to make submissions to it in relation to the proposal. The panel will give notice in writing to the Minister that either requests the Minister to seek an opinion from the Labour Court on whether the proposal is a proposal to create so-called exceptional collective redundancies, or else states that the panel is of the view that the conditions for the making of such a request have not been satisfied. The panel must give a copy of that notice to the party from which the reference was received and other affected parties.
The redundancy panel may not make a request to the Minister unless it appears to it that the proposed collective redundancies are so-called exceptional collective redundancies and the panel is satisfied that, in regard to the proposal, the party from which the reference was received has unsuccessfully sought to resolve the matter through local engagement. The panel must also be satisfied that the party from which the reference was received has acted reasonably and not in a manner which has frustrated the possibility of agreement to restructuring or other changes necessary to secure the viability of the business of the employer, and has not had recourse to industrial action since the proposal was referred to the panel.
Section 7 provides that the Minister may, within seven days of receiving a request from the redundancy panel to do so, request the Labour Court to issue an opinion as to whether collective redundancies proposed by an employer constitute exceptional collective redundancies. The Minister may also make a request to the Labour Court on his own initiative if it appears to him that the proposed collective redundancies are exceptional collective redundancies. The time limit in the latter case varies depending on whether the matter has been referred to the redundancy panel.
Section 8 provides for a hearing and the giving of an opinion by the Labour Court. The court shall, within 16 days of receiving a request, hold a hearing into the matter, and either issue to the Minister its opinion whether the proposed collective redundancies are exceptional collective redundancies or report to the Minister that it is unable to issue an opinion. The Labour Court may not issue an opinion unless it is satisfied that the party from which the reference was received was unable to resolve the matter through local engagement and has not frustrated the possibility of agreement to restructuring, and that no industrial action on the part of that party is current. No appeal shall lie from an opinion given by the Labour Court under this section. However, the Employment Appeals Tribunal can make a decision on any question referred to it under section 39 of the Redundancy Payments Act 1967. The Minister shall, within seven working days of receiving an opinion from the Labour Court, notify affected parties by such means as he considers appropriate.
Section 9 provides that, where the Labour Court issues an opinion that collective redundancies proposed by an employer are exceptional collective redundancies and, having proceeded with the dismissals on the same basis as in the relevant proposal, the employer applies to the Minister for a rebate under the Redundancy Payments Act 1967, the Minister shall have regard to the opinion of the Labour Court when considering the employer’s application for the rebate. If the Minister refuses to pay the rebate on the basis of the opinion of the Labour Court, the exemption from income tax provided by section 203 of the Taxes Consolidation Act 1997 does not apply in respect of lump sum payments made by the employer to employees dismissed. Section 7 of the Unfair Dismissals Act 1977 has effect, with modifications, in respect of a dismissal that is one of a number of dismissals included in a collective redundancy that is determined by the Labour Court to be an exceptional collective redundancy. The compensation payable is such amount as is just and equitable but may not exceed pay for 208 weeks for an employee who had not more than 20 years’ continuous service or, in the case of an employee who had more that 20 years continuous service, pay for more than 260 weeks.
Section 10 provides for time limits before which dismissals may not take effect. An employer who effects a dismissal before the expiration of the period specified in section 10(1) or in section 9(3) or 12(1) of the Protection of Employment Act 1977, as the case requires, will be guilty of an offence and liable on conviction on indictment to a fine up to €250,000.
Section 11 provides for the amendment of section 2 of the Protection of Employment Act 1977 to update the definition of “Minister”. Section 12 provides for the amendment of section 9(3) of the Protection of Employment Act 1977 to reflect the decision of the European Court of Justice in the case of Junk v. Kuhnel. Section 13 provides for the updating of penalties in the Protection of Employment Act 1977. Section 14 provides for the amendment of section 2 of the Redundancy Payments Act 1967 to update the definition of “Minister”. Section 15 provides for the amendment of section 4 of the Redundancy Payments Act 1967 to entitle employees who have attained the age of 66 years to statutory redundancy payments. I am sure Senator White will be pleased about the latter.
