Eugene Murphy (Fianna Fail)
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Fearaim fáilte roimh an Aire Stáit, an Teachta Calleary, agus a fhoireann go dtí an Teach ar maidin.

Paul Gavan (Sinn Fein)
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I move amendment No. 1:

In page 6, between lines 24 and 25, to insert the following:

“(b) by the insertion of the following subsection after subsection (1):

“(1A) Where a European Works Council stands established pursuant to the Transnational Information and Consultation of Employees Act 1996 in relation to the employment in which it is proposed to create collective redundancies, the employer or responsible person shall, in addition to the requirements of subsection (1), with a view to reaching agreement, initiate consultation with the European Works Council.”,”.

It is always good to see the Minister of State. As the Minister of State will know, we have been waiting for this Bill for some time. It is good that it is finally here, but there are a number of aspects which the amendments we have tabled will deal with and which I very much want to highlight.

Amendment No. 1 relates to an issue that is very close to my heart as a former trade union official. The European works council, EWC, legislation, frankly, is not fit for purpose. I know this on the basis of first-hand knowledge and from colleagues of mine who have highlighted real deficiencies to me. I also know it as a result of my time as a member of the enterprise committee, which has taken a very good look at the issue involved. We heard from employee and employer organisations, which expressed concerns about this issue.

Representatives of both Irish and European trade unions as well as Irish and European businesses' stakeholders along with the European Commission have identified that the Irish legislation transposing the transnational works council directive, the Transnational Information and Consultation of Employees Act 1996, as amended, fails to make it clear that disputes involving EWCs can be referred to the Workplace Relations Commission, WRC, in the first instance, and then to the Labour Court for legally binding decisions. The Department appears to reject this argument and has pointed to recent referrals of EWC disputes to the WRC and, then, the Labour Court. However, and this is a key point, these disputes concern individual members of EWCs who believe that their rights have been denied them.

The Department's position does not address the points that EWCs, as collective bodies, do not appear to have right of access to the WRC or to the Labour Court, which means we are out of line with other EU jurisdictions. It is a very sore point among our friends in the trade union movement, and this legislation is not in line with what it should be in line with. We want to change that.

Substantial disputes can arise between EWCs and management when job losses are involved. In other words, collective redundancies. The amendment makes it clear that where Irish-based EWCs need to be informed and consulted about job losses, they will have access to the State's dispute resolution procedures if the need arises. This would be a step towards correcting the gaps in the legislation.

The Minister of State may take the position that the EU Commission will soon be publishing proposals to revise the EWC directive and that changes to the Irish legislation should await the outcome of the process. With European Parliament elections due to be held soon and a new Commission set to be appointed, it could be four to five years at the earliest before Ireland's EWC law will be changed. That is too long to wait to correct the problem.

My engagement with the officials of the Department, particularly at meetings of the enterprise committee, has been truly disappointing. What I sense is an ideological objection to collective bargaining in any form. As the Minister of State knows, we are one of only two countries in the European Union that do not have the right to collective bargaining. It is a major omission and failure on the part of successive Fianna Fáil and Fine Gael Governments that they have not given us that human right. Collective bargaining is recognised as a human right, but we do not have that human right here. Even in respect of EWCs, the collective issue has not been addressed by the Department. This is something I have raised at meetings of the enterprise committee for at least the past four or five years.Each time, I have been fobbed off with a statement that the issue is being looked at and somebody will get back to me. When I raised the issue via a Commencement matter, I was told there is no issue. In fact, there is a really important issue in terms of European Works Councils. Anyone from the trade union movement will have made that clear to the Minister of State. The employer body of the European Union has acknowledged there is a problem in this regard.

Will the Minister of State take the opportunity today to deal with this issue? If he does not, if he comes back with the line about changes to the EWC directive, what he is really saying is that he will not deal with the issue for the next four or five years. We must do better.

Dara Calleary (Mayo, Fianna Fail)
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I thank the Senator for his amendment. I genuinely appreciate its rationale. However, as the Minister of State, Deputy Richmond, said to the Senator's colleague, Deputy O'Reilly, during the Bill's passage through the Dáil, we do not accept this amendment. It appears to require the employer or responsible person to initiate consultations with a European Works Council, where established, on proposed collective redundancies. This is in addition to the consultation with employee representatives. Under law, EWCs have a specific remit, which is to facilitate information-sharing and consultation with employees on transnational issues. The operation of EWCs is governed by the Transnational Information and Consultation of Employees Act 1996.

