Shipbuilding (Redundancy Payments) (Hansard, 7 February 1978)

§ Mr. Kaufman

The broad principles of the schemes which my right hon. Friend proposes to implement by Order under the Bill are as follows:

Preliminary outline of schemes proposed for introduction under Clause 1 of the Bill.

(1) Two identical schemes would be introduced, one for British Shipbuilders, the other for Harland and Wolff. Both would begin on 1st July 1977.

Coverage of the schemes

(2) The schemes would cover all prescribed classes of employees of less than 65 years of age.

Benefits payable

(3) Benefits would be calculated in accordance with age and length of service in relevant companies. No employee would receive less than £300, irrespective of age and length of service, subject to having been employed by relevant companies for not less than one year.

(4) Employees between the ages of 40 and 64 would be eligible for length of service payments. Length of service would be defined as each completed year of total continuous service verifiable from the records of any relevant company as defined in Clause 1(3) of the Bill. To take account of the special circumstances of certain employees of certain ship-repair companies, any employee who established a qualifying period of service in accordance with the provisions for casual employment under the Redundancy Payments Act 1965 would be entitled to 476W payments for a corresponding length of service under the shipbuilding scheme.

(5) Length of service payments would range, by an even progression, from a minimum of two weeks for one year of service to a maximum of 80 weeks after 25 years of service.

(6) Length of service payments would be calculated in terms of multiples of the beneficiary's normal weekly earnings excluding overtime calculated in accordance with the provisions of the Redundancy Payments Act 1965, and taken at the average of the 13 weeks preceding redundancy. The payments would be divided into lump sum and income support; at the top of the length of service scale, for example, 40 weeks' average pay would be payable in a lump sum, and the remaining 40 weeks would be payable as income support, spread equally over two years.

(7) The income support payments would cease at the age of 65. If an employee made redundant obtained new employment at lower earnings within two years, his earnings would be made up for the balance of the two year period to 90 per cent. of his previous earnings in shipbuilding, or by the maximum income support payment payable to that employee, whichever produced the lower figure.

(8). No employee would receive total payments under the shipbuilding scheme and the Redundancy Payments Act 1965 adding up to more than two years' of his pay calculated as in paragraph (6) subject to the maximum earnings level fixed by the Redundancy Payments Act 1965, currently £100 per week.

(9) No employee who was made redundant would receive more than he would have earned by continuing in employment up to the age of 65.

(10) Employees over the age of 40 would receive age payments in addition to the length of service payments, ranging from £50 at age 41 to a maximum of £750 starting at age 55.

(11) Re-employment of a beneficiary under the scheme by a relevant company would be conditional upon the refund by the employee of a proportion of any lump sum payment calculated in proportion to the length of time for which the 477W employee has been redundant. For example, an employee who had received a lump sum payment based on 38 weeks' pay would be required to make a refund only if re-employed by a relevant company within less than 38 weeks.

Mobility payments

(12) If an employee, in preference to redundancy, applied for and obtained a job in another relevant company, his travelling and removal expenses would be reimbursed up to a maximum of £2,000.

Retraining

(13) If an employee, in preference to redundancy, agreed to retraining for a vacancy in his present company, his wages during training, if lower than his previous average earnings, would be made up to his previous average earnings for the duration of the training course. An employee who refused an offer of retraining as part of a manpower planning scheme which was agreed with the relevant trade union would not qualify for redundancy benefits under the scheme.

Cost

(14) The cost of a scheme on the above lines would vary according to the total number of beneficiaries, and the age, length of service, earnings and reemployment experience of the individual beneficiaries. Given that the scheme is predominantly oriented towards higher payments for increasing age and length of service, the age profile of the total beneficiaries would significantly affect the total cost.

(15) Using the same assumptions as those in the Financial and Explanatory Memorandum to the Bill—i.e., an age profile reflecting that of the industry as a whole—the cost per 1,000 redundancies, based on average earnings at September 1977, would amount to £1.5 million per 1,000 redundances. This is higher than the illustrative example in the Explanatory and Financial Memorandum to the Shipbuilding (Redundancy Payments) Bill because, in general, the scheme is of a fundamentally different kind to that on which the figures in the memorandum are based, being predominantly lump sum as compared with income support. In particular, a significant proportion of 478W the extra cost is accounted for by the fact that the scheme proposed would provide for significantly more generous benefits to those between 40 and 55 years of age as compared with the model.

(16) The maximum payment possible under the scheme would amount to £7,400—i.e., the amount required to bring the benefits under this scheme together with those payable under the Redundancy Payments Act 1965, up to the sum of £10,400 which is the ceiling referred to in paragraph 8 for a person earning £100 a week or more.