David Cullinane (Waterford, Sinn Fein) | Oireachtas source

I move: "That the Bill be now read a Second Time."

I welcome the opportunity to move this Bill on Second Stage. Picture the scene. It is June 2015. Clerys is broken into two companies; one is the operations company that employs the workers and the other is an assets company. The assets are transferred from the operations company 24 hours before it is liquidated. Workers are left high and dry and the owner of the company sells the assets and pockets the takings. Meanwhile, the taxpayer foots the bill as workers' entitlements are paid from the insolvency fund. Welcome to Ireland and the world of tactical insolvencies.

This has happened in the past. Clerys was the most high-profile case and captured the imagination of the public. Obviously people were sympathetic to the workers who lost their jobs and were left high and dry but, unfortunately, it was not the only time that this has happened. Party leaders, quite rightly, queued up to offer sympathy but we have to go beyond what has been described in the past as "tea and sympathy" and do something about the situation. Tonight, we have an opportunity to support this Bill and to make sure that another situation like that of Clerys does not arise again in this State.

The purpose of this Bill is to provide for protections for employees in situations of collective redundancy in which the employer is insolvent. We have seen far too many cases over the years in which companies have used the courts to engage in tactical liquidation to avoid paying their debts to their employees and creditors. The cost of this is ultimately borne by the State. In effect, such tactical insolvencies are fraud and amount to theft - the theft of workers' pay and pensions, the theft of goods and services from other companies and the theft of revenue from the State. At present, all of this is perfectly legal but of course we know it is wrong and consequently there is a responsibility on Deputies as legislators to fix this problem. I hope that no Deputy here would purposely allow the continuation of the present loopholes which allow for fraud against ordinary working people and struggling contractors. I sincerely hope that no Deputy here would allow workers to be left with wages unpaid and contractors left with unmet invoices because of the ruthless actions of a selfish few - and it is only a selfish few. The vast majority of employers are decent and would not engage in the type of practices that we saw in the case of Clerys.

I respectfully call on all parties to support this Bill. I specifically call on the Government and Fianna Fáil to support it. Very often we have moved Bills in this House and the Government has critiqued elements of them. We have no difficulty with that. Committee Stage is the place to work out any difficulties the Minister or Fianna Fáil may have with the Bill, but let there be no doubt about it; doing nothing is not an option. Telling us we must wait is not an option. We need to rectify this situation and we need to do it quickly.

The Bill has the support of the Mandate trade union, Unite the Union, the Communication Workers Union and the Financial Services Union. Moreover, the Irish Congress of Trade Unions has consistently called for action on this issue. It perceived it as one of its main priorities and before the last general election lobbied all parties to do something about this issue. These are all private sector unions and they are the unions that must deal with the mess which is continuously created by this loophole.

The impetus for this Bill lies with the 2016 Duffy-Cahill report and I will give some background to the circumstances that led to it. On 12 June 2015 - two years and two weeks ago - the 130-strong workforce of Clerys was sacked without notice and another 330 workers employed by the store’s concession outlets were locked out of their jobs and left facing an equally uncertain future. Clerys was bought by Natrium some time between midnight and 1.15 a.m. on that day and was declared insolvent that afternoon. The workers did not receive any notice. Many of them heard about their job losses through social media or phone calls from friends. They did not receive the statutory redundancy lump sum from the new owners and nor were they paid moneys owed in lieu of redundancy and holiday pay. The obligation to pay for workers' entitlements was left on the State. The company made millions from transferring its assets to a different company. It sold the assets and was away on its toes while the workers were left high and dry and the taxpayer was left to foot the bill.

I do not believe the Minister would stand over that. The then Taoiseach, Deputy Enda Kenny, did not. He quite rightly said this must be dealt with and showed solidarity with the workers of Clerys at that time. I wish to put on the record that I accept he showed solidarity.

Six months later, on 4 January 2016 the then Minister for Jobs, Enterprise and Innovation, Deputy Bruton, and the then Minister of State with responsibility for business and employment, Senator Ged Nash, commissioned a twin-track examination of protections in law for employees with a particular focus on ways of ensuring that the laws surrounding limited liability and corporate restructuring were not used again to avoid a company’s obligations to its employees. The task was given to Ms Nessa Cahill and Mr. Kevin Duffy and they presented their findings on 26 April 2016. They found that:

All of those employees [at Clerys], most of whom had accrued significant service, were made redundant when the company by which they were employed became insolvent and was placed in liquidation. They were dismissed without notice and ... the employer did not engage in the type of consultation with their representatives [that one would expect], in this case their trade union, envisaged by the Protection of Employment Acts 1977 to 2014.

Those Acts then did not apply. They also found "The employer did not pay the statutory redundancy lump sums to which they were entitled under the Redundancy Payments Acts 1967 to 2014 ... nor did they receive payment from the employer of other amounts due to them arising from their employment, such as payment in lieuof notice and compensation in respect of accrued holidays."