We have a number of concerns about the Senator's proposal. First, as he noted, the European Commission, in January, published its proposal for an amending directive underpinning the operation of European Works Councils. The general objective of this initiative is to improve the effectiveness of the framework for the informing of and consulting with employees at transnational level. My understanding is that the Belgian Presidency has convened several working parties on this matter, the fourth of which took place last Tuesday. The ambition is to reach a general agreement by the end of this Presidency.

I do not necessarily accept the Senator's view that action will not be taken for five years. He might be better placed than most of us to pursue the matter. I wish him well in the race for the European Parliament. I do not accept his view that it could be five years before this issue is addressed. We have seen files move very quickly. The artificial intelligence file is one example. In that context, it is best to ensure that the legal provisions relating to transnational employer obligations maintain a level playing field. Therefore, it is appropriate that developments at EU level, which I think will happen more quickly than the Senator envisages, are ultimately reflected in the Transnational Information and Consultation of Employees Act 1996.

Second, the amendment would require consultation with an EWC, where established, even if collective redundancies are only proposed in the Irish establishment and not in establishments in other member states. That is not the context in which EWCs were designed to work. If collective redundancies are proposed by an employer in two or more member states, the employer is obliged to follow the local jurisdiction's law in each case. If there is a transnational element to the proposed collective redundancies, information-sharing and consultation with employees under the EWC may also be required. That is already codified in the 1996 Act.

Finally, it seems likely that adding a direct requirement to consult with an EWC could extend the timeline and complexity of the consultation process significantly. This is not in the interests of employees in a redundancy consultation process, who already are facing a protracted period of uncertainty and stress. For these reasons, I cannot support the amendment.

Paul Gavan (Sinn Fein)
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I appreciate the Minister of State's response. I acknowledge, in fairness, that whenever I have engaged with him, he has always given me a thoughtful response and engaged in a meaningful way. I do not often say such things but I do so now to be fair to him. However, I genuinely disagree with him on this issue. The fundamental point is that EWCs are not allowed to operate here in the same way as they operate in the rest of the European Union, with specific reference to their recognition as a collective body that can access the industrial relations machinery of the State. This is a fundamental flaw that has been highlighted for a number of years. It is a matter of regret to me that the Department has not really engaged on this issue. I accept we will not reach agreement on it today. I will press the amendment because it reflects a key principle for Sinn Féin, which is our party's commitment to trade union rights, and, indeed, democratic rights, in this country.

Paul Gavan (Sinn Fein)
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I move amendment No. 2:

In page 13, after line 32, to insert the following: "Amendment of Act of 2014

28. The Act of 2014 is amended by the insertion of the following sections after section 621:

"Power of the Court to return assets which have been improperly transferred

621A. (1) The court has the following power where, on the application of the Minister or the liquidator and/or employee representative and

employees’ recognised trade union in respect of a situation in which collective redundancies have arisen in circumstances in which the

employer is insolvent, it can be shown that—

(a) the employer is unable to fully discharge the debts owing to the employees,

(b) any property of the company of any kind whatsoever was disposed of either by way of conveyance, transfer mortgage, security, loan or in any way whatsoever whether by act or omission, direct or indirect, and

(c) the effect of such a disposal is to perpetrate a fraud on the company’s employees by leaving inadequate resources to discharge the entitlements of the employees who are subsequently made redundant as a result of the employer’s insolvency.

(2) The power of the court is to order, if it deems it just and equitable to do so, any person who appears to have—

(a) the use, control or possession of the property concerned, or

(b) the proceeds of the sale or development of that property, to deliver it or them, or pay any sum in respect thereof, to the liquidator on such terms or conditions as the court thinks fit.

(3) If the Minister makes a payment to employees pursuant to section 10 of the Protection of Employees (Employers’ Insolvency) Act 1984, then the Minster shall have the right to make an application under subsection (1) in order to recover the sum expended.

Preferential Creditor status for employees

621B. (1) Assets or value accrued pursuant to section 621A, form part of the assets of the employer for the purposes of the liquidation and shall be distributed in accordance with section 621.

(2) Notwithstanding the generality of the foregoing, payments due to discharge the entitlements of the employees who have been made redundant as a result of the employer’s insolvency shall have priority to all other debts.".".

This amendment seeks to provide protection for employees in collective redundancy cases where the employer is insolvent, to give power to the High Court to return assets that have been improperly transferred and to give preferential status to employees. It builds on the Duffy-Cahill report recommendation to ensure limited liability and corporate restructuring are not used to avoid a company's obligations to its employees.

