Neale Richmond (Dublin Rathdown, Fine Gael) | Oireachtas source

I think Deputy Barry is breaking the third wall.

On the Deputy's proposed new section 621A, section 608 of the Companies Act 2014 already provides that where it can be established that the effect of the transfer of assets has been to defraud creditors, the company or its members, the court can order the return of these assets which have been improperly transferred. Under this provision, the term "creditor" includes employees of the company concerned. Consequently, workers are already entitled, as creditors, to apply to the court for the return of assets which have been improperly transferred.

As regards subsection (3) of the Deputy's proposed new section 621A, section 10 of the Protection of Employees (Employers' Insolvency) Act 1984 already provides for this transfer of rights and remedies of the employee to the Minister in these circumstances. I do not see that there is sufficient added value through the new section 621A proposed by the Deputy.

There are two key points to make about the Deputy's proposed section 621B. First and most straightforward is that the Deputy's proposed amendment will not give enhanced redundancy to anyone. The entitlements of an employee, which are currently treated as preferential debts in a liquidation, are simply their statutory entitlements, namely, to statutory redundancy, where applicable, and certain pay-related debts such as arrears of wages and holiday pay. These are, in effect, underwritten by the State from the Social Insurance Fund, where the assets of the insolvent company are insufficient to discharge these debts. In a company insolvency, employees are generally preferred creditors for the purposes of any balance normally owed to them outside of these parameters.

Second, I have spoken about the dangers of creating separate classes of worker. I fully recognise that in a redundancy situation insolvent companies take different approaches, depending on a wide range of factors, and some employees benefit from significantly better terms than others. This is a matter for negotiation between employees and-or their representatives and the employer. It is a wholly different matter for the State to place enhanced redundancy packages on a statutory basis in insolvency situations. The State treats all employees equally and provides them with the same protections. If it gave statutory recognition to enhanced redundancy packages, this would involve the State in treating workers in the same situation in different ways. The State cannot and should not make such arbitrary distinctions, and it would likely be unconstitutional to do so. It would also impose additional costs on the Social Insurance Fund to the detriment of others who rely on the floor level protections it provides and, ultimately, to the Exchequer.

It would also have a knock-on effect on creditors such as SMEs and suppliers who are employers and, due to liquidity issues, may find themselves making their own workers redundant as preferential debts include rates and taxation claims. The State is also a preferential creditor and such a proposal would adversely affect the Exchequer and deprive the taxpayer of moneys owed to local authorities, the Department of Social Protection and Revenue.

In terms of tactical insolvency, we are of the belief that there are powers under existing legislation to cover that scenario. This Bill goes further in proposing to enhance the mechanisms by which a liquidator may increase the assets available for distribution to creditors; to lower the threshold required for the court to make an order by which a related company contributes to the debt of the company being wound up, as per section 599; to give the courts discretion to increase the period within which transactions made in the period preceding the liquidation may be deemed an unfair preference, in section 604; and to make the reckless trading provisions more objective and accessible, as per section 610.

On Deputy Barry's intervention, I share his concern regarding the workers of the aforementioned company. I expect that all statutory obligations will be met. In terms of the notice received today by the Department, I can confirm that workers are able to take alternative employment without losing any of the entitlements laid out by the Deputy.

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