Ms Maeve McElwee:

The Deputy has raised a key consideration and concern, which is that any collective agreement agreed privately in a business between an employer and its employees is negotiated without any agreement with the State. There is an enormous challenge, therefore, in terms of the liability that might ultimately rest with the State. If the State had to honour collective agreements on redundancy payments or ex gratiapayments in the case of the liquidation of a very large employer or many small employers, that could overwhelm the Social Insurance Fund very quickly. It is important to remember that collective agreements are industrial relations agreements. They tend to be of the time that they are negotiated. They can be, and in many cases are, renegotiated as circumstances within organisations change. It will be extremely difficult for the State to consider legislating for one aspect of a collective agreement that may contain many different clauses in respect of terms, conditions, rights and entitlements as they pertain within an individual employment in the normal course of operations.

The clear question in this regard and in the context of fairness and equity is whether there is a deliberate attempt to put the assets of the business beyond the reach of the employees so that they cannot access their statutory entitlements. We know that in the vast majority of cases, that is not an issue. These are legitimate liquidations. They are legitimate redundancies that arise. They are very difficult circumstances. Unique circumstances can arise, and have arisen previously, but this is not an issue in the vast majority of cases. My understanding is that in the case of Debenhams, which gives rise to our discussion today, there was no effort to put funds out of reach so that employees could not draw down their statutory entitlement. We need to recognise that and consider the precedent that the Bill may set.

The unintended consequence of something such as that, of course, is that as employers see themselves struggling into a difficult circumstance, rogue employers may find themselves in a situation where they may negotiate agreements internally and privately with no reference to the State or the State’s requirements to pay in any liquidation collective agreements and ex gratiapayments that go way beyond what they might otherwise do in their existing financial circumstances. Again, I am not suggesting that it would happen or that there would be a wholesale challenge to it but it may happen and it may be the unintended consequence of this type of legislation. Ultimately, the biggest issue for any employer is that these are people who are being treated differently and the challenge of creating different classes of employees with different entitlements, depending on how they might be made redundant and not recognising the fact that no matter how one is made redundant, one is still in many situations facing exactly the same set of challenging circumstances. However, some may be more challenged than others.

When we come just to that question of preference, obviously, as we already outlined, there are preferences built into the existing legislation. However, we have to remember that when preference is given to one creditor over another, and in this case, if it were to be employees in an insolvency situation, that money comes from somewhere, and the liquidator has to make those decisions. In many cases, that will come in terms of not paying other suppliers to that business and where they are small firms and do not get paid, we in turn just move that misery of financial challenge down through other organisations as well. There is already a balance in the legislation that tries to balance the rights of those who have preferential claim on anything that the liquidator has to adjudicate on in terms of who gets the payments that are being made through the current and existing processes under both company and employment rights legislation.

On the ongoing discussions with the Minister of State, Deputy English, it is my understanding that the liquidator will now be obliged to have 30 days of consultation with the employees because at that point they supersede the employer in situations of liquidation to engage with employees who are being made redundant through a liquidation process.