For years, workers, trade unions and Opposition politicians have been seeking legislative protections for workers' collective agreements. The Government outlined its intentions to deliver legislative improvements in that area through this Bill. While any improvement in this area is welcome, Sinn Féin has been clear that the Bill does not address the situation whereby workers are treated as unsecured creditors for the purposes of their collectively bargained redundancy agreements. Treating them as such means this debt to the workers is not prioritised along the same lines as are wages and statutory redundancy. This matter must be addressed. It is for this reason that I proposed this amendment.

During collective redundancy cases in the event of liquidation, the phrase "a company's obligations to its employees" is used frequently, as it was used in the Duffy-Cahill report. It is on this point that I am focusing this amendment. We cannot have companies engaging in what are known as tactical insolvencies, whereby they break the company up into different components, sell off the parts that are profitable, walk away with the money and leave the operational parts intact, with the State and workers having to shoulder all the liabilities. On several occasions, we have seen tactical liquidations used by companies to make workers immediately redundant and deny them their collective redundancy entitlements.

While every situation is unique, the overarching aim of what was done with Debenhams, Clerys, Paris Bakery, TalkTalk and La Senza, to name but a few, was to defraud workers and the State. I hope there will be unanimous support for this amendment, which seeks to prioritise workers in such horrendous situations.

Dara Calleary (Mayo, Fianna Fail)
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I cannot accept this amendment. With regard to the proposed new section 621A, section 608 of the Companies Act 2014 already provides that where it can be established that the effect of a transfer of assets has been to defraud creditors of the company or its members, a court can order the return of those assets that have been improperly transferred. This would apply in some of the circumstances to which the Senator alluded. In this provision, the term "creditor" includes employees of the company concerned. Consequently, workers are already entitled, as creditors, to apply to a court for the return of assets that have been improperly transferred. Regarding subsection (3) of the Senator'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 to be gained through the proposed new section 621A.

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

The Ministers of State, Deputies Richmond and Higgins, have already spoken about the dangers of creating separate classes of workers. I fully recognise that in redundancy situations, solvent companies take different approaches, depending on a wide range of factors, and that some employees benefit from significantly better terms than others. This is a matter for negotiation between the employer and employees or their representatives.

It is a wholly different matter for the State to place enhanced redundancy packages on a statutory basis in an insolvency situation. The State treats all employees equally and provides them with the same protections. If it gave statutory recognition to enhanced redundancy packages, it would involve the State treating workers who are in the same circumstances 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 the Exchequer.

I fear it would also have a knock-on effect on other creditors, such as SMEs and suppliers, which are themselves employers and which, 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. Such a proposal would adversely affect the Exchequer, potentially depriving the taxpayer of moneys owed to local authorities, the Department of Social Protection and the Revenue Commissioners. It could incentivise employers and employees to reach enhanced collective agreements ahead of insolvency in the knowledge that they would be funded from the sale of assets or State funding via the Social Insurance Fund, or both.

I appreciate the intention behind this amendment and know where it is coming from but I am concerned that far-reaching implications and potentially significant unintended consequences may arise if it is accepted. Any change to the carefully balanced order of distribution in a liquidation requires in-depth examination and does not involve a decision that can be made without due consideration of all these issues.

Marie Sherlock (Labour)
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I support amendment No. 2 and what Senator Gavan said. This Bill needed to do three things. The first concerns improving the provision of information to employees and creditors more generally. The second concerns the special recognition of workers, specifically with regard to existing collective agreements, implicit or express. The third concerns tightening up section 610 of the Companies Act with regard to the movement of assets to minimise losses and payments to workers. While the Bill does well on the first objective, I am very disappointed that the Minister of State has so clearly set his face against the recognition of collective agreements, implicit or otherwise. There is a very cold message to unionised labour on the benefits to unionised labour of having a precedent set down in collective agreements. It points to the failure of any legislation to recognise collective agreements.

With regard to the first part of the amendment, on the power of the court to return assets that have been improperly transferred, the Bill clearly tightens up section 610 of the Companies Act. This is welcome but falls short. It has been said several times in the debate about collective redundancies that it has taken a long time to get to this Bill. We had the report following the Clerys liquidation and that of the Company Law Review Group, CLRG, in 2021, but the minority report of the CLRG in 2021 specifically called for an amendment that would provide that a court would not give a hearing to the winding-up petition unless it had full details regarding the employees’ rights, entitlements and interests, including any enhanced redundancy terms. It expressly states that if there is a legitimate interest on the part of the company to protect its assets against whatever predatory actions it may envisage, the application for liquidation or winding up should be confined specifically to the protection of assets and that there would have to be a separate application concerning the winding up of the company and, therefore, the termination of the employment contracts of the workers. It is a great pity that consideration was not given to that very sensible amendment in the CLRG minority report in 2021 because it would get around some of the genuine difficulties and the defrauding of people of their redundancy entitlements because of the actions of the owners of the company in seeking to minimise the payouts for their losses.

