OBSERVER: The upcoming Finance Bill provides the Government with an excellent opportunity to give people faced with redundancy much more favourable tax treatment. The Redundancy Payment Acts 1967-91 also need fundamental reform to provide for more realistic statutory payments. It now appears that such an initiative is unlikely to take place before a general election but it should be top priority for any new administration.

The Minister for Finance has already indicated his intention to introduce a special tax claw-back scheme in the Finance Bill for certain sportspersons ending their sports career. This generous proposal would enable them to claim back tax amounting to 40 per cent of their gross earnings from sport over a 10-year period.

For high earners this could produce an attractive lump-sum payment of approximately 400 per cent of an annual gross income on retirement from their chosen sports career. Not a bad bonanza for the high-fliers. Surely the case for better tax treatment of ordinary compliant taxpayers with no alternative source of income is now equally worthy of Government attention.

Statistics compiled by the Department of Enterprise, Trade and Employment suggest the number of job losses announced this year will be the highest since 1993. In 2001, 19,828 people were notified of redundancy. This compares to 13,316 for 2000. However, the actual number of job losses may be even greater than this because official statistics do not account for redundancies at many small firms.

Nonetheless, with notified redundancies for the whole of 2001 being 49 per cent higher than in the previous year, and with the December 2001 figure alone being 60 per cent higher than in December 2000, we can see how serious the redundancy problem has become.

Indeed, the Government's estimates for this year allow for an increase in redundancy payments of 82 per cent above last year's levels. Yet the total provision for redundancy payments expenditure comes to only €51 million. Thus, a significant increase in the level of payments would represent only a small proportion of the social insurance fund surplus.

In a recent submission to the Minister for Enterprise, Trade and Employment, Ms Harney, SIPTU sought a number of changes to statutory redundancy entitlements, including more favourable treatment for lump-sum payments, which would be more in line with the European norm.

It suggested that lump-sum payments should be increased from the present basis of half-a-week per year of service up to age 41 and one week per year of service thereafter to three weeks pay per year of service irrespective of age. There is also currently one additional week's pay due for a redundant worker but, SIPTU believes, that should be doubled.

The money to pay for this exists in the Social Insurance Fund, despite it being raided by the Minister for Finance for €645 million to balance the recent Budget. Estimates suggest the fund will still be in surplus by €1.2 billion at the end of this year.

In SIPTU's view, these changes are desirable and necessary if we are to eliminate age discrimination from the legislation and put statutory redundancy payments at a more realistic level for those now leaving their employment.

Immediate provision for education and training courses should also become a feature of any redundancy settlement, with all the State agencies co-operating in ensuring that periods of redundancy become periods of personal development and up-skilling.

SIPTU has suggested that the qualifying period be reduced from the current two years' continuous employment to one year. Such a change would be consistent with the qualifying periods of other protective legislation, such as the Unfair Dismissals Act.

There was also a request to improve the mechanism for calculating qualifying service in line with the rapidly changing nature of employment, where the job-for-life prospect is now very unlikely.

Department interpretations of qualifying service are currently rigorously applied and service is rounded up to or down to the nearest six months - even if the difference is marginal, a day perhaps. Some sort of averaging mechanism or scaling system - as introduced in the proportionality mechanisms for social welfare entitlements - could be introduced. In general, service should be rounded up, in a more generous response to calculating entitlement.

The ceiling for the calculation of lump-sum statutory entitlements stands at £400 (€508) per week or £20,800 per annum. This ceiling should be abolished or indexed from a new, higher, agreed figure in line with pay movements of average industrial earnings. The abolition of the current ceiling for the calculation of lump-sum payments should be replaced by a much higher figure, to be automatically indexed thereafter.

The European Commission is proposing to revise the 1980 Directive on Protecting Workers in the event of insolvency of their employer.

While Irish workers can claim back-wages, holiday pay, sick pay and statutory minimum notice up to a maximum of eight weeks' pay, the Commission proposes to increase that figure to 12 weeks, but the European Parliament has voted to support a figure of 24 weeks.

The Government has an important decision to make on that before the Employment Council next Thursday. It should support a more progressive approach to compensation for job loss to enable people to protect their living standards while seeking alternative employment.

• Mr Des Geraghty is general president of SIPTU