Louise O'Reilly (Dublin Fingal, Sinn Fein)
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I move amendment No. 3:

In page 13, after line 32, to insert the following: “Amendment of Act of 2014

28.The Act of 2014 is amended by the insertion of the following sections after section 621:

“Power of the Court to return assets which have been improperly transferred

621A. (1) The court has the following power where, on the application of the Minister or the liquidator and/or employee representative and employees’ recognised trade union in respect of a situation in which collective redundancies have arisen in circumstances in which the employer is insolvent, it can be shown that—

(a) the employer is unable to fully discharge the debts owing to the employees,

(b) any property of the company of any kind whatsoever was disposed of either by way of conveyance, transfer mortgage, security, loan or in any way whatsoever whether by act or omission, direct or indirect, and

(c) the effect of such a disposal is to perpetrate a fraud on the company’s employees by leaving inadequate resources to discharge the entitlements of the employees who are subsequently made redundant as a result of the employer’s insolvency.

(2) The power of the court is to order, if it deems it just and equitable to do so, any person who appears to have—

(a) the use, control or possession of the property concerned, or

(b) the proceeds of the sale or development of that property, to deliver it or them, or pay any sum in respect thereof, to the liquidator on such terms or conditions as the court thinks fit.

(3) If the Minister makes a payment to employees pursuant to section 10 of the Protection of Employees (Employers’ Insolvency) Act 1984, then the Minster shall have the right to make an application under subsection (1) in order to recover the sum expended.

Preferential Creditor status for employees

621B. (1) Assets or value accrued pursuant to section 621A, form part of the assets of the employer for the purposes of the liquidation and shall be distributed in accordance with section 621.

(2) Notwithstanding the generality of the foregoing, payments due to discharge the entitlements of the employees who have been made redundant as a result of the employer’s insolvency shall have priority to all other debts.”.”.

This amendment seeks to provide protection for workers in collective redundancy cases where their employer is insolvent and to give power to the High Court to return assets that have been improperly transferred and give that preferential status to employees. The intention of this amendment is to build on the Duffy Cahill report recommendations to ensure limited liability and corporate restructuring are not used to avoid a company's obligations to its workers. For many years workers, trade unions and parties in opposition have been seeking legislative protections for workers on collective agreements. If we look back at the history of this there have been several attempts to do this, all of which have proved this area is very fraught and complex. We completely understand it is not easy and nobody in my party has sought to try to trivialise this or oversimplify it in any way. We do not for a moment believe it is not complicated; it is incredibly complicated.

The Minister of State's Government outlined intentions to deliver legislative improvements in this area and while all improvements in this area are massively welcome. This Bill does not address the situation whereby workers are treated as unsecured creditors for the purpose of their collectively-bargained redundancy agreements. We should remember that for every collectively-bargained redundancy agreement there is give and take and very often people have given over that which they get back for the redundancy agreement within the collectively agreement for the redundancy part of it. There is always give and take, and we saw that with Debenhams, where the workers had conceded a number of issues and in return for that got a collective redundancy agreement they thought gave them some status. When they found themselves in the courts as part of their campaign it turned out that did not have the status it perhaps should have. That is not right and needs to be addressed. During collective redundancy cases in the event of liquidation the phrase "a company's obligations to its employees" is very frequently used. It was used in the Duffy Cahill report and this point is the focus of the amendment. We cannot have companies doing what are known as tactical insolvencies and we have seen numerous examples of that, such as when a company is broken up into different components with the bits that are profitable being sold off and people walking away with the money. The operational parts are left intact and the State and the workers have to shoulder the liability in that case. When the profitable parts are gone the parts that are not profitable are left and it is the workers who are left holding the baby on that, so we have seen tactical liquidations.

What I want to ensure is that companies can no longer engage in the practice of tactical insolvencies, and that is the purpose of this amendment. I do not think anyone disputes that goes on. We may have disagreements about the extent to which it goes on. That is fine, but it goes on. This legislation is an ideal place to ensure that practice is stopped and that is the purpose of my amendment.