The government will implement a new program to offer interest-free loans to companies that are having difficulty meeting severance pay for their staff as a result of the pandemic.
The Department of Enterprise, Trade and Employment said over the weekend that it was working on a new deal under which those debts would be “in storage” for a specified period.
Taoiseach Micheál Martin told the annual industrial relations press conference last Friday that the government would lift a temporary suspension in September that was in place during the pandemic over the rights of laid-off workers to trigger demands for dismissal.
The Taoiseach described the decision to introduce the suspension of severance claims during the Covid crisis as “a proportionate measure to mitigate a risk to businesses and of course to jobs.”
Mr Martin said that after the current suspension is lifted, the government “will ensure that financially troubled businesses are supported by a deferred payment agreement while ensuring that employees receive their rights.”
Tánaiste and Enterprise and Employment Minister Leo Varadkar had raised the issue of the government providing interest-free loans to employers who would have difficulty paying severance pay in a letter to businesses earlier this month.
The ministry gave more details on the planned new regime after Mr. Martin’s speech on Friday.
He stated that under the existing provisions of the Severance Pay Act 1967, the state may finance statutory severance pay from the Social Insurance Fund on behalf of an employer in situations where the The employer can provide proof of inability to pay due to financial hardship or insolvency.
He stated that in such situations a debt was incurred and the employer was obligated to repay it. “The Ministry of Social Protection will seek to collect the debt directly from the employer and each case is assessed on its own merits. A mutually agreed-upon repayment plan can be put in place, including installment repayments to minimize financial hardship.
The Ministry of Enterprise, Trade and Employment said that to coincide with the lifting of the emergency suspension of the right to seek dismissal and in recognition of the challenges some companies would face in meeting the costs involved , “It is proposed that, for a limited period, the existing practice will be restructured to introduce some form of ‘storage’ of the termination debt related to Covid.
“The details of this proposal are currently being worked out, but the intention is that, subject to eligibility criteria, including verification of inability to pay, the termination debt will be formally deferred or ‘parked. »For a defined period, without interest or penalty. .
“The Ministries of Enterprise, Trade and Employment and Social Protection are working together to finalize these provisions and introduce legislative changes in the coming months. ”