Dáil debates

Thursday, 24 January 2013

Ceisteanna - Questions - Priority Questions

Employment Rights

4:35 pm

Photo of Joe HigginsJoe Higgins (Dublin West, Socialist Party)
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To ask the Minister for Jobs, Enterprise and Innovation noting the circumstances around the recent occupation of HMV stores and the current occupation of the Old Darnley Lodge Hotel, Athboy County Meath, if he will support the introduction of legislation that will support jobs being maintained, including through public ownership of enterprises which close preemptorily, give workers and the State sight of the company accounts and prioritise the settlement of outstanding pay and redundancy payments due to workers in such enterprises and prevent employers injuncting workers occupying the place of work in pursuit of their rights. [3562/13]

Photo of Dara CallearyDara Calleary (Mayo, Fianna Fail)
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To ask the Minister for Jobs, Enterprise and Innovation if he has any plans to change either consumer or employment legislation in the view of recent events at a company (details supplied); and if he will make a statement on the matter. [3564/13]

Photo of Richard BrutonRichard Bruton (Dublin North Central, Fine Gael)
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I propose to take Questions Nos. 3 and 4 together.

The recent closures of HMV and the Old Darnley Lodge are very regrettable. My thoughts are with those directly affected, the workers and their families and the wider local communities. Their concerns about the future of their jobs and the payment of money owed to them by their employers are of paramount importance.


There is a body of legislation to protect workers in such situations such as the Payment of Wages Act 1991, Redundancy Payments Act 1967 – 2007, Protection of Employment Act 1977 and the Minimum Notice and Terms of Employment Act.


When I became aware of the evolving situation in both companies, I asked the National Employment Rights Authority, NERA, to contact the workers involved in the sit-ins, and to mobilise NERA resources to answer workers’ queries on their employment rights.


In the case of HMV, my Department established a direct line of contact with the receiver from the outset and I was assured that communicating with staff would be a priority. I understand that, over the weekend, the HMV receiver secured the agreement of staff to discontinue their sit-in in return for his commitment to arrange for payment of wages this week. The HMV receiver has indicated he is making every effort to find a buyer for the Irish operation. I understand that the receiver has issued employees with letters notifying them that they are on temporary lay-off, pending an outcome to his efforts to secure a buyer.


In relation to the Old Darnley Lodge, my Department, through NERA, is offering employees ongoing information support in relation to the processing of any outstanding entitlements, including redundancy entitlements.


On the general legislative front, employees left without pay and redundancy payments by an insolvent employer are protected in legislation and are entitled to receive outstanding payments from the Social Insurance Fund, which is administered by the Department of Social Protection. NERA can assist workers to establish the position regarding their rights.


On the issue of preventing employers from injuncting workers occupying the place of work, it should be noted that the Industrial Relations Act 1990, subject to certain prescribed conditions being met, contains a number of provisions affording immunity to persons who organise or engage in trade disputes from civil liability. The Act also places restrictions on the right of employers to obtain injunctions in certain dispute situations. However, the Act does not place restrictions on the seeking of injunctions in cases of unlawful action, for example trespass, sit-in, occupations, damage to property, or actions resulting in or likely to result in personal injury or death. Where an injunction along the lines mentioned by the Deputy is sought, it is a matter for a court to decide, based on the circumstances of the case, whether or not such an injunction is warranted.


As regards the suggestion that pay and redundancy should be prioritised, I point out that in instances where a company is being wound up, employees, in relation to pay etcetera, are preferential creditors under the Companies Acts. Initial priority in terms of disbursement of assets belongs to super preferential creditors, that is the Revenue Commissioners on behalf of taxpayers in respect of any PRSI deductions made by the employer. The liquidator’s costs are next in priority. The employees, the Revenue Commissioners and the rating authority rank next in priority. Holders of fixed charges and mortgages are outside the liquidation process and can enforce their security in accordance with the terms of the deed of charge or mortgage.

The proposal on public ownership of enterprises which close peremptorily is not a viable option. The reality is that the economy has gone through a profound crisis as a result of policies which allowed the economy to become dependent on property, construction and debt. The economy must now make a transition to one that is sustainable, built on enterprise, innovation and exports. While the Government actively promotes policies designed to assist enterprises at risk of losing jobs, it is not viable for Government to take responsibility for running businesses which cease to be viable. In addition, there are EU rules regarding operating aid to be considered.


