Robert Troy (Longford-Westmeath, Fianna Fail) | Oireachtas source

I move amendment No. 1:

To delete all words after "That" and substitute the following: Dáil Éireann:

— acknowledges the exceptional challenges faced by many workers across Ireland as a result of the global pandemic;

— acknowledges the Government’s commitment to further enhance the protection of employees in a way that does not unduly impede enterprises in the conduct of their business;

— resolves that the Companies (Protection of Employees’ Rights in Liquidations) Bill 2021 be deemed to be read a second time this day 12 months, to allow time for:

— legislative proposals in the areas of insolvency and redundancy law;

— the provision of enhanced information in relation to those remedies designed to secure the protection of employees that are already a feature of the existing legal landscape;

— legislative proposals in the area of company law that are material to the protection of workers as creditors; and

— the establishment of an independent forum that will consider employment law issues into the future with membership to include stakeholders such as employee and employer representatives as well as employment law and other legal experts.

Along with many other Deputies, I offer my sincerest sympathies to the former staff of Debenhams. It is a difficult experience for workers to lose their jobs. It is an experience that many workers across Ireland are having at this moment as a result of the global pandemic. I sincerely thank Deputy Barry for bringing this Bill before the House. It is timely and affords the House the opportunity to discuss a very important issue, particularly in view of the fact that, in the programme for Government, we committed to enhancing employee rights as creditors.

Before we go into the detail of what is proposed in the Bill, I want to challenge the assertion that the Government has done nothing to help the workers of Debenhams. This Government and officials in relevant Departments have engaged with the workers, Mandate and the Irish Congress of Trade Unions, ICTU. The job loss response protocol was put in place to ensure that all available supports and information would be provided to the former workers, including welfare entitlements, job search assistance and upskilling opportunities. This was reinitiated during the summer following my engagement with Deputy Paul McAuliffe and former Debenhams workers to ensure that no one missed out on available supports and information for workers. The Government appointed Kevin Foley to independently review the Debenhams situation. It is worth noting that in his independent report published in December, he stated that the 2016 collective agreement had no legal application in 2020. The fact is that the State stepped in to provide redundancy payments - confirming that there was no money or asset there. In recognition of the exceptional circumstances of this case, as reflected in Kevin Foley’s report, the Government was willing to allocate a fund of €3 million to be administered by SOLAS to support career guidance, training, education and pre-retirement planning for the former Debenhams workers. This was in addition to the €13 million in redundancy payments provided by the State. The Department of Further and Higher Education, Research, Innovation and Scienceand SOLAS have been engaging with Mandate over recent weeks to provide clarification on the proposed design and operation of the support. Recently, the Labour Court provided mediation advice requesting that trade unions consider making arrangements to allow their membership consider the clarified arrangements in a second ballot. I understand that the national shop stewards group agree that the €3 million fund will be put to the former Debenhams workers for a second ballot. I welcome that.

The Government has done all that it can to ensure that former Debenhams workers' legal rights and entitlements were vindicated. Indeed it went further in this instance in recognising the significance of the situation. This has been clearly outlined in the report by Kevin Foley published in December. What Government did not do was unfairly build up former Debenhams workers' expectations of what could be done. It is entirely regrettable that this happened - at the their expense - and that some exploited their situation for political gain. It is heartening to hear Deputy Barry finally recognise on the floor of the House that no legislation could have retrospectively dealt with this situation.

I appreciate that Deputy Barry's intentions in the Bill are in good faith. However, he can appreciate that putting forward proposals for additional preferential creditor status to be given to a particular class of employee - in this case collective redundancy - raises considerable complexities.

