Alan Shatter (Dublin South, Fine Gael) | Oireachtas source

I thank Senator Barrett for raising this issue. It is worth spending a few minutes discussing it. The amendment is about debt relief notices, debt settlement arrangements and personal insolvency arrangements. It is designed to ensure that somebody who enters into one of them is not removed from their employment or their employment status is not jeopardised nor is that of their spouse, and to render it unlawful for an employer to terminate a contract of employment for entering into such an arrangement.

A number of basic things can be said about this. The debt relief notice, debt settlement arrangement and personal insolvency arrangement do not exist at present in our legal system. We will give birth to them when the Bill is enacted. It is highly unlikely that, at present, anybody would have a contract of employment which makes a specific reference to those mechanisms. It would also be very unusual for a contract of employment to make reference to somebody entering into some "debt settlement arrangement" of an unspecified nature which would result in them being rendered unemployed or give an employer a right to terminate their employment. What we have at present is bankruptcy legislation; we do not have the debt settlement resolutions. What the Senator is proposing does not relate to bankruptcy, and I will refer to bankruptcy presently.

I share the sentiments expressed. Part of the backdrop to the debt settlement arrangement or personal insolvency arrangement is an understanding that an individual has financial resources that will be available to them and primarily that the individual is in employment, be it self-employment or employed by an employer, whether that is a limited liability company or a sole trader, and that the employed individual has a stream of income.

Without a stream of income a person will not be able over a period of years, as the debt settlement arrangement or the personal insolvency arrangement envisages, to pay off the debt. This envisages that a person is currently insolvent and does not have the income to discharge his or her debts in full, but has some income in practical terms and that, on the basis that he or she will not be sued for those debts and that his or her creditors are providing some accommodation, which may involve either or both debt forbearance and debt forgiveness, he or she will over a period of years be in a financial position to pay off all or a portion of his or her debt and then exit the debt settlement or personal insolvency arrangement. It would be a contradiction of the whole ethos of what is being proposed that, by virtue of entering into it, a person would be fired.

We do not have these models at the moment - there are not contracts of employment that would give the employer the right to fire. Let us remember that we have in existence very good legislation in the Unfair Dismissals Act, which contains various protections for employees. I have not looked at the unfair dismissals legislation for some time but it was an area in which in years gone by I would have done some work. As far as I can recall, it does not contain a provision that a person entering into a debt settlement arrangement or personal insolvency arrangement can be fired over a debt relief notice. It could not be in our domestic legislation because these things did not exist and were not in anyone's head when that legislation was enacted. An employee who enters into any such arrangement has very basic and direct protection under the unfair dismissals code.

When the legislation is enacted it is important that we do not have people entering into contracts of employment which of themselves allow someone to be dismissed because he or she is party to such an arrangement. As Senators Cullinane and Bradford said, many people who enter into these arrangements will be people who, through no fault of their own, find themselves in financial difficulties. They are in good faith entering into arrangements in the hope that they can resolve their debt problems. Of course not everyone will be in that category - let us not be naïve about it. Some people will enter these arrangements having led a profligate lifestyle, spent excessively and not cared where they were going to get the money from, and have entered this arrangement as the least worst alternative because for them bankruptcy is the other alternative. Not everyone who enters these types of arrangements will necessarily be the innocent individuals who fell on hard times. Some people will have made bad decisions which had nothing to do with the Celtic tiger and nothing to do with the misbehaviour of banks. They simply led a profligate lifestyle and decided they did not have obligations to their creditors and their life has caught up with them. There are also people in that category. However, I do not believe that applies to most people. In the context of the economic and fiscal difficulties that have hit this State and impacted unexpectedly on so many people's lives, the vast majority will be people in good faith trying to resolve their problems.