I very much support the amendment. Given all the words spoken in the aftermath of the Clerys and Debenhams cases, we must ensure we are not back in circumstances in which employees are effectively defrauded of their entitlements, particularly in unionised workplaces. This must be taken on board if the Department is serious about sending a signal. In the context of the directive on adequate minimum wages, there have been assuring words from the Government on the need to do something with regard to collective bargaining and expanding it; however, this Bill, which presents an opportunity, does nothing to advance this aim. This is a missed opportunity.

Paul Gavan (Sinn Fein)
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I endorse everything my colleague Senator Sherlock said. Given that we have waited so long for the Bill, this is a missed opportunity. It has been years in the making. There is a lack of ambition or perhaps an ideological objection. Ultimately, this comes down to whether the Government believes trade unions are good and should be valued and whether collective agreements should be valued. Sinn Féin is very clear on this in that it believes trade unions make a very positive contribution to society. Statistics show that where societies have more collective bargaining, they are better and more egalitarian and have better services. Trade unions and civil society actors always bring a positive approach to building a better society. However, when it comes to the crunch, the Department is not prepared to recognise that. That is a great pity. Collective redundancy agreements are good and worthy of being protected. The lesson of all the tragedies I mentioned, including those of Debenhams, Clerys, Paris Bakery and TalkTalk, is that we must ensure workers are protected and that their agreements are protected. Ultimately, this Bill will not do that, which means we will be back here again having a conversation about another set of workers who have been defrauded. That is an opportunity lost. We and the Government should do better.

Dara Calleary (Mayo, Fianna Fail)
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I thank Senators Sherlock and Gavan. I acknowledge the very important role of trade unions. The Government has really put trade unions at the heart of government and has been very involved in social partnership. We have initiated a series of changes to strengthen worker protections and rights since we entered office. These are being rolled out. The plan of action on collective redundancies following insolvency, launched in June 2021, lays out our plans to enhance protections, most importantly to ensure transparency for employees in insolvency circumstances. We have already implemented several of the actions, and this Bill will enhance these.

Regarding Senator Sherlock’s point on the minority CLRG report, we have considered the ICTU response and taken on board some of its suggestions. Creditors are not totally powerless in an insolvency and have options available to them in pursuing their rights. What we are trying to do is work hard to ensure assets are not beyond the reach of creditors, including employees. The Companies Act has several provisions that address this. We will be examining work that the ODCE is doing.We are going to do that. We are very committed to working with the union movement. We are involved in work with them on all sorts of legislation, and not just under an employment framework. We work with them through the social partnership framework and we have regular consultation with them on that. We have taken on board the suggestions that the Irish Congress of Trade Unions, ICTU, has made on the Company Law Review Group, CLRG, report. I want to acknowledge the work of the CLRG in this space. By taking on board the views of ICTU, we have tried to enhance it as far as possible.

Eugene Murphy (Fianna Fail)
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When is it proposed to take the next Stage?

Pat Casey (Fianna Fail)
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Now.

Eugene Murphy (Fianna Fail)
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Is that agreed? Agreed.

Eugene Murphy (Fianna Fail)
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When is it proposed to take the next Stage?

Pat Casey (Fianna Fail)
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Now.

Eugene Murphy (Fianna Fail)
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Is that agreed? Agreed.

Eugene Murphy (Fianna Fail)
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Does the Minister of State wish say a few words to conclude?

Dara Calleary (Mayo, Fianna Fail)
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I thank the Senators for their engagement this morning, which was quick for quality. In particular, I would like to thank all the officials in our own Department. They have worked very hard on this Bill, along with members Company Law Review Group and our social partners in ICTU, who fed into this.

We already have robust legislative protections and safeguards in place for workers under employment law, but also for workers as creditors under the Companies Act. This enhances that. While I know it took time, it was important that we got the detail right. We will continue to enhance protections for workers as creditors in the forthcoming review of the Companies Act. I genuinely wish Senator Gavan every success in his efforts to speed up the timetable of the WRC in the next European Parliament.

Eugene Murphy (Fianna Fail)
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Gabhaim buíochas leis an Aire Stáit. Gabhaim buíochas le foireann na Roinne agus leis na Seanadóirí. Gabhaim buíochas freisin le foireann an Tí. Tá súil agam go mbeidh deireadh seachtaine saoire deas agaibh go léir.

When is it proposed to sit again?

Garret Ahearn (Fine Gael)
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Next Wednesday at 12.30 p.m.

Eugene Murphy (Fianna Fail)
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Is that agreed? Agreed.