Department of Social Protection to write off €345m over unpaid redundancies

The Department of Social Protection is set to write off €345 million owed by companies for unpaid redundancy and insolvency payments.

A total of €459 million is owed by companies after the department had to step in and cover workers’ redundancy payments and other insolvency costs. Some 60 per cent of the 9,306 companies that owe the State money are either insolvent or dissolved.

The chairman of the Dáil public accounts committee, Sean Fleming, said there was a “complete imbalance” between how the department chases up individuals for debts, compared with its attitude to money owed by companies. He said there appeared to be “no effort to collect money due to the State” from companies.

The Laois TD said the committee would “be following up” on why there was such a low return on companies’ debts.

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He believed some companies were using the liquidation process to shed their debts and then reorganise to start trading again. “There doesn’t seem to be any follow-up. Companies are re-trading and are profitable, and we are instead chasing old age pensioners for overpayments made.”

The Department of Social Protection said the vast majority of the debts owed by companies for unpaid insolvency or redundancy payments would be written off from this year. About €330 million of the debts are owed by companies that became insolvent during the recession, between 2011 and 2014.

“When employees cannot secure a redundancy or insolvency payment from their employer when a business ceases to trade, the department steps in and funds the redundancy payment, and then raises a liability against the employer, which it seeks to recover through the liquidation process,” a department spokeswoman said.

Figures supplied to the public accounts committee show that between 2000 and 2009, the State wrote off more than €1 billion in unrecovered debts from redundancy payments.

Welfare fraud

Minister for Social Protection Leo Varadkar recently launched a campaign encouraging people to report suspected welfare claims fraud. An advertising campaign to encourage the reporting of fraud is expected to cost more than €200,000.

Figures from the department indicate that €26 million was recovered from €41 million fraudulent claims made by individuals last year.

Mistakes made by claimants filling out documentation and Department of Social Protection staff errors resulted in overpayments of €49 million last year.

Last year €2.3 million was paid out to welfare recipients “incorrectly due to administrative errors made by the Department’s staff in computing or determining eligibility” a spokeswoman for the Department said.

Some €46.7 million was paid to welfare recipients who had incorrectly filled in documentation, or failed to report a change in their circumstances. And a separate €20 million was found to have been overpaid to claimants last year in pension entitlements after the person had died.

In total the Department recovered €82 million last year from overpayments, and €80 million in 2015. Mr Fleming said the Minister was “chasing people wearing ‘fake beards’, and making no effort” to collect the substantially larger sums of money owed by companies.