Section 16 provides for the amendment of section 7 of the Redundancy Payments Act 1967. Subsection (2A) is being inserted into section 7 to ensure that the dismissal of employees is not to be taken to be a dismissal by reason of redundancy if the dismissals are collective and are effected on a compulsory basis and if the dismissed employees are to be replaced at the same location or elsewhere in the State by other employees who are directly employed by the employer or other persons whose services are to be provided to that employer in pursuance of other arrangements where those other persons perform, or are to perform, essentially the same functions as the dismissed employees, and where the terms and conditions of employment of those other persons are to be materially inferior to those of the dismissed employees.
Section 17 provides for amendment of section 38 of the Redundancy Payments Act 1967 to delete reference to powers no longer required to be exercised in the former paragraphs (a) to (c) and to authorise deciding officers to make decisions under sections 29 and 32 in respect of certain payments from the social insurance fund.
Section 18 provides for amendment of section 39(16) of the Redundancy Payments Act 1967 to eliminate the requirement that the reference of appeals to the Employment Appeals Tribunal by deciding officers be made in a particular prescribed manner. Section 19 provides for the updating of penalties under the Redundancy Payments Act 1967. Section 20 provides for the repeal of section 3 of the Redundancy Payments Act 1971, which imposes an upper age limit for entitlement to redundancy payments. Section 21 provides for the updating of penalties under the Redundancy Payments Act 1971. Section 22 provides for the amendment of section 1 of the Redundancy Payments Act 1979 to update the definition of “Minister”. Section 23 provides for the repeal of section 5 of the Redundancy Payments Act 1979, which amended section 3 of the Redundancy Payments Act 1971, now being repealed by section 20 of the Bill. Section 24 provides for the amendment of section 1 of the Unfair Dismissals Act 1977 to update the definition of “Minister”.
Section 25 provides for a technical amendment of section 2 of the Unfair Dismissals Act 1977. It remakes a proviso inserted into subsection (2) by the Unfair Dismissals (Amendment) Act 1993 as new subsections (2A) and (2B). The proviso relates to exceptions in certain circumstances to the general non-applicability of the Unfair Dismissal Acts 1977 to 2005 to fixed-term specified-purpose contracts. The purpose of the amendment is to make it clear that the exception stated in the proviso covers all the types of fixed-term specified-purpose contracts described in section 2(2) and not simply those referred to in paragraphs (a) and (b).
Section 26 provides for the amendment of section 5 of the Unfair Dismissals Act 1977 by providing that in cases where all the employees who are involved in a lock-out, strike or industrial action situation are dismissed, the reasonableness or otherwise of the actions of the parties is to be taken into account in determining whether the dismissals were unfair.
Section 27 provides for the amendment of section 17 of the Employment Equality Act 1998. Subsection (1) is a technical provision to overcome the misdescription of an amendment made in 2004 and subsection (2) substitutes a new subsection (4) reflecting the abolition of the upper age limit for redundancy payments.
I wish to acknowledge the work that was done by the social partners in addressing the problems that arise in exceptional collective redundancy situations. The ability of the social partners to reach consensus shows the strength of the social partnership process.
I am pleased to bring this Bill before the House. I hope that we will be able to progress it through the House in a expeditious manner. I would invite Senators to provide constructive criticism of the proposals it contains and to put forward any observations they may wish to offer.
Mr. Coghlan Mr. Coghlan
Mr. Coghlan: I welcome the Minister of State. I thank him for introducing the Bill and for providing an outline of its contents. Following the disgraceful series of events at Irish Ferries, the Government was forced to act. I am disappointed, however, that the workers at Irish Ferries had to suffer before the Minister and his colleagues were alerted to this shady practice. Lest there be any doubt, this shady practice involved Irish Ferries receiving €4.3 million towards the cost of statutory redundancy payments to more than 400 Irish staff who were then replaced by eastern European workers on lower pay.