As far as the sale of gift vouchers is concerned, consumer protection law prohibits traders from engaging in unfair or misleading commercial practices. Aside from general advice regarding gift vouchers, the National Consumer Agency issued a public statement in the run up to Christmas urging consumers to use gift vouchers as quickly as possible. Consumers who have used payment cards to purchase vouchers from retailers who cease trading have been advised to contact their card issuer. The agency’s full advice and public statements in relation to the purchase of gift vouchers can be obtained from its website.

Additional information not given on the floor of the House.


The Deputy has asked whether I plan to change consumer legislation in view of recent events. In these situations, customers holding unredeemed gift vouchers are effectively creditors of the retailer. The priority of creditors is determined in accordance with section 284 of the Companies Act 1963. Any measure which would require that unredeemed vouchers should always be honoured would mean that holders of such vouchers would rank in priority over the interests of all creditors, including the interests of employees, the taxpayers and other ordinary creditors. I do not consider that such a measure would be appropriate or justified.


On the question of giving workers and the State sight of company accounts, under the Companies Acts, limited companies are required to file annual accounts with the Companies Registration Office. That office strictly enforces this requirement and in general all filed accounts are available to the public from the CRO. In addition, mortgages and debentures over a company’s assets must be registered in the CRO, providing further information on a company’s level of indebtedness


In summary, I am satisfied that the current body of employment rights and industrial relations legislation, backed up by the information and enforcement activities of NERA and the redress available to workers through the State’s workplace relations bodies, provides robust protection for employees, even in these very difficult circumstances. I am similarly satisfied with the protection provided by consumer protection legislation, backed up by the services of the National Consumer Agency. Accordingly, I do not intend to amend the relevant legislation as suggested by the Deputies.

4:45 pm

Photo of Joe HigginsJoe Higgins (Dublin West, Socialist Party)
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After the peremptory closure of HMV Ireland, with more than 300 job losses, the workers correctly occupied some stores in Limerick, Cork and Dublin, demanding their rights in terms of pay, holiday pay, redundancy and the guarantee of social welfare entitlements. The Minister put his faith in the receiver to give these workers justice. Is the Minister not aware that the receiver, Deloitte, put these workers under disgraceful pressure last weekend, blackmailing them that the pay for the entire 300 workers would be withdrawn if they did not hand over the premises to the receiver forthwith without any guarantee on redundancy payments?

Even worse, the owners of the Old Darnley Lodge Hotel, Athboy, County Meath, told 15 full-time and 30 part-time workers on 16 January that the hotel would close in one hour. The owners have since absconded without any contact with the staff at all. This is a year after similar behaviour by the employers in La Senza lingerie chain. Is it not a sorry judgment on this Government's record on workers' rights that in the Ireland of 2013, employers can treat workers in this high-handed, cavalier and disgraceful fashion?

I ask the Minister to put in place new strategies. He says it is not viable to consider public ownership for major enterprises like this but it is viable to throw hundreds of workers on to the dole. These companies should be forced to open their books so workers can understand exactly where the €15 million HMV brought in last month went and can ask why it should not go to them.

The occupation is the most effective weapon for workers facing this disgraceful action but the law the Minister just mentioned allows the employers who have closed these businesses and treated their employees disgracefully to injunct them. Surely the power should be given to workers to injunct the bosses who have gone off with their wages and entitlements?

Photo of Richard BrutonRichard Bruton (Dublin North Central, Fine Gael)
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Clearly the best outcome in all of these situations is to find a buyer and maintain and support jobs in the business, or as many of those jobs as is possible. That must be a factor in dealing with such situations. The legislation exists to allow receivers or examiners to seek new buyers and to find a way of making a settlement with creditors in cases of examinership and to find a way for those parts of a business that can be saved to remain viable. Clearly, that is an element of that and those in charge of a company need access to the resources of the company to seek that outcome.

The Deputy suggests the State should intervene to keep these companies going but the sad truth is that 300,000 jobs have been lost across many sectors in the four years before we entered government. The chances of the State being able to intervene in so many businesses that were getting into difficulty would not be viable. We must find sectors that are sustainable in the long term. Sectors like construction became too big, as did some parts of the retail sector, and we cannot continue to support them. Under pressure of reduced resources, we must find the sectors that will give us sustainable employment. That must be our strategy.

Strong labour laws exist to protect people. The workers of other companies that closed in such circumstances, like La Senza, have been paid by the insolvency fund so the system has protected and paid workers in those situations.

Photo of Dara CallearyDara Calleary (Mayo, Fianna Fail)
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This is the second January in a row where workers have been forced to occupy premises. In this case, the workers involved heard about their fate on the media, which is completely unacceptable. I am not sure about the Minister's faith in the receiver when it was the National Consumer Agency that found that HMV Ireland was a separate operation from HMV UK. We did not know that until the NCA pointed it out. There are serious gaps in this area.

