The Irish Govt must be expecting a lot of redundancies in 2012, judging by the fact that Budget 2012 has reduced the Redundancy rebate for Employers from 60% to 15%. As elucidated in last year’s blog titled Redundancy Madness, we questioned the wisdom of Govt rebating 60% of the minimum entitlement cost of a redundancy to the employer. So this is a small bit of good news for the hard pressed taxpayer.
The minimum designated redundancy payment stipulated by the legislation is two weeks pay per year of service not exceeding €600 per week. This minimum entitlement under the legislation applies to all PAYE workers employed until a contract of service for more than two years. Employers can of course decide, at their discretion, to be far more generous if they so wish. You can work out your entitlements at Redundancy Calculator, kindly provided to the public by the Dept of Welfare.
The manifestation of redundancies, expected shortly after the festive season will probably commence with the banks, followed swiftly by the retailers who are going to shed thousands of jobs in 2012. Given the fiscal awfulness of our situation, the Govt has moved swiftly to minimize the exposure to the taxpayer, for which they are to be commended. Why they did not abolish the rebate in its entirety is baffling but given the piecemeal approach to cutbacks generally, it is entirely understandable.
This budget change will create a disproportionate burden on small business, the employment engine of the economy. The immediate impact of the change is that employers are now liable for 85% of the cost of any redundancy, which is bound to focus employer’s minds on the employment status of their workers. This is good news for recruitment agencies who are expert in providing flexible temporary staffing solutions to the public and private sector. Govt is one of the biggest users of agency workers and are clever enough to understand the lack of obligation under employment legislation they enjoy by using agency workers. Expect to see a lot more rolling 11 month contracts in 2012…..