Dara Calleary (Mayo, Fianna Fail) | Oireachtas source

I cannot accept this amendment. With regard to the proposed new section 621A, section 608 of the Companies Act 2014 already provides that where it can be established that the effect of a transfer of assets has been to defraud creditors of the company or its members, a court can order the return of those assets that have been improperly transferred. This would apply in some of the circumstances to which the Senator alluded. In this provision, the term "creditor" includes employees of the company concerned. Consequently, workers are already entitled, as creditors, to apply to a court for the return of assets that have been improperly transferred. Regarding subsection (3) of the Senator's proposed new section 621A, section 10 of the Protection of Employees (Employers' Insolvency) Act 1984 already provides for this transfer of rights and remedies of the employee to the Minister in these circumstances. I do not see that there is sufficient added value to be gained through the proposed new section 621A.

There are two key points to make about the proposed new section 621B. First, and most straightforward, is that the Senator's proposed amendment will not offer enhanced redundancy to anyone.The entitlements of an employee that are currently treated as preferential debts in a liquidation are simply their statutory entitlements, namely entitlements to statutory redundancy where applicable and to certain pay-related debts such as arrears of wages and holiday pay. These are effectively underwritten by the State from the Social Insurance Fund in cases where the assets of the insolvent company are insufficient to discharge these debts. In a company insolvency, employees are generally preferred creditors for the purpose of any balance normally owing to them outside these parameters.

The Ministers of State, Deputies Richmond and Higgins, have already spoken about the dangers of creating separate classes of workers. I fully recognise that in redundancy situations, solvent companies take different approaches, depending on a wide range of factors, and that some employees benefit from significantly better terms than others. This is a matter for negotiation between the employer and employees or their representatives.

It is a wholly different matter for the State to place enhanced redundancy packages on a statutory basis in an insolvency situation. The State treats all employees equally and provides them with the same protections. If it gave statutory recognition to enhanced redundancy packages, it would involve the State treating workers who are in the same circumstances in different ways. The State cannot and should not make such arbitrary distinctions, and it would likely be unconstitutional to do so. It would also impose additional costs on the Social Insurance Fund, to the detriment of others who rely on the floor-level protections it provides, and ultimately the Exchequer.

I fear it would also have a knock-on effect on other creditors, such as SMEs and suppliers, which are themselves employers and which, due to liquidity issues, may find themselves making their own workers redundant. As preferential debts include rates and taxation claims, the State is also a preferential creditor. Such a proposal would adversely affect the Exchequer, potentially depriving the taxpayer of moneys owed to local authorities, the Department of Social Protection and the Revenue Commissioners. It could incentivise employers and employees to reach enhanced collective agreements ahead of insolvency in the knowledge that they would be funded from the sale of assets or State funding via the Social Insurance Fund, or both.

I appreciate the intention behind this amendment and know where it is coming from but I am concerned that far-reaching implications and potentially significant unintended consequences may arise if it is accepted. Any change to the carefully balanced order of distribution in a liquidation requires in-depth examination and does not involve a decision that can be made without due consideration of all these issues.