Willie Penrose (Longford-Westmeath, Labour)
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28. To ask the Minister for Social Protection to commit to initiating a legal case under section 599 of the Companies Act 2014 in an effort to recover moneys paid by the State to cover the statutory redundancy entitlements of the former workers of Clerys department store who were made redundant in June 2015; and if he will make a statement on the matter. [11890/16]

Leo Varadkar (Dublin West, Fine Gael)
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My Department is responsible for compensating employees for the loss of their jobs where their employer is unable to pay statutory redundancy due to financial difficulties or insolvency. Payments are made from the Social Insurance Fund, essentially from the PRSI contributions paid in by those in employment, employers and the self-employed.

Following the liquidation of Clerys in June 2015, more than €2.5 million was paid under the Department’s redundancy and insolvency payment schemes to 134 former employees. Arising from the Clerys liquidation, the Department of Jobs, Enterprise and Innovation initiated a twin-track examination of protection law for employees and unsecured creditors to ensure in particular that limited liability or company restructuring were not used to avoid a company’s obligations to its employees and creditors. The Government recently published one of these reports, by Nessa Cahill and Kevin Duffy. It is my firm view that employers must adhere to the letter and spirit of both company and employment law.

My Department is currently considering how the provisions of the Companies Acts, including section 599 of the Companies Act 2014, might be used to recover the moneys expended from the Social Insurance Fund. Consideration of legal action by my Department must take into account a number of factors, including the burden of proof required, the likely costs and duration of a legal action, and the level of assets, if any, that might be recovered if an action were successful. Officials from my Department are discussing this approach with the Attorney General's office and with senior counsel to seek legal advice, as there is no precedence in Irish case law on this specific provision.

Willie Penrose (Longford-Westmeath, Labour)
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As the Minister is aware, the significance of this case is due to the fact that the insolvency was preceded by a company restructuring which involved a separation of the trading business that employed the staff from its major asset, namely, the Clerys building. The operating company was then declared insolvent and went into liquidation. The employees lost their entitlements without notice or consultation and without payment of their statutory redundancy, but that was fixed up. In effect, what happened was that a situation was engineered in which people's entitlements and the payment to them of €2.5 million was placed onto the shoulders of the Department and the taxpayers and in which the company got away scot free. This is not good enough, and workers who had given their lifetimes were dismissed without leave or consultation or anything else.

Section 599 comes from the 1990 Act and was repeated verbatim in the 2014 Act. It is about bringing assets of a connected company into a liquidation on the grounds of fairness and equity. It is used in New Zealand, from where we borrowed it, but has never been invoked. This is the area on which there should be a focus. The provision is designed and custom-built for the purpose that arose at Clerys. It is time the shackles were thrown off and the legislation was used to pursue the issue that has arisen. If the advice from the Attorney General comes through - and I understand it could be positive - will the State invoke the legislation to ensure this money is recovered?

Seán Ó Fearghaíl (Kildare South, Ceann Comhairle)
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Thank you, Deputy. The time has elapsed.

Leo Varadkar (Dublin West, Fine Gael)
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As Deputy Penrose has described it, the €2.5 million that was required to pay the statutory redundancy to the employees who were entitled to it had to come from the Social Insurance Fund - that is, it came from the contributions of others rather than from the company. Section 599 is a mechanism by which it might be possible to recover those funds either from the company or from connected companies. However, key to this prospect will be the advice of the Attorney General. If the advice is that we have a good chance of winning the case and that there is a good chance of recovering the money, then of course it would be my intention to proceed with that legal action. However, I must bear in mind the undesirability of exposing the taxpayer to a further loss by pursuing a case that may not be successful or one against a company that may not have the €2.5 million to repay to the Social Insurance Fund. These are the factors that must be taken into account - namely, whether there is a reasonable chance of the case being successful, and, if it were successful, whether the companies concerned have the money to pay back to the Social Insurance Fund.

Willie Penrose (Longford-Westmeath, Labour)
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With all respect to the Minister, that reflects the conservatism within the bureaucracy. Section 599 has never been used. It is on the Statute Book for a good reason and it should be used. If the Government, with the backing of the deep pockets of the State, cannot use it, how can a small business or small company owner use or exploit it? Let us go for it. The Government should carry the loss, and if the courts hold against it, Members can amend the law to ensure this situation never occurs again. This is happening too often; too many companies are getting away with passing the buck and engineering matters to place the bills onto the shoulders of the Minister. It is important that this action be pursued, and the time to so do is overdue. People outside the House make the point to me that if the Department were owed €20 or €200 or €2,000 by an ordinary person - an overclaim, perhaps, or on foot of an inadvertent action - that person would be pursued with vigour. I ask the Minister to pursue this matter with vigour. I would be surprised if the Attorney General did not give the green light to pursue this action. What is the sense of having legislation on the Statute Book if it is useless and toothless?

Seán Ó Fearghaíl (Kildare South, Ceann Comhairle)
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I thank Deputy Penrose.

Willie Penrose (Longford-Westmeath, Labour)
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If it is, the legislation should be brought back before the Dáil, where Members can amend it to make sure it has teeth.

Seán Ó Fearghaíl (Kildare South, Ceann Comhairle)
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The Minister to conclude.

Leo Varadkar (Dublin West, Fine Gael)
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Deputy Penrose is as familiar with the Attorney General and her office as I am, and a conservative she is not. She is-----

Willie Penrose (Longford-Westmeath, Labour)
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I did not say the Attorney General was conservative.

Seán Ó Fearghaíl (Kildare South, Ceann Comhairle)
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No, Deputy. Let the Minister respond, please.

Willie Penrose (Longford-Westmeath, Labour)
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The Minister should not pull that one on me. I know who is conservative.

Willie O'Dea (Limerick City, Fianna Fail)
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It is the bureaucracy.

Leo Varadkar (Dublin West, Fine Gael)
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It certainly was what the Deputy implied.

Willie Penrose (Longford-Westmeath, Labour)
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No. It was the bureaucrats, and she is not a bureaucrat.

Leo Varadkar (Dublin West, Fine Gael)
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One thing about which I hope my bureaucrats are conservative is saving taxpayers' moneys. As a result of this, €2.5 million already has been lost-----

Willie Penrose (Longford-Westmeath, Labour)
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Exactly. Let us try to get it back.

Leo Varadkar (Dublin West, Fine Gael)
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-----and I certainly am not going to risk losing millions more on a case that may not be successful or on a case against a company that might not have the funds to pay back the money. That would be throwing good money after bad. However, if there is a strong case to be made, then I believe it should be pursued. As I stated, my officials are in consultation with the Office of the Attorney General in this regard, and even pursuing the case may have a value in itself, in respect of the message it may send to other companies.

However, I am not wilfully going to expose taxpayers to the further loss of funds. That would only enrich barristers at the expense of taxpayers.