The decision by the Irish government to compensate Magdalene women is welcome, but UK-based former laundry workers must not be disadvantaged.

Magdalene asylums grew out of the Evangelical rescue movement in the UK during the 19th century, whose formal goal was to rehabilitate prostitutes. In Ireland, the institutions were named for St. Mary Magdalene.

The Magdalene movement in Ireland was largely appropriated by the Catholic Church and the homes, which were initially intended to be short-term refuges, increasingly turned into long-term institutions. Penitents were required to work, primarily in laundries, since the facilities were self-supporting and not funded by the state or religious denominations.

Magdalene laundries operated in most of the major towns and cities of Ireland, the first starting in Dublin in 1765. Over the years they became more punitive and prison-like in nature. Throughout the 20th century, women placed in the laundries were single mothers whose babies were taken from them. Some young girls who had not had children were placed there simply for being a potential threat to the morals of the community. All were forced to work as laundry workers for no pay and held there against their will. Some women lived most of their adult lives in the laundries.

A recent enquiry has confirmed that the Irish government was responsible for regulating conditions in the laundries and colluded with the activities there by giving them contracts to handle laundry, and through the Garda who brought back women who managed to escape. It is estimated that, since their inception, up to 30,000 women were incarcerated in the Magdalene laundries. Unbelievably, the last such institution in Ireland closed in Waterford in 1996.

For many years the Irish government refused to acknowledge any responsibility for the laundries. Compensation claims made for workers were rebuffed until the government was forced to confront the issue in 2011 by the United Nations. This followed a highly influential report from the Justice for Magdalenes campaign group (JFM).

Since 2002 I have been acting on a pro bono basis for a number of British-based women incarcerated in these laundries, trying to obtain compensation for them. To this day some have still not told their own families about this part of their lives because of the stigma attached. In 2011, I assisted JFM in drafting proposals on the quantification of general damages for Magdalene workers when it became clear that a compensation scheme was likely to be set up in the wake of the UN report.

On 26 June 2013, in response to the report by judge John Quirke, the Irish government announced that Magdalene laundry victims will now be entitled to a scheme including:

• Financial compensation, starting at €11,150, for women who worked in a laundry for up to three months, rising to €68,500 for those incarcerated for five years and a maximum payment of €100,000 for those held in laundries for 10 years or more;

• Women who are entitled to more than €50,000 through the scheme will receive a €50,000 lump sum, plus an annual payment calculated from the remaining sum, which will be paid weekly;

• A pension of €100 per week rising to €230 pw from pension entitlement age;

• All cash payments, for Irish claimants at least, will be exempt from income tax and other taxes and will not be taken into account in means testing for social welfare or other benefit.

The four main religious institutions responsible for the laundries have just announced that they will not be contributing to the cost of the scheme, estimated to be around €50m.

The scheme will pay less than court-awarded damages in some cases but no evidence is required save for residence records. The award of a state pension of €100pw rising to €230 per week, from pension eligibility age, to all Magdalene workers, no matter how long they worked in a laundry, is extremely welcome.

The scheme should therefore be quick and simple to administer which is just as well as applicants are not able to claim legal costs to assist with their claim. However, potential problems remain for former laundry workers now residing in the UK who may be at a disadvantage to their counterparts residing in the Republic of Ireland.

The report recognised that for laundry workers residing in the UK, any payment made to them will be regarded as income and capital for means-tested benefits purposes. In the UK when payments which are ‘made in consequence of any personal injury to the claimant’and paid into a fund known as a personal injury trust’, that payment is disregarded for means-tested benefit purposes.

There is uncertainty here as to whether the compensation payments will be considered by the UK government to be derived in consequence of a personal injury. If not, the beneficiary may lose their entitlement to means-tested benefits and support.

Unfortunately, the report offered no direction on this and it remains unresolved, saying that it should be a matter for the UK government and dialogue at a political level, where possible, with a view to ensuring certainty on this matter is all it can recommend.

We know from our previous experience that many UK-based claimants will be in receipt of means-tested benefits and so are at risk of their benefits being affected. Magdalene laundry workers residing in the UK should not be penalised further either by the Irish or British governments. The only fair and equitable way to treat them is by setting up a personal injury trust for all payments, without exceptions, so that these women can receive their payments tax-free and without effect on benefits.

We have written to the Irish government to encourage them to make use of our experience in this area and to find a fair and equitable way forward. We eagerly await their response.

Patrick Allen is senior partner of Hodge Jones & Allen