Under the Bill, a redundancy panel drawn from the social partners will be established which may request the Minister to refer dismissals to the Labour Court to determine whether they are genuine redundancies. Based on that opinion, the Minister may refuse to pay a redundancy rebate.  That is entirely correct and it is a shame that such a system is not already in place. The Bill is a reflection of the new challenges that face a new Ireland. Where once we were struggling to keep our workers from leaving, we are now struggling to stop jobs that we have in abundance from being devalued.
My party watched the unfolding events at Irish Ferries with a growing sense of disgust and horror. The actions of the company have been an example of the worst type of Dickensian exploitation ever seen in this country. A number of points should have been borne in mind in respect of this matter. Paramount among these is the fact that Irish Ferries is an Irish company based in Ireland and, as such, should be subject to the laws of this country including legislation that provides for a minimum wage, employee protection and health and safety. It was as a result of a legal nonsense that the company was allowed to get away with industrial murder. The Bill is the result of the actions of a greedy, grubby company, intent on maximising profits that is not just seeking a cheaper labour force but that is actually seeking a criminally cheap labour force.
We have established in this country an industrial relations infrastructure that at the very least ensures that workers from new countries are not exploited and are paid a decent wage. That legislation has protected Irish workers from being replaced in their jobs by new arrivals to our shores. Irish Ferries, for no good reason whatsoever, other than that it runs ships as opposed to, for example, busses or trains, is not obliged to obey those laws. It has run roughshod over 40 years of industrial diplomacy that helped create the Celtic tiger from which everyone, including Irish Ferries, benefited.
The management of Irish Ferries should have been loyal to the social partnership process. It should also have been loyal to the people who helped the company to become profitable. I wonder if the company will be able to count on the loyalty of Irish people in the future. I also wonder if it will be able to depend on the loyalty of exporters, importers and tourists who were so badly treated and so hugely inconvenienced during this sorry drama.
The Second Stage of this debate allows me the opportunity to raise the issue of immigration and job displacement. My party, backed by our colleagues in Labour, has sought to begin a dialogue on immigration to Ireland to ensure that the seeds of resentment and racism are not sown in this country. What happened at Irish Ferries can only contribute to this.
The recent dramatic growth in the rate of immigration into Ireland is resulting in what is arguably the greatest economic and social transformation of our country since independence. My party believes that this transformation presents Ireland with both a significant challenge and considerable opportunity. Given Ireland’s history of emigration and migration, the country has a special responsibility to address the challenge of immigration.
As my party leader stated earlier this year, as a people, we understand better than most the special challenges of immigration and integrating new communities. Now is the time for a real national debate on these issues so that we can make the necessary changes to meet these new challenges. We have a chance to get this response right and to avoid the mistakes that were made elsewhere.
Immigration and multiculturalism can be good for Ireland but the current system is not being managed well. We need a system that is good for the Irish and good for the immigrants. As of now, we have a system that is not serving the interests of either.
My party has three priorities to make immigration work for Ireland. First, immigrants have rights and responsibilities. They should have the right to be free of discrimination and have their contribution to the country recognised, but they have the responsibility to integrate into our community, comply with our laws and respect our cultural traditions. We do not want to see a situation developing in which our immigrant population live separate lives. We have a responsibility to facilitate and encourage this integration.
Second, immigration must be managed in a way that keeps Ireland safe. We must ensure that Irish laws are understood by and adhered to by immigrants. We also need to send a strong message that people who want to come to this country to commit serious crime are not welcome and will be dealt with severely.
Critically, and most importantly in the context of this Bill, immigration must be a force for improving, not threatening, living standards. We must protect Irish jobs and the rights of those who come to work here. Companies that pay below the minimum wage should pay severe fines, and immigration levels from non-EU countries must be explicitly linked to economic conditions and the needs of the labour market.
