Small businesses paying 100 per cent of redundancy is ‘manifestly unfair’

Fine Gael Deputy Michelle Mulherin raised the issue of the abolition of the employers' rebate in respect of statutory redundancy lump sum payments in the Dáil this week.

The Deputy said: “From the experience on the ground, I believe that this measure in the budget is having a devastating effect on sole traders, whether they are renting or they are owner-occupiers. They could be downsizing, winding down their businesses either because of current economic climate or for health or retirement reasons, and would need to come up with a lump sum for employees, and they would now have to pay 100 per cent of it. The way these small businesses are going, they do not have the money. They will be in position where they will become personally liable. Their personal assets become liable for a redundancy debt which could see them having to mortgage or sell their own homes to pay a debt of a redundancy lump sum to an employee.”

Deputy Mulherin continued: “I know a business person in the process of downsizing their small business who had to pay redundancy of €40,000 to an employee. That individual cannot get €10,000 to pay the tax man to get a tax clearance certificate to allow them conduct their business. The vulnerable are the sole traders like the owners of shops, pubs, and restaurants who do not have the protection of the corporate veil, which means their personal assets, including a family home, could be required to discharge a redundancy payment.”

The Deputy said that people are trapped as: “Many small businesses are not making a profit and many men, women, and couples engaged in them are barely earning what we would call a living to support themselves or their families. These are small businesses, and if they go to the wall, these people are not even entitled to mainstream social welfare payments. This is a desperate situation for many and it is biting on the ground. Not only have they got a dead business in some cases but they find that if they wind it up, they are personally liable to pay employees who obviously need a redundancy payment.”

In conclusion Deputy Mulherin said: “It must be pointed out, however, that during the boom times when there was money in this country, 60 per cent of the cost of the redundancy payment was covered by the Government. Now, with these businesses on their knees and on the back of TalkTalk going bust when it did, which heaped the cost of those redundancies on the State, small businesses are being asked to pay 100 per cent of the redundancy. That is manifestly unfair. These sole traders should not be treated the same as large multinational corporations which in many cases were incentivised to come to this country at a cost to the Exchequer when businesses are struggling and feeling very hard-pressed. An exceptional case must be made for people who are not trading under the corporate veil. That issue must be seriously examined.”

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