On line 22, I take it that the "company" means a company formed and registered under the Companies Act, 1963?
Protection of Employees (Employers' Insolvency) Bill, 1984: Committee Stage.
Question proposed: "That section 1 stand part of the Bill."
In paragraph 1 (3) (c) where an employer is a company, would the Minister tell us how he interprets "insolvent" because a person can be insolvent in a number of ways — as dictated by the court, voluntary insolvency or, as has happened quite a lot recently, people who vanish and are not made insolvent by the court, have not been liquidated by the court or have not declared themselves insolvent. I do not intend to go into the various sections of the Companies Act in relation to winding up, liquidations, voluntary insolvencies and so on but perhaps the Minister would say what is meant by paragraph (c).
First, may I congratulate Deputy Ahern on his appointment to the Front Bench and to this post. His qualifications and skill as an accountant will be of particular benefit to the House when taking the Committee Stage of this legislation.
The Deputy will agree that there are various ways in which insolvency can emerge within a firm from the legal point of view under the companies legislation. We were trying to use the broadcast possible definition to ensure that no company and, consequently, no worker, will be able to escape from the consequences of this legislation.
The note I have on our understanding and interpretation of paragraph (c) is as follows:
Where the employer is a company and the company is being wound up, or a receiver has been appointed, or possession is taken of any property of the company by or on behalf of the holders of any debentures secured by any floating charge....
An extract from the report of the review committee on insolvency law and practice in the United Kingdom, the Cork report, setting out some background information in relation to floating charges is contained in my note. I can give this information if the House wishes. Basically we are taking the broadest possible definition of insolvency we know of, such as liquidation or receivership and others where the bank move in.
Does this legislation take account of the fairly major changes that are already in draft in regard to the Companies Act? The 1963 Companies Act, a 200 page document covers many points which have been proved in the courts to be very marginal, whether they cover insolvency cases, liquidations and so on. Has this new legislation taken account of these points?
We have co-ordinated the definition of insolvency with the Department of Industry, Trade, Commerce and Tourism to coincide with the existing definition of insolvency. They will mesh.
Section 1 (3) (c) states:
(c) where the employer is a company, a winding up order is made or a resolution for voluntary winding up is passed with respect to it, or a receiver or manager of its undertaking is duly appointed, or possession is taken, by or on behalf of the holders of any debentures secured by any floating charge, of any property of the company comprised in or subject to the charge, or
That seems to be in line with section 285 of the Companies Act. I take the Minister's point that he has had consultation with the Department but where in that section of the Act does it take account of companies which are fly-by-night operators? The Companies Act adequately covers people who are put into liquidation by the courts or who voluntarily wind up but it was never intended to cover companies which closed down one day and opened up two months later under a different name. I should like to see something written into the Bill which would take account of that.
Is it intended to go through the Bill section by section?
Yes.
There is no reference to the implementation of directive 80/987/EC. The Bill, welcome though it is, is limited. It is to have retrospective effect to 22 October 1983. The directive is dated 20 October 1980. There is nothing under section 1 (2) to confirm that it gives effect to the minimum terms of the directive.
The Deputy asked if it was proposed to go through the Bill section by section. It is so proposed. It is essential that we do so on Committee Stage. We must deal with each section but only matters relevant to the section under consideration may be raised when that section is being considered. We are now dealing with the definition section.
We are aware of the problem Deputy Ahern referred to. The revised legislation will cover it. We have attempted to cover it under (d) where under the regulations to be made under section 4 (2) of the Act we will be able to describe such fly-by-night operators. That is how we intend to handle it. We can take it up on section 4.
We can come to it then. The Minister will accept that there will be far more problems in that category than in companies which are insolvent or in voluntary liquidation. Most of the big firms are in liquidation, even big ones like Verolme but they are covered by statutory registration. Employees of firms which are fly-by-night operators must be protected. They use the legislation to close down and then reopen under a different trading name.
The definition of an employee means a person who has entered into or works under or, in the case of a contract which has been terminated, worked under a contract with an employer. What allowance is made for family arrangements? There can be disputes within families. How is it intended to provide some control where there is a dispute within a family? In the Hours of Work Bill there is a different definition. Disputes between families are left out of the Act. Does the same apply here or does the definition of employee cover family member?
We will be covering relatives in the definition of this.
In the broad sense?
Yes.
In the definition of employee it states:
... a contract with an employer, whether the contract is for manual labour, clerical work or otherwise.
I am concerned about those qualifications because there is a legal principle under which the words "or otherwise" are interpreted to mean other situations of a similar category to the two definitions which went before, namely manual labour and clerical work. I do not see that it is necessary once the contract of employment is there. It might have the effect of limiting or excluding certain categories of employers. There could be many categories intended to be covered by the Bill which would not come within the definition of manual labour or clerical work. Adding "or otherwise" does not extend that in any way. Is it necessary to put in manual labour, clerical work or otherwise? We might be better off without it.
