John Perry (Sligo-North Leitrim, Fine Gael) | Oireachtas source

I am taking this issue on behalf of the Minister for Finance. I thank Deputy Spring for raising this very important issue. I welcome this opportunity to address the Dáil on the subject of IBRC staff redundancies as the welfare of all employees is of utmost concern to this Government. Liquidation by its legal nature creates an immediate termination of all employment contracts with the resultant impact on the employees involved. The special liquidation order made under the Irish Bank Resolution Corporation Act 2013 is no different from other liquidations and for employees in IBRC, their employment was terminated with immediate effect following the passing of the Act on Thursday, 7 February 2013.

There is no doubt that this will have come as a shock to the employees in the bank. It is unfortunate that it was not possible to give more notice on this matter and I regret the abruptness of how this decision was communicated to the management and staff. However, it was imperative to keep the matter confidential due to the scale, sensitivity and complexity of the economic issues involved.

Nonetheless, unlike in other liquidations, it is very likely that the employees will be re-hired by the special liquidator for the duration of the liquidation on such terms as he may determine. Most employees have been rehired on monthly contracts. Some staff may be offered positions with NAMA or with other purchasers of the assets to continue to manage the loan portfolios. As is common in liquidations, the transfer of undertaking (protection of employment) regulations will not apply to the liquidation of IBRC.

Again, as would be the case in the liquidation of an Irish company with foreign subsidiaries, the liquidation of the Irish company does not automatically place the foreign subsidiaries into liquidation. This is the case for the IBRC and the foreign subsidiaries have not been automatically placed into liquidation as they have a separate legal existence. It is up to the special liquidator to decide whether or not to wind up those subsidiaries or to sell them as a going concern. Employees of IBRC subsidiaries, including foreign subsidiaries, have not had their contracts of employment automatically terminated. They remain employed by those subsidiaries pending the decision of the special liquidator on the future of the subsidiary. However, this is clearly a very difficult time for the employees of IBRC subsidiaries as they await the outcome of the special liquidation process.

Employees will rank as preferential creditors ahead of the floating charge holders and unsecured creditors in respect of certain amounts owing to them on a winding up, including accrued wages and salaries, holiday pay, sick pay, statutory redundancy, pensions contributions and claims for damages arising from accidents.

I will list the instances in which employees rank as preferential creditors. All wages and salaries in respect of services rendered to IBRC during the four-month period prior to the winding up, subject to a maximum claim of €3,174.35 per employee; all accrued holiday remuneration up to the date of the winding up; all sums due in respect of sick leave up to the date of the winding up; all contributions due from IBRC in respect of any superannuation benefits scheme, including a PRSA, and any contributions deducted from employees as at the date of the winding-up; statutory redundancy lump sums, less the amount of any rebate due from the Department of Jobs, Enterprise and Innovation; any compensation awarded by the Employee Appeals Tribunal in respect of pay in lieu of notice and in respect of any claim for unfair dismissal; and any compensation due under the Workmen's Compensation Act in respect of damages and costs in relation to an accident occurring in the course of employment prior to the relevant date, save to the extent insured. In the normal course of events, liquidators do not make payments in respect of preferential claims owing to employees until all assets have been realised, which in the case of IBRC is envisaged to take approximately six months. In those circumstances the employees will be able to make a claim in respect of two things: their statutory redundancy entitlements from the Social Insurance Fund, and arrears of pay, sick pay, holiday pay or pay in lieu of statutory redundancy notice, limited to €600 per week up to a maximum of eight weeks from the insolvency payments scheme. The Minister for Social Protection will rank as a preferential creditor of IBRC in respect of any payment made to employees of IBRC from the social insurance or the insolvency payments scheme. The special liquidators will assist any employee in respect of the processing of claims under the insolvency payments scheme or the Social Insurance Fund. Further information in relation to the Social Insurance Fund and the insolvency payment scheme is available on the Department for Social Protection's website.

In conclusion, I wish to take this opportunity to acknowledge the significant efforts the directors and staff of IBRC have made to the stabilisation and maintenance of value in IBRC. I regret the abruptness of how this decision was communicated to the management and staff. However, as already indicated, it was imperative to keep the matter confidential due to the scale, sensitivity and complexity of the economic issues involved.

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