The manner in which these amendments are drafted gives some cause for concern. Given existing provisions in the unfair dismissals legislation, I do not believe we need these provisions at all. I emphasise that the purpose is to help people who have some prospect of a stream of income to resolve their debt circumstances while benefiting creditors to the degree that they recoup some of the debt owed to them. Between now and Report Stage I will consult the Attorney General or Parliamentary Counsel on the Senator's proposal and get further advices on whether such a provision is necessary and, if so, how it might be better framed because there are certain difficulties with it. I do not want to be pedantic. When I was in opposition I always hated it when I had a good idea and Ministers went on at length as to how some proposal was marginally technically defective because 50% of the time it was nonsense and the other 50% of the time it was true. Often instead of talking about substance people got lost down that particular tunnel. I want the Senator to understand that I am dealing with this in good faith.

Section 134(1) makes reference to someone having entered into an arrangement. It does not define what that arrangement involves. Section 134(2) refers to the personal insolvency arrangement and debt settlement arrangement but does not deal with the debt relief notice. While I understand the Senator's intention, it does not quite work in a legal sense in the way it is framed. I would like to raise that issue with the Parliamentary Counsel and get some further advices before Report Stage as to whether a provision is necessary. While there is no particular reason many employers would do this, I would not like to find after the enactment of this legislation that employers have some generic provision in future employment contracts giving them a right to sack someone who entered into one of these arrangements. I believe there would be certain problems regarding the implementation of that type of provision and I would like us to look at that issue in more detail.

While the Senator does not deal with this, for the sake of completeness it is worth referring to the bankruptcy area. It is not widely appreciated that the current Bankruptcy Act 1988 contains no prohibition on continuing to employ someone who has been rendered bankrupt. Such prohibitions are imposed by sectoral legislation or in the regulations of professional bodies. In the context of bankruptcy, it is not within my authority to address or delete provisions in other legislation. In so far as they exist in the area of bankruptcy, that is an area that should also be visited. For example, professional bodies exclude certain people from continuing in employment who are bankrupt. I am very familiar with the legal profession where one of the bases for being struck off or ceasing to practise as a solicitor is if one is rendered bankrupt. Within the codes of practice for the bar, barristers' rights to practice are terminated if they are rendered bankrupt.

I do not want to engage in special pleading for the legal profession, but it is a good example. If there is a competent lawyer, who was well representing his or her clients and who has never done anything fraudulent and there is no question surrounding his or her legal expertise and capacity, but that person has made bad personal financial decisions and has become bankrupt, there is no public benefit in telling that lawyer, whether it be a solicitor or a barrister, that in the one area in which he or she has skill and expertise to make a living, he or she will be prevented from earning that living because he or she has been rendered bankrupt and by stopping him or her from practising, he or she will be stopped from generating any stream of income from which any outstanding creditors may benefit, if that was a possibility. It makes absolutely no sense. Those sorts of provisions in codes of conduct in the past were based on an assumption that if a professional individual was rendered bankrupt in some way, it posed a risk to funds held on behalf of the client or - because bankruptcy was so disapproved of - it was some indication that there might be a hint or a whiff of criminality of some description, or if not that they were clearly not people of "appropriate reputation" to be engaged in that type of professional work. We live in a different world and where there is no legislation on this issue, it would be important for professional bodies to revisit the codes of conduct.

In this regard in the context of the legal profession, it is not appropriate in the insolvency legislation to pick out a particular profession and detail which profession should not do this. If we did that we would be at risk of leaving out some profession that has these sorts of rules. Next term, the Dáil Select Committee on Justice, Defence and Equality will deal with Committee Stage of the Legal Services Bill.

There is an issue on whether provision should be made in legislation that requires that it be unlawful to have a provision in the code of conduct of either of the professions that restricts somebody from practising for no reason other than being rendered bankrupt. That is an interesting issue.

I thank Senator Barrett for raising this issue. On the basis of saying that I want to consult further with the Parliamentary Counsel, I ask him not to put the amendments to a vote.

I thank Senators for their very constructive contribution on these proposals. We will have another look at this on Report Stage to get definitive advice whether there is a need to do this. If the advice is that because of provisions in the unfair dismissals legislation that currently exists, there is no need to do this, I will not come back with an amendment. If there is a risk that despite the content of the legislation, employers could think they have an absolute right under the terms of their employment contracts to terminate the employment of an employee who enters into these arrangements, we will need to address it. It could effectively defeat the implementation of arrangements entered into for debt settlement resolution to the benefit of both debtors and creditors.