As we are discussing the Protection of Employment (Exceptional Collective Redundancies and Related Matters) Bill, it would be remiss not to address the issue of job losses and costs. Ireland has managed to sustain significant economic growth by attracting foreign investment, but the sequence of high profile job losses in various multinational companies is a worrying trend. It has become common practice for many high profile companies to engage in global rationalisation as a code word for moving jobs from Ireland’s high cost base.
Since 2001, the Government has been warned at the highest level by the National Competitiveness Council of the dangerous direction that policy on business costs was taking. Nothing has been done to address the problems of energy, broadband, telecommunications and other infrastructural difficulties to ensure that the Irish economy is well equipped to tackle fierce competition.
Since this Government came to power it has imposed at least 50 stealth taxes and charges on businesses and consumers. Compared with the UK, electricity is 50% more expensive, landfill costs are 350% higher, insurance is 20% more expensive and broadband is 10% more expensive. Meanwhile, inflation continues to rise and now stands at 4.9%.
Competition from eastern Europe, India and China is still in its infancy and is likely to intensify significantly in years to come. The Government cannot afford to bury its head in the sand any longer. We urgently need an all-party debate on how best to cope with the enormous competition faced from overseas in light of the burgeoning cost base in Ireland.
Companies have been liquidated and my colleague, Senator Finucane, before he left earlier for another engagement, informed me of one such company of which the Minister of State, Deputy Killeen, might well be aware. The companies concerned pay the statutory two-weeks’ redundancy but on liquidation, as I understand it, refund 40% of that to the State. Would the Minister of State consider using such refunds to the State to benefit workers, particularly in the case of the company Senator Finucane has in mind and perhaps one or two others the Minister of State might have had in mind when we discussed the matter earlier, especially where they are only paid the bare minimum? These people have suffered the sad trauma of redundancy. The Minister of State might have a view on that. Perhaps there is something that could be done in the context of this Bill to help alleviate the situation further.
Mr. Leyden Mr. Leyden
Mr. Leyden: I welcome the Minister of State, Deputy Killeen, and his senior officials to the House and commend him and the Department on introducing the Bill. I welcome this legislation which establishes a redundancy panel to make decisions, when required, on what are termed exceptional collective redundancies.
The Bill will provide for certain proposed collective redundancies to be referred to the panel and allows for the Minister for Enterprise, Trade and Employment to take appropriate action. The Bill also amends previous legislation to update penalties and other aspects of the legislation. I commend the procedure for the appointment of members of the redundancy panel and the representation of the Government, IBEC and the ICTU on this panel.
This Bill is important because it closes the door on occurrences such as that which arose with Irish Ferries. In that case, the company was able to rely upon a rebate from the State of €4.3 million as a result of the dismissal of its staff and the employment of lower paid workers. The company benefitted greatly from this particular decision and that is why this Bill is so timely and appropriate. The Minister and his officials have taken quick action in this regard.
It is clear that a situation such as the Irish Ferries dismissals is different from smaller-scale or individual dismissals. Therefore, these dismissals should be resolved in a different way and this Bill provides for a resolution along these lines. It lays down the procedures for this and makes clear that a case will be referred to the panel only after other avenues have been explored.
I welcome the representation of different bodies on the redundancy panel. I feel strongly that this will provide a balanced overall view of each case on its own terms.
I also commend the Minister on other reforms on the upper age limit which he has included in this Bill which will remove ageism from the redundancy scheme. The Minister of State might outline the amount of funds available in the redundancy fund and indicate the condition of the fund at present.
Like Senator Coghlan, we all are concerned about the recent decisions to close successful industries and relocate them to Third World countries such as China, India and Singapore. Today Poland is gloating over the fact that it has secured some jobs which were successfully in our country. It is discouraging to think that new member states, which successfully applied for membership of the European Union which was voted on in the Nice treaty by ourselves, now exploit the fact they pay lower wages, charge lower taxes and attract companies which have been successful here and which have provided good employment for many in urban and rural areas. The day will come when they will rise to the level of the rest of the European Union and will find other countries pulling jobs from them.