The company advised investors before Christmas that there was significant doubt about its ability to continue as a going concern. Surely it is within our capacity to amend the law that where a company issues such a warning, it is not allowed to trade in vouchers or accept money for future purchases when it knows it cannot honour them. That is how we could intervene there.

There are European regulations on gift vouchers that do not seem to apply here. Why if I got a voucher issued by HMV UK can I redeem it, but I cannot redeem the voucher issued by HMV in Grafton Street? The National Consumer Agency did not do enough in December to highlight this. A large retail company issued a warning; the National Consumer Agency should have acted on that straight away and warned consumers about it. There should be provision in law that if a company issues a public warning that its retail operations are restricted, it cannot trade in vouchers.

Photo of Richard BrutonRichard Bruton (Dublin North Central, Fine Gael)
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I agree with the Deputy that there have been many cases where workers have been treated poorly by employers and I am not exonerating them in any way but the question was should we change the law in this area. In many cases, NERA ensures that employers respect the existing law. Employers often fail to do so and that is why we immediately called in NERA.

The Deputy raised the situation with vouchers. If a company issues gift vouchers it knows it cannot honour, it is a serious matter under company law. Such instances would be reported to a receiver and, in turn, would have to be investigated with potential action being taken. Companies cannot act in a misleading way when conducting business.

The wider issue of precedence for gift vouchers over other creditors in the event of a company getting into difficulty raises the issue of the order for creditors. We just spoke of the need for workers to have preference in response to their commitments to a company. Gift voucher holders fall into the category of unsecured creditors and come lower down the order. Changing the order of preference would raise considerable issues.

Photo of Joe HigginsJoe Higgins (Dublin West, Socialist Party)
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Does the Minister not agree his austerity policy of slashing wages and increasing taxes for workers is hitting the retail trade and is a contributory factor to the crisis in the sector? The Minister says it is not viable for State intervention to save significant numbers of jobs but in the past period, the State allowed Waterford Glass and Irish Glass Bottle to close.

These were two instances where not only could significant numbers of jobs have been saved but other strategic interests could have been accrued.

Finally, I put it to the Minister that the legislation about which he boasts is feeble in the extreme as long as workers, some of whom might have decades of service, can be told at an hour's notice or less that their jobs are gone, the company is gone, they will not get redundancy payments and they can be left chasing their wages. What will the Minister do so that in the next period this type of disgraceful behaviour towards workers by employers cannot be repeated?

4:55 pm

Photo of Dara CallearyDara Calleary (Mayo, Fianna Fail)
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On the role of the company during the Christmas period, does the Minister intend to ask the receiver to pursue the issue that the company continued to trade knowing it may not have been able to honour the purchases?

Photo of Richard BrutonRichard Bruton (Dublin North Central, Fine Gael)
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I would hotly dispute the contention that policies being pursued by the Government are undermining retail business. The truth is that the Government has made a number of interventions to improve the environment for business in the retail sector, whether it be in terms of access to credit or their cost structure. The Minister of State, Deputy Perry, is conducting an audit of the licences with a view to simplifying licensing in respect of the retail sector. There is much work to make it easier to do business and to create employment.

Of course, restructuring of businesses is what we need to encourage. For example, as part of the Companies Bill 2012 coming before the Dáil shortly, I am ensuring that examinerships can be taken in the Circuit Court, which has a regional presence, and it will be easier for companies that are in difficulty to get the protection of the courts to allow a work-out with their creditors. That is a practical way of making it easier to see companies restructured.

Clearly, the law is there to protect workers. I set out the different Acts. Workers have rights. NERA is there to help them enforce those rights. We have sophisticated and proven institutions, such as the Labour Relation Commission, to deal with disputes and to help workers and employers reach solutions in difficult situations. There is the long stop of an insolvency payment system to meet persons' obligations in respect of their rights should their jobs be lost and the employer be proven insolvent. We have a range of measures seeking to protect workers in these situations.

These are very difficult situations but we seek, as we did in this instance, to intervene to support workers in those to ensure that they-----

Photo of Joe HigginsJoe Higgins (Dublin West, Socialist Party)
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What will the Minister do about the Old Darnley Lodge Hotel?

Photo of Richard BrutonRichard Bruton (Dublin North Central, Fine Gael)
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In the same way, we have made the services of NERA available to the workers so that it will support workers in that situation. Obviously, the same applies in terms of recourse to the insolvency legislation to protect the workers in respect of payments if the company is insolvent. Of course, the company, in the first instance, has its responsibilities and the State will not step in unless the company is not seen to honour its responsibilities.