First, I wish to address the purpose of the Bill, which in essence seeks to put one class of employee as preferred creditor above another in a redundancy situation, and which has the knock-on impact of creating a secondary class of employee in redundancy. Preferential payments are provided for under section 621 of the Companies Act 2014. A preferential creditor is one whose debts are deemed to be more important than the debts of another creditor. As the Deputy is likely to be aware, employees are already considered preferred creditors in terms of wages owed, outstanding holiday pay, sick pay, pension scheme contributions and statutory redundancy. Preferential debts also include rates and taxation claims and so the State is also a preferential creditor. When a company is winding up, preferential debts rank equally. If there are insufficient funds with which to pay all preferential creditors, that is, employees, claims are to abate in equal proportions, and in situations of insufficient funds for statutory entitlements, the State steps in via the Social Insurance Fund, which is what happened in the Debenhams case.

It is important to remember the current law is a result of careful balancing of the various rights of creditors, including employees. While preferential payments are facilitated under company law, their legislative basis and the policy underpinning them comes from other areas, such as employment and tax law. The aforementioned section 621 refers to those relevant provisions in other legislation. The Bill proposes to amend section 621 to provide that any redundancy payments and entitlements agreed under any contract of employment or agreement or custom and practice are included in the list of preferential payments in a winding up and provide that payments due to those employees who have been made redundant as a result of the employers' insolvency shall have priority to all other debts. As this Bill concerns providing additional rights to employees, it is more a matter for employment rights rather than company law. On that point, I wish to inform the House that the Government is committed to further enhancing the protection of employees in a way that, unlike this Bill, does not impede enterprises in the conduct of their business. I will elaborate on those proposals shortly.

The Bill proposes creating a special class of redundant worker in the event of the employer being insolvent with legal rights that go beyond those of workers who are made redundant generally. To do so would represent the State picking and choosing certain workers over others as being more deserving of payments. This would neither be fair nor proportionate. Not all redundancies are a result of insolvency situations. Redundancies can occur for other reasons such as an employer restructuring or downsizing, but the business will continue to trade. Those employees would be at a distinct disadvantage if the company is not insolvent and would only be legally entitled to statutory redundancy.

It is also important to remember that Ireland's system of industrial relations is based on a voluntary approach and collective agreements are not binding in law. The effect of implementing this proposal would be to elevate the collective agreement to a statutory footing in insolvency situations only, with the State ultimately bearing the cost. It should also be noted that many creditors are SMEs and microenterprises, which themselves are providing jobs. Were the workers to be moved ahead of other priority creditors and secured creditors, there undoubtedly would be a risk to the jobs of the staff engaged in those creditor companies. It must also be noted that in creating a special class of redundant worker, as provided by the Bill, there would be a potential impact on State creditors, including the Revenue Commissioners and the Department of Social Protection, recouping moneys owed, which would also be a major concern and would, in turn, further deplete the Exchequer and the Social Insurance Fund.

I wish to turn now to the Government's commitment to further enhance the protection of employees in a way that does not unduly impede enterprises in the conduct of their business. To that end, both the Minister of State, Deputy English, and I have jointly looked at the legislative provisions that deal with redundancy and insolvency from both an employment law and a company law perspective. We have had a number of engagements with trade union representatives. We have set out a number of actions which combine legislative amendments in the areas of insolvency and redundancy law, as well as the provision of enhanced information on those remedies designed to secure the protection of employees that are already a feature of the existing legal landscape. In parallel, legislative proposals in the area of company law that are material to the protection of workers as creditors are also included. I concede that progress is slower than I would like in this area and I would like to see faster progress in the coming months. While the amendment refers to 12 months, it is certainly not my intention that it would take that long.

Reference was made to the general scheme for a Bill providing for the small business administrative rescue process, which will amend the Companies Act 2014 to provide for a new dedicated rescue process for small and micro companies and, once enacted, will ensure the mechanisms are in place to protect jobs and prevent future redundancies as much as is possible. The Company Law Review Group, CLRG, has made an initial report into the rights of employees as creditors, and we have used the opportunity of this Bill to include amendments to progress recommendations made by the CLRG regarding the provision of information to employees as creditors in a liquidation.

See this speech in context