The location of jobs is fluid. In this regard the Minister and the Department have a role to monitor companies to ensure there is no danger they will make with such decisions. This Bill particularly will discourage companies from trying to take advantage of the redundancy laws to date. It is galling that Irish Ferries benefited to an extent from its decision to employ workers on much lower wages and to exploit workers in that company which carries an Irish flag.
The Minister of State is anxious to get this Bill through the House and I certainly will not delay it. It is timely legislation and I commend him and his staff on putting it together. It includes many important provisions which are relevant to employees, employers, the Department and the State. It also includes the flexibility to extend the redundancy panel beyond a three-year period.
I note local authority members have not been excluded. I commend the Minister of State on that because, while it is normal practice to exclude Members of the Oireachtas and the European Parliament, many local authority members are well qualified to serve on this panel and they should not be precluded from doing so by virtue of their representative functions. Far too often, Bills have excluded the people who have given great service to public life. It is welcome that those who wish to make further contributions to the public are not excluded.
The Minister of State has played an important role with regard to the minimum wage. Workers should be pleased with the actions he has taken since his appointment and he has made another wise decision on this Bill. I wish him continued success and hope it will not be long before he returns to a future ministerial role after the general election.
Mr. McDowell Mr. McDowell
Mr. McDowell: Like others, I acknowledge the genesis of this Bill in the Irish Ferries dispute of a few months ago, the outcome of which was particularly galling on a number of levels. It was galling in the first instance because what most of us thought of as an Irish company effectively dismissed several hundred Irish workers who had given many years of loyal service. It was also galling because the same company sought to employ foreign workers on levels of pay and conditions that were clearly exploitative and unacceptable to any Irish person accustomed to the standards of employment and pay offered in this country. It was all the more galling when the State, after a legal assessment, ended up subsidising the whole miserable affair by more than €4 million. That situation was calling out for reform. I am aware this Bill has been the subject of discussions among the social partners and it goes a considerable distance towards providing us with a blueprint for dealing with these issues.
I am somewhat bemused by the complicated nature of the process being put in place. One first sends a request to the Secretary General of the Department, who notifies the Minister for Enterprise, Trade and Employment, who refers to the redundancy panel, which returns to the Minister and suggests that he or she might like to refer the request to the Labour Court, which makes a recommendation which can then be appealed to the Employment Appeals Tribunal. Do we really need something as complicated as that? For that matter, do we really need the panel at all? It would have been sufficient if the Minister could simply form a judgment and consult the Labour Court in the first instance. I do not understand why we need to go through what appears to be an excessively convoluted process to reach the same end point. I thank the Minister of State for making his officials available to us this afternoon and thank the officials for the comprehensive briefing they gave us. I gather the process is intended as a sort of clearing house to sift out cases which do not merit the attention of the Labour Court but it seems an excessively complicated way to achieve that end.
The process has been put in place for a pilot or experimental three-year period. I do not see why that has to be the case. A shift in the law is clearly needed and the Part 2 provisions are likely to be required in the future. It is excessively cumbersome to deprive the Minister of the right to continue the Part on his or her own initiative. We are in effect giving a veto to the social partners, which no doubt arose from the partnership talks. I am not sure, however, that it makes objective sense. If the Minister thinks it beneficial to have this process in place, he or she should have the discretion to continue the procedure irrespective of whether the social partners like it. It is not difficult, however, to see why some social partners might have problems with the provision in three years’ time.
The central point of the Bill is important in terms of clarifying that an exceptional collective redundancy is a dismissal rather than a redundancy. Among the many insertions and amendments of past Acts, I am not completely clear whether an exceptional collective redundancy is also defined as an unfair dismissal. The Bill will make sense only if it establishes that the dismissal is ipso facto unfair and brings into play the entitlements to compensation set out in the Bill. Perhaps the Minister of State will clarify that matter in his response.
