Arthur Spring (Kerry North-West Limerick, Labour)
Link to this: Individually | In context | Oireachtas source

I bring to the attention of the House the fact that I am a former employee of this organisation with former working colleagues in the House, some of whom are friends of mine. This is an issue of fairness and justice for people who were not responsible for the downfall of Anglo Irish Bank or Irish Nationwide and who have been working for the State on behalf of citizens and taxpayers to put right what a few people did wrong. The people who did wrong were senior management, directors and people who did not have a day-to-day job that was more relevant to the average industrial wage. IBRC employees have taken public abuse, have been held responsible publicly and have been vilified by many Members in the House without any comprehension or understanding of what it is like. They have been subject to the type of abuse that many of us have received over the past two years and which was also received by the previous Government.

I am raising this issue because of the terms and conditions highlighted to the employees who sit in place and do an honest day's work for an honest day's pay. To put it mildly, the pay for people on the front line was one of the lowest of all the banks. The ratio one would use is an income-cost ratio. The income of the bank was very high while the cost ratio was quite low. This is because people were quite often paid in share options - what I call "golden handcuffs". The Labour Party believes people should be looked after for a day's work and if one tells them they will be entitled to a redundancy package, one lives up to it, particularly if the State is involved.

Gary Marshall was appointed chief operating officer by the Department of Finance. I refer to correspondence of 5 September. It stated that further to the last update on the bank's ongoing consultation process, voluntary redundancy terms to be offered to all eligible employees were agreed between the bank and the authorities over the weekend. The letter confirmed that subject to certain terms and conditions, the following terms would apply to the forthcoming voluntary redundancy scheme. The terms were four weeks' base pay per year of service, inclusive of statutory redundancy entitlement. All successful applicants for voluntary redundancy were to receive a minimum redundancy payment of three months' base salary. It was envisaged that the above terms would apply in respect of redundancies made by the bank over the next five years subject to an annual review. In the event that compulsory redundancies became necessary, it was proposed that the terms would apply to them.

It is the House that decided that the special liquidator should be put in place. People employed at IBRC tried to work out the assets for the State and did an honest day's work. I note the special liquidator can take guidance from the Minister for Finance to determine whether or not a special package can be put in place to fulfil the terms and agreements that were subject to the HR department of IBRC.

There is information on the Internet relating to IBRC that says that they are entitled to the full voluntary redundancy package as agreed. It states that in the event that compulsory redundancies become necessary in the future, it is anticipated that the terms set out above will apply to any such redundancies. It states that any such proposed redundancies would be subject to a separate consultation process with employee representatives. That needs to take place immediately in recognition of what has gone on. I will give these documents to the Minister of State, the Minister for Finance and the Tánaiste to make sure the employees are given what they are entitled to.

John Perry (Sligo-North Leitrim, Fine Gael)
Link to this: Individually | In context | 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.

Arthur Spring (Kerry North-West Limerick, Labour)
Link to this: Individually | In context | Oireachtas source

With all due respect to the Minister of State, the issue is one of fairness. In the event that compulsory redundancies become necessary, it is proposed that the terms set out will be applied to these redundancies. That is the core issue. Directors and senior management have received redundancies or have been paid off. I intend to make this fight on another day. They have received lucrative payments. However, the people who put their shoulders to the wheel have an expectation that was signed up to by a State organisation, the IBRC.

I refer to legal advice from William Fry which states that IBRC has been placed in liquidation by a ministerial order made under the Act, called a special liquidation order. Unlike other forms of liquidation, no order or shareholders' resolution was required to commence the liquidation. On the making of the order by the Minister for Finance, two joint special liquidators were appointed. The special liquidators have full custody and power over all the assets and undertaking of IBRC and the power to carry on its businesses so far as may be necessary for the liquidation.

The poignant part of the advice states that these powers are to be exercised subject to the right of the Minister for Finance to give instructions to special liquidators as to the manner in which the liquidation is to be conducted. It is within the gift of the Government to do what is right by the employees, to give them what they are entitled to. I welcome the news that many of them will be kept on and that they will eventually be wound down. It is all a question of fairness. There is a legal framework but assets need to be protected. Heaven forbid we put €15 billion of State assets at the risk of industrial action, although this has not been indicated. Businesses and assets are put at risk. We need to tackle this issue.

John Perry (Sligo-North Leitrim, Fine Gael)
Link to this: Individually | In context | Oireachtas source

I do not believe it is fully within our capacity. The special liquidation order was made and is no different from any other liquidation. I repeat what the Minister stated in the House. The employees' employment was terminated with immediate effect. The liquidator is the man in charge and he has complete autonomy with regard to the operation of the company, including its selling out over six months. The workers will have the opportunity of employment by the liquidator, who is issuing short-term contracts, and some may also avail of employment in NAMA. I expect the bank's book and assets will be sold, which will provide employment opportunities for staff. They are in receipt of immediate redundancy payments from the liquidation but they will remain in employment for the moment. I am certain that those seeking jobs in the banking sector will be successful. I would not be pessimistic about their opportunities for finding jobs in the future. The State is meeting its obligations under the Act-----

Arthur Spring (Kerry North-West Limerick, Labour)
Link to this: Individually | In context | Oireachtas source

It was always going to be wound up.

John Perry (Sligo-North Leitrim, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Whatever was the position prior to the date when the Minister took decisive action would not stand up. The Government has no role in how the Act is applied.