Companies, unfortunately, go out of business and in the majority of cases the employers use the established mechanisms to do right by their employees. It is important that we acknowledge when companies do right because, as I have said, the vast majority do. In this case, the Clerys insolvency was preceded by a company restructuring, which involved a separation into two different entities of the principal property asset and the operations of the business.

That was done solely to deprive workers of their entitlement and to allow the company to make huge profits while at the same time liquidating. It was asset stripping a company. It liquidated it, made the workers redundant and bagged all the profits. When the operating entity subsequently became insolvent and went into liquidation, the employees lost their employment without warning or notice and, as an apparent result of the transfer of this asset, the moneys owing to the employees were not paid.

The Protection of Employees (Collective Redundancies) Bill 2016 will provide legislative support for workers to ensure this does not happen again. The main recommendations in the Duffy-Cahill report underpin the Bill. It will provide protection for employees in collective redundancy cases where the employer is insolvent. It will give power to the High Court to return assets which have been improperly transferred and give preferential status to employees. The Bill simply allows the High Court to adjudicate on these matters. If the High Court determines that what happened in Clerys were to happen again where assets were transferred purely for the purpose of a tactical insolvency it could then order the assets to be transferred back to the principal company or the liquidator to ensure that workers were paid. I cannot see how any reasonable person could oppose such a measure. The mandate given to Ms Cahill and Mr. Duffy was to focus on ways of ensuring that limited liability and corporate restructuring are not used to avoid a company’s obligations to its employees.

The Bill also provides for a 30-day consultation period where it is known that the company's liabilities are such that they will trigger redundancies. The Minister will also remember the case of TalkTalk in Waterford and many cases over the years where workers were not given proper notice. Many of these workers found out their jobs were lost through social media. Workers need protections in law to ensure they are given proper notice and that proper consultation takes place with the trade unions and the worker representatives. Of course, this does not always happen. The Bill rights that wrong by balancing the rights of the employee and the rights of the employer. It is only in cases where the High Court deems a fraud to have occurred that it will require the assets to be returned to the liquidator for disbursal among the employer's creditors, including the former workforce.

The Bill also provides for a 30-day consultation period between those in control of a company and the employees where the owners believe that the company is on an irreversible road to closure. Failure to comply with the obligations of this Act will lead to a fine of up to €5,000. I believe this to be a reasonable penalty and again all decisions relating to such matters lie with the High Court. It is in the hands of the court to decide the rights of the case and again I find it hard to see how anyone could object to that.

The past ten years have seen a sustained attack on the living standards of hundreds of thousands of families across the State. The funding for key public services was slashed and the State’s industrial relations architecture was weakened to favour unscrupulous employers. The end result was a dramatic loss in pay and conditions for many workers. The establishment parties, including the Minister's, not only failed to protect workers, but consciously and deliberately introduced policies which increased levels of deprivation, inequality and in-work poverty.

These policies were bad for workers, bad for the economy and bad for society. A society that builds an economy on low pay, precarious working conditions or any abuse of workers is not a society worth supporting. We saw workers denied their rights and forced to engage in strikes and sit-in protests. Ordinary working people in companies such as Waterford Crystal, Vita Cortex, TalkTalk, Lagan Brick and Game found that when they lost their jobs the law was not there to protect them. Unscrupulous employers were simply allowed to do what they wanted and people shrugged their shoulders and said, "Well, that is just the way it is." Worse, in some cases tea and sympathy is offered and we have statements in the Dáil where everybody queues up to say how terrible it is but nobody is prepared to do anything about it - certainly not those in the establishment parties.

The previous Government established the Duffy-Cahill commission. It looked at the issue in a considered way and made recommendations. We have taken those recommendations, consulted with legal people and produced the Bill in the best interests of working people to ensure workers like the Clerys workers never again lose their jobs. The Bill will also prevent companies from asset stripping and moving the assets to keep them outside the purview of the liquidator and workers, walk away with all the money, sell the assets and deprive workers of their entitlements. It is morally wrong. At the moment it is not legislatively wrong, but we can put that right here today. All of us, Fianna Fáil, Fine Gael, Sinn Féin, Independents and all the other parties can do that here today if we so choose.

I do not know what the Government's position or Fianna Fáil's position on the Bill is. History has told me that when we have moved Bills on workers' rights they have not looked at them favourably in the past. I appeal to the Minister on this. We have supported many Government Bills if we believe the purpose and intent of the Bill is to do the right thing. We understand that even if we have concerns and if our support has caveats, they can be dealt with on Committee Stage. I appeal to the Government and other parties to support the Bill. Let us send a collective loud message from the Oireachtas that we will not tolerate tactical insolvencies, abuse of workers' rights or what happened with Clerys where workers were left high and dry with unscrupulous employers behaving as they did in that case.

My appeal to the Government and to Fianna Fáil to support the Bill is genuine. I hope they both do so.

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