Reference was made to the age limit on redundancies. I have had an experience of this a couple of years ago with a constituent who was unfortunate enough to remain in her job a few months beyond her 66th birthday. The company for which she worked closed and she was denied statutory redundancy, notwithstanding her 30 years of service or the fact that others who had worked there for much shorter periods were entitled to statutory redundancy. Understandably, the matter caused enormous hurt and considerable hardship to the woman. The age limit is clearly a disincentive for anybody in similar circumstances to continue working beyond his or her 66th birthday. I am surprised that a constitutional challenge has not yet been made to that provision, which is now redundant, if I can be excused the phrase. I am glad the opportunity was taken to make the amendment.
It is our experience of social partnership legislation such as this Bill that the role of these Houses is to apply our collective rubber stamp. That process has served us well. I hope the Minister of State finds the time to pass this Bill through the other House before its dissolution.
Mr. Hanafin Mr. Hanafin
 Mr. Hanafin: I welcome the Minister of State to the House and support the Protection of Employment (Exceptional Collective Redundancies and Related Matters) Bill 2007, the long title of which states:
Bill entitled an Act to make provision, consequent on the conclusion of the ten-year framework social partnership agreement 2006-2015 known as “Towards 2016”, for the establishment of a redundancy panel and the reference to it of certain proposed collective redundancies and for related action by the Minister for Enterprise, Trade and Employment, including the obtaining from the Labour Court of opinions on the nature of proposed collective redundancies; to remove the upper age limit for entitlement to redundancy payments; to make consequential amendments of the Protection of Employment Act 1977, the Redundancy Payments Act 1967, the Redundancy Payments Act 1971, the Redundancy Payments Act 1979, the Unfair Dismissals Act 1977 and the Employment Equality Act 1998; and to make further amendments of those Acts to update penalties and for purposes of statute-law revision.
Social partnership has served this country well. It is not for nothing that we are internationally regarded as a leading light or that The Economist, a highly respected publication with a weekly circulation of more than 2 million, has rated Ireland as the best place to live for the past two years. Our neighbours in Europe look to Ireland as an example of what should and could be done. This Bill is part of this because the partnership was responsible for drafting it and every partner played a role in it. Certain groups may not have been happy with aspects of the legislation, such as employers who may have believed there would be too many protections, but the process has stood the test of time and is now in its 20th year.
Since 1987 social partnership has helped to maintain a strategic focus on key national priorities and create and sustain the conditions for remarkable employment, fiscal stability and a dramatic improvement in living standards which have benefited the people. The challenges facing us are no less complex or important than in 1987. Towards 2016 develops a new strategic framework to address key social challenges and focuses on the needs of all in our society. This approach will take time. The agreement sets out how we propose to measure and review progress over a ten-year framework period. It sets out the terms of the pay increases for the private sector and the public service over a 27-month period. While the total increase is significant, the benefits will be reaped by all sections of the community, which should be welcomed.
Social partnership has served us well in the past 20 years. It is a problem solving process which has evolved on the basis of the Government providing an arena within which the social partners, as stakeholders, engage in a flexible process of addressing immediate problems, while attending to long-term development. In this, the Government is firmly in the tradition of the European social model which values engagement with the social partners as an important contribution to better policy making and more legitimate policy outcomes. The results are there for all to see.
The dramatic transformation of Irish economic and employment fortunes in the past decade has reflected, in the judgment of the NESC reports, three main factors: a national policy and institutional framework which was consistent, highly focused on competitiveness and employment creation, innovation and problem solving; an export sector that was greatly expanded and increasingly concentrated in high value, high growth market segments; and the European Union, because it increased market access, created a level playing field through re-regulation, provided a relatively stable monetary environment and supported Ireland’s infrastructural and social development. The most dramatic impact has been in the rapid growth in employment, drawing not only on those who were unemployed, especially long-term unemployed, but also women and others who had previously little expectation of finding meaningful, well paid work in the economy. Among them were many Irish emigrants who had returned and others who have enriched society by coming to make their career and home in Ireland.
