Social Security (Amendment No.20) (Jersey) Law 2012 (Appointed Day) Act 201-

Information about the publication of Ministerial Decisions

A formal published “Ministerial Decision” is required as a record of the decision of a Minister (or an Assistant Minister where they have delegated authority) as they exercise their responsibilities and powers.

Ministers are elected by the States Assembly and have legal responsibilities and powers as “corporation sole” under the States of Jersey Law 2005 by virtue of their office and in their areas of responsibility, including entering into agreements, and under any legislation conferring on them powers.

An accurate record of “Ministerial Decisions” is vital to effective governance, including:

demonstrating that good governance, and clear lines of accountability and authority, are in place around decisions-making – including the reasons and basis on which a decision is made, and the action required to implement a decision
providing a record of decisions and actions that will be available for examination by States Members, and Panels and Committees of the States Assembly; the public, organisations, and the media; and as a historical record and point of reference for the conduct of public affairs

Ministers are individually accountable to the States Assembly, including for the actions of the departments and agencies which discharge their responsibilities.

The Freedom of Information Law (Jersey) Law 2011 is used as a guide when determining what information is be published. While there is a presumption toward publication to support of transparency and accountability, detailed information may not be published if, for example, it would constitute a breach of data protection, or disclosure would prejudice commercial interest.

A decision made on 7 September 2012:

Decision Reference: MD-S-2012-0071
Decision Summary Title :	DS Insolvency Lodge Appointed Day Act		Date of Decision Summary:	4 September 2012
Decision Summary Author:	Policy Principal		Decision Summary: Public or Exempt?	Public
Type of Report: Oral or Written?	Written		Person Giving Oral Report:	N/A
Written Report Title :	WR Insolvency Lodge Appointed Day Act		Date of Written Report:	4 September 2012
Written Report Author:	Policy Principal		Written Report : Public or Exempt?	Public
Subject: Social Security (Amendment No. 20) (Jersey) Law 2012 (Appointed Day) Act 201-.
Decision(s): The Minister decided to lodge ‘au Greffe’ for States debate an Appointed Day Act that would bring into force the Social Security (Amendment No. 20) (Jersey) Law, 2012, on 1 December 2012.
Reason(s) for Decision: The Social Security (Amendment No. 20) (Jersey) Law, 2012 will introduce an insolvency benefit to provide a reasonable proportion of amounts owed to employees whose employment has ended due to their former employer’s bankruptcy. Four components of benefit will be available to claim; unpaid wages, holiday pay, statutory notice pay, and statutory redundancy pay. The benefit will replace the non-statutory temporary insolvency scheme that provides compensatory payments in lieu of statutory notice (established by the Social Security Minister under R.44/2009, as extended by P.67/2009 and R.74/2011).
Resource Implications: There are no financial or manpower implications. In the short term, the benefit will be funded from Social Security Fund resources.
Action required: Policy Principal to request the Greffier of the States to lodge ‘au Greffe’ the above-mentioned projet by 11 September and to list it for States debate on 9 October 2012.
Signature:		Position: Minister
Date Signed:		Date of Decision (If different from Date Signed):

Social Security (Amendment No.20) (Jersey) Law 2012 (Appointed Day) Act 201-

Social Security (Amendment No. 20) (Jersey) Law 2012 (Appointed Day) Act 201-

Background

The Social Security (Amendment No. 20) (Jersey) Law 2012 (Appointed Day) Act 201- will amend the Social Security (Jersey) Law 1974 from 1 December 2012 to introduce a new insolvency benefit.

The Social Security (Amendment No. 20) (Jersey) Law 2012 (‘Amendment 20’) was adopted by the States on 9 June 2011, sanctioned by Privy Council on 14 December 2011 and registered in the Royal Court on 6 January 2012.

Amendment 20 sets out;

The conditions that must be met for entitlement to insolvency benefit
The components used to calculate benefit
The method of calculating benefit
A mechanism to recover amounts paid in benefit via insolvency proceedings.

In 2009, the Minister for Social Security had introduced a ‘temporary insolvency scheme’[1] that paid compensatory statutory notice pay to employees who had been made redundant due to the insolvency of their employer. That temporary scheme will close to new claims as of 30 November 2012. Insolvency benefit will be available to entitled employees who lose their employment on or after 1 December 2012 due to the bankruptcy of their employer.

Entitlement to Insolvency benefit

Insolvency benefit will provide financial assistance where a person meets the following conditions;

The employer (or former employer) of the person must be bankrupt and this must be the main reason for the fact that the person is no longer employed.
The person must have been an “employee” within the meaning of the Employment (Jersey) Law, 2003.
The person must have been employed wholly or mainly in Jersey.
The employer must have been liable to pay Class 1 contributions in respect of that person in any one or more months in the three months prior to bankruptcy.
The employer must owe the person amounts in respect of one or more of the four components of the benefit.

Components of Insolvency Benefit

Insolvency benefit is calculated based upon any amounts owed to a person by their former employer in respect of the following four components of benefit;

Unpaid wages relating to the 12 months prior to cessation of employment; ‘wages’ as defined by the Employment Law.
Holiday pay, or pay in lieu of holiday relating to the 12 months prior to cessation of employment.
Statutory redundancy pay; 1 week’s capped pay for each year of service, in accordance with the Employment Law.
Pay in lieu of statutory period of notice on termination of employment; up to 12 weeks’ pay, in accordance with the Employment Law.

Calculating benefit

Insolvency benefit is calculated by adding together the components that the person was owed by their former employer and making any appropriate deductions, including Social Security contributions and Income Tax where such deductions would be due on those sums. The maximum amount of insolvency benefit that may be paid to a person is capped at £10,000.

Recovery via insolvency proceedings

The Social Security Minister takes on the right as a creditor to claim any amount of benefit that has been paid out to a person when the proceeds of any remaining assets of the company are distributed amongst the creditors (the insolvency proceedings). Any sums recovered will be refunded to the Social Security Fund.

If a person is owed any other amounts by their former employer that they have not received as paid as part of the benefit, the person may pursue these claims separately as a creditor in the insolvency proceedings.

Financial and Manpower implications

In the short-term, Social Security contributions will not be increased and funding for the benefit will be drawn from Social Security Fund resources.

In 2009, it was estimated that a funding requirement of £350,000 per year would be required that would have been achieved by increasing Class 1 employer Social Security contribution rates by 0.032 percent. Given the difficult economic climate and the potentially small amount of funding required, the former Minister decided that employer contributions would not be increased to fund the insolvency benefit in the short-term.

A small increase in employer contributions will be required to fund this benefit in the future. More defined estimates of the funding requirement for the insolvency benefit will be available based on actual benefit spend.

[1] Further details can be found on the States Assembly website www.statesassembly.gov.je; See R.44/2009, which was extended by P.67/2009 and R.74/2011.