[Ireland] Interest-free loans to help struggling businesses meet redundancy costs

A new scheme offering interest-free loans to businesses that face difficulties meeting redundancy payments for staff following the pandemic will be introduced by the Irish Government, The Irish Times reports.

In late June, the Department of Enterprise, Trade and Employment said it was working on a new arrangement under which such debts would be “warehoused” for a particular period of time.

On June 18, Taoiseach Micheál Martin told the annual Industrial Relations News conference that in September the Government would lift a temporary suspension which has been in place during the pandemic on the rights of workers who had been laid off to trigger claims for redundancy.

The Taoiseach described the decision to introduce the suspension on claims for redundancy payments during the COVID-19 crisis as “a proportionate step to mitigate a risk to businesses and of course to jobs”.

Mr Martin said that after the current suspension was lifted the Government would “ensure businesses in financial difficulties are supported with a deferred payment arrangement while ensuring employees receive their entitlements”.

Tánaiste and Minister for Enterprise and Employment Leo Varadkar had reportedly raised the issue of the Government providing interest-free loans to employers that would face difficulties in meeting redundancy payments in a letter to businesses earlier in the month.

The department set out more details of the planned new scheme following Mr Martin’s June 18 speech.

It said that under existing provisions of the Redundancy Payments Act 1967, the State can fund statutory redundancy payments from the Social Insurance Fund on behalf of an employer in situations where the employer can provide evidence of inability to pay due to financial difficulties or insolvency.

It said that in such situations a debt was raised and the employer was liable to repay it. “The Department of Social Protection will seek recovery of the debt directly with the employer and each case is assessed on its own merits. A mutually agreed repayment plan can be put in place, including repayments by instalment to minimise financial hardship.”

Warehousing

The Department of Enterprise, Trade and Employment said that to coincide with the lifting of the emergency suspension of the right to seek redundancy and in recognition of the challenges that some businesses would face in meeting the costs involved, “it is proposed that, for a limited period, the existing practice will be restructured to introduce a form of ‘warehousing’ of COVID-related redundancy debt.

“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, redundancy debt will be formally deferred or ‘parked’ for a defined period, with no interest or penalties applying.

“The Departments of Enterprise, Trade and Employment and Social Protection are working together with a view to finalising these arrangements and introducing amending legislation over the coming months.”

A new scheme offering interest-free loans to businesses that face difficulties meeting redundancy payments for staff following the pandemic will be introduced by the Irish Government, The Irish Times reports.

In late June, the Department of Enterprise, Trade and Employment said it was working on a new arrangement under which such debts would be “warehoused” for a particular period of time.

On June 18, Taoiseach Micheál Martin told the annual Industrial Relations News conference that in September the Government would lift a temporary suspension which has been in place during the pandemic on the rights of workers who had been laid off to trigger claims for redundancy.

The Taoiseach described the decision to introduce the suspension on claims for redundancy payments during the COVID-19 crisis as “a proportionate step to mitigate a risk to businesses and of course to jobs”.

Mr Martin said that after the current suspension was lifted the Government would “ensure businesses in financial difficulties are supported with a deferred payment arrangement while ensuring employees receive their entitlements”.

Tánaiste and Minister for Enterprise and Employment Leo Varadkar had reportedly raised the issue of the Government providing interest-free loans to employers that would face difficulties in meeting redundancy payments in a letter to businesses earlier in the month.

The department set out more details of the planned new scheme following Mr Martin’s June 18 speech.

It said that under existing provisions of the Redundancy Payments Act 1967, the State can fund statutory redundancy payments from the Social Insurance Fund on behalf of an employer in situations where the employer can provide evidence of inability to pay due to financial difficulties or insolvency.

It said that in such situations a debt was raised and the employer was liable to repay it. “The Department of Social Protection will seek recovery of the debt directly with the employer and each case is assessed on its own merits. A mutually agreed repayment plan can be put in place, including repayments by instalment to minimise financial hardship.”

Warehousing

The Department of Enterprise, Trade and Employment said that to coincide with the lifting of the emergency suspension of the right to seek redundancy and in recognition of the challenges that some businesses would face in meeting the costs involved, “it is proposed that, for a limited period, the existing practice will be restructured to introduce a form of ‘warehousing’ of COVID-related redundancy debt.

“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, redundancy debt will be formally deferred or ‘parked’ for a defined period, with no interest or penalties applying.

“The Departments of Enterprise, Trade and Employment and Social Protection are working together with a view to finalising these arrangements and introducing amending legislation over the coming months.”