Redundancy payments to be processed for HMV staff – Varadkar

Minister Varadkar said today that the Department of Social Protection will deal promptly with Redundancy and Insolvency applications in respect of the former employees of HMV when they are received from the Liquidator.

Employees who lose their jobs because of the liquidation of their company are entitled to statutory redundancy payments and to wage related payments due at the time of the liquidation.

Four HMV stores were shut earlier this year and the company has reportedly gone into liquidation before the payment of redundancy.

Minister Varadkar said that eligible staff would be entitled to payments from the State under the Redundancy and Insolvency Payments schemes.

Redundancy Payments

The purpose of the Redundancy Payments Scheme is to compensate workers, under the Redundancy Payments Acts 1967 to 2013, for the loss of their jobs by reason of redundancy. An eligible employee is entitled to two weeks statutory redundancy payment for every year of service, plus a bonus week. Compensation is based on the worker’s length of reckonable service and reckonable weekly remuneration, subject to a ceiling of €600 per week.

In order to qualify for a statutory redundancy payment, an employee must:

• have at least two years continuous service
• be in employment which is insurable under the Social Welfare Acts
• be over the age of 16
• have been made redundant as a result of a genuine redundancy situation meaning that the job no longer exists and the employee is not replaced

Insolvency Payments Scheme

The purpose of the Insolvency Payments Scheme, which operates under the Protection of Employees (Employers’ Insolvency) Act, 1984, which, in turn, derives from EU Council Directive 987/80, is to protect certain outstanding pay-related entitlements due to employees in the event of the insolvency of their employer, i.e. where the company enters liquidation or receivership.

These entitlements include wages, holiday pay, sick pay, payment in lieu of minimum notice due under the Minimum Notice and Terms of Employment Act and certain pension contributions. Various other statutory awards, for example those made by the Employment Appeals Tribunal, Rights Commissioners are also covered by the Scheme.

Payments are calculated by reference to an employee’s wages and are subject to a maximum limit of €600 per week. Payments of arrears of wages, sick pay, holiday pay and minimum notice are limited to a maximum of 8 weeks.

All applications under the Insolvency Payments scheme must be made by a liquidator on behalf of the insolvent company. Payments under the scheme will be paid through the liquidator and any tax and PRSI deductions are usually made by them.

Redundancy and Insolvency payments will be paid after the liquidator is appointed. The liquidator is responsible for filing the relevant documents with the Companies Registration Office, in particular the Statement of Affairs (financial statement).

ENDS