We have done this in a way that has produced significant rewards for ordinary people. Easing tax burdens which had increased inordinately on the average worker has produced an outcome where, as the OECD has recently shown, the average worker with two children pays no net tax, while child benefit and other payments add almost 1% to earnings. Only in Iceland is a better deal on offer and only in Mexico and Korea do workers on two thirds of average earnings pay less tax after benefits. The social balance of our approach is reflected in the fact that single parents do better than anywhere else. Therefore, not only have we increased dramatically the numbers at work, their living standards have also increased at a striking rate.
The strategy we have pursued with the social partners has resulted in a very substantial increase in the revenue base of the State, facilitating a dramatic increase in public spending on a wide range of services and infrastructure in recent years. It is a remarkable feature of the economy that we have low taxes in tandem with significant social services. Long may that continue. Social partnership has played an important part in this.
We must address the problems of rapid growth in the economy which are all too familiar in the form of infrastructural and other bottlenecks. The Government has gone about this. If we react in the wrong way, the consequences will be immediate and severe. The pre-partnership era was almost unenlightened compared to our current experience but it was all we knew at the time. However, now that we have reached this stage, I hope the partnership process will continue and workers will continue to be protected through legislation. I am proud to be the representative of the Irish Congress of Trade Unions on the Labour Panel for Fianna Fáil in this House.
Ms White Ms White
Ms White: I welcome the Minister of State and commend the Bill before us. Both the Minister of State and my colleagues have commented on the many good aspects of the legislation but I would like to focus on section 15 which provides for the amendment of section 4 of the Redundancy Payments Act 1967 to entitle employees who have attained the age of 66 years to statutory redundancy payments. The section changes the lamentable status quo, whereby employees aged 66 and above are refused statutory redundancy payments. It is yet another example of age discrimination codified in law. It refused to appreciate the valuable work and contribution that older people made in the economy. Until now, however, these valued workers were not entitled to any statutory redundancy payments on being made redundant. The reasoning behind this could only have been faulty and ageist. Perhaps it was thought that these older employees would be happy enough to draw the pension and withdraw from working life, but why was this attitude held? Surely, it was obvious that the people concerned were working beyond the usual retirement age of 65 years because they wanted or needed to do so. It was wrong, therefore, for the legislation to deny them their deserved statutory redundancy payment and assume that they did not merit it. Can one imagine the heartbreak for an employee treated in such as way to see their cherished job being taken away through no fault of their own, and, furthermore, to find that, unlike their younger colleagues — perhaps even colleagues they helped train in — the Government does not see fit to recognise that they too have suffered a loss, just because they can draw a pension?
I am, therefore, delighted that the Bill proposes to increase the upper age limit for employees to receive statutory redundancy payments. This move is not before time. At least now workers who have toiled loyally for their employers for decades can receive recognition of that dedication and contribution should their positions cease to exist. The former position was ludicrous in that a 65 year old working for 40 years for a company would receive compensation, but a 66 year old who may have worked for the company for a longer period would not. The legislation is a step in the right direction. I look forward to further legislative change in the future to help erase the remaining vestiges of entrenched ageism in our society.
I am driving for change and the abolition of the mandatory retirement age in both the public and private sectors. I thank the Minister of State and his officials who gave us a tremendous briefing on this complex Bill earlier. They told us how they had toiled over it at weekends with officials and the representatives of the social partners. It is a great compliment to both sides. The legislation is heavy going and complicated. It is not scintillating and sexy and required serious detailed attention to make sure its provision were correct. I compliment the Minister of State and everybody else involved.
Mr. Killeen Mr. Killeen
Mr. Killeen: Ba mhaith liom buíochas a ghabháil leis na Seanadóirí. I thank Senators for their supportive comments on the legislation and reiterate the points raised about the Irish Ferries dispute and other similar scenarios. The Bill will achieve what we have set out and give an enhanced measure of protection to workers who are compulsorily made redundant in circumstances where they are replaced by workers on lower pay or worse terms and conditions of employment. When enacted, the legislation will provide for the establishment of a redundancy panel for the reference to it of certain proposed collective redundancies and related action by the Minister for Enterprise, Trade and Employment in line with what was agreed during the talks on Towards 2016.
Senator Coghlan pointed out that redundancy payments were made to Irish Ferries staff on the basis of existing legislation. He is concerned about the devaluation of jobs, emigration and job displacement. He also referred to integration issues which will be hugely important in the long term. He made specific reference to the workers at the Castlemahon plant in County Limerick at the request of his colleague, Senator Finucane. The Minister is one of those who hope to receive a payment as part of a preferential claim following the winding up of the company. He has no discretion regarding the 40% due to the social insurance fund and, therefore, has no legal power to divert any of the money to the employees concerned if funds are recovered.
Senator Leyden asked how much was in the social insurance fund. I have some figures which indicate that approximately €165 million was paid out of the fund last year. It is a very large fund of several billion euro. I will get the Senator the exact amount as I am not quite sure how much it is at this stage.
Mr. Leyden Mr. Leyden
 Mr. Leyden: It is in a healthy state.
Mr. Killeen Mr. Killeen
Mr. Killeen: It is in a particularly healthy state, which is the way we like it to be. The Senator’s point about local authority members was well made and I am pleased that is the case on this occasion. It is not always the case, as he knows.
Senator McDowell also referred to the Irish Ferries case and the need for reform. He was somewhat unhappy with the three year time limit. It is fair to say that, in many respects, people will have to wait to see how this operates in terms of whether it is able to address the difficulties it is designed to address. The Minister has the power to extend it for a period of time. The Senator made the point that the social partners have a very strong say in regard to it. They have put a considerable amount of work into the preparation of this Bill as have the officials in the Department. A very difficult job has been done in a very short period of time. In the circumstances, this is probably the appropriate way to deal with it.
Senator McDowell also referred to the situation of a 66 year old. I am very pleased we have been able to take the opportunity on this occasion to rectify that. The Senator referred to the clarification of exceptional collective redundancy being defined as “a dismissal”. He raised the question of whether that was automatically an unfair dismissal. He referred to section 9(3) of the Bill as it affects section 7 of the Unfair Dismissals Act 1977 in that if a dismissal which is the subject of a claim under the Unfair Dismissals Acts has already been the subject of a determination of the Labour Court that it is an exceptional collective redundancy, then in a separate process, if a rights commissioner of the Employment Appeals Tribunal finds that it is also an unfair dismissal for the purpose of the Unfair Dismissal Act and if the remedy is compensation rather than re-engagement or re-employment, then an employee with fewer than 20 years’ service will be eligible for up to four years’ salary in compensation. An employee with more than 20 years’ service will be eligible for up to five years’ compensation. Also in these situations, the employee will not be required to show mitigation of loss. The only reductions which can be made to the compensation award are where the amounts have been paid in redundancy or severance by the employer. These agreements were also agreed in Towards 2016.
It is a very substantial improvement in the situation as it pertains. It is up to a rights commissioner of the Employment Appeals Tribunal to decide if the dismissal is unfair. There are potentially two processes in addressing the question Senator McDowell asked.
Senator Hanafin spoke eloquently about the value of social partnership and I thank him for the points he made in that regard. I am sure Senator White is very pleased about section 15. She has campaigned very strongly in this regard. I would not have dared come into the House with this Bill without that provision. I very much agree with her that we need people to stay working much longer in the current economic climate and that in justice, we should make provision for people to remain at work if they are able and willing to do so.
I thank the Acting Chairman and the Senators for their co-operation.
Question put and agreed to.
Labhrás Ó Murchú Labhrás Ó Murchú
Labhrás Ó Murchú: When is it proposed to take Committee Stage?
Mr. Leyden Mr. Leyden
Mr. Leyden: Now.
Seanad Éireann 186 Protection of Employment (Exceptional Collective Redundancies and Related Matters) Bill 2007: Second Stage.