We used the definition of employee which was used in other legislation to harmonise the integration of this legislation. It must fit into a family of labour, accountancy and company law. We went to some trouble to ensure we were using the same language and definition of language. It may seem archaic to be talking in 1984 of manual labour, clerical work or otherwise but it is a phrase that has been used in other legislation. From the point of view of the intent of this legislation any employee who is fully insured will be fully covered by the provisions of this legislation.'
Is it intended to introduce Article 1 of the EC directive I have referred to? I can see that this could be a two edged weapon in that "or otherwise" might exclude certain employees. However, the Bill should be so comprehensively constructed as to include any possible type of working relationship. That is covered in the EC directive where it states that the directive shall apply to employees' claims arising from contracts of employment or employment relationships.
As a trade union official I come across cases where some workers, however questionable the relationship, want to claim something when the firm goes bust. They are told they are not provided for in law. It should be covered by the term "employment relationships".
I support what the Deputy said. We have gone some way to meet that in the definition we have used. Is it the same definition as is in the legislation dealing with redundancy so that someone who is properly and fully insured will benefit and derive protection from this? We want to avoid the kind of interpretation problems that might arise.
A person can work full time in a factory. He contracts his labour, as it were. Although he is working fulltime in that factory, he is paid on a contract basis, in other words, he is paid so much per job. Deputy Prendergast is concerned about that type of person. Such a person could not be said to be under a contract within this definition. Is it the intention that people who work on that basis should be excluded? I was talking to a maintenance man recently. The firm maintained that he was not their employee. Technically perhaps that was correct but, in fact, he worked for them full time. They said they paid him by the job. This arrangement was set up for the convenience of the employer. The reality is that he worked for them for years and never worked for anybody else. Is it the intention that a person in that category should be excluded from the benefits of this legislation?
It is crucial for us to emphasise the importance of this definition. Whether we are talking about the Holidays (Employees) Act, the Minimum Notice in Terms of Employment Act, the Redundancy Payments Act, all the existing corpus of industrial legislation takes second place to the Companies Act in establishing who is a preferential shareholder when there is a liquidation.
I recognise the Minister's humanitarian input into this Bill. Nobody in this House has dealt more often with shysters than I have as a trade union official. They seek to exclude as many people as they can. They rush to the protection of the courts to exclude certain types of worker such as piece workers. They and their families have invested their life's work in a company, on whatever basis, to the benefit of that company. The company then try to wriggle out of their obligations by devious means. The use of the term in the EC Directive, "employment relationship", would bring in everybody. I will refer to this on another section of the Bill. I may be working on an arranged basis to the mutual benefit of the employer and myself, and I should not have to pay a penalty for that if the employer goes out of business. This is one of the most crucial parts of the Bill.
The date of retrospection in the Bill is October 1983. The Minister and his Department should consider making it retrospective to the beginning of the financial year. Many factories closed between the beginning of April and October 1983. Many employees were badly affected by those closures. As Deputy Prendergast pointed out, the law governing receivership and liquidation puts the workers in a very weak position. There are many preferential creditors.
This section deals with definitions. I do not think it deals with the commencement of the Act.
The definition of "employee" is the one used in the other Acts. I do not see how we can improve on that. Deputy Prendergast said the Companies Act takes precedence over all the other legislation when it comes to the winding up of a company or a court case. Section 285 of the Companies Act, 1963, sets out a list of who gets priority in the case of a liquidation or winding up. What account has been taken of that section of the Companies Act in this Bill? Many of these seem out of date when you think that the Companies Act was enacted 21 years ago. Subsection (2) (c) provides:
all wages (whether payable for time or for piece work) of any workman or labourer in respect of services rendered to the company during the 4 months next before the relevant date.
Paragraph (d) reads:
All accrued holiday remuneration becoming payable to any clerk, servant, workman or labourer (or in the case of his death to any other person in his right) on the termination of his employment before or by the effect of the winding-up order or resolution.
What is the position of this Bill in relation to the Companies Act? I want to clear my own mind on that matter.
We are introducing legislation to set up a fund which will be contributed to out of the PRSI fund to reimburse with minimum delay workers who become unemployed because of an insolvency in the company for which they work, and to ensure that they will get their full entitlement in relation to arrears of wages, salary, holiday pay, sick benefit, and so on. At present, in the event of a company going into liquidation, the worker has to take his or her place in the queue with the liquidator until the liquidator has gone through all the process of establishing whether or not there are assets. That process could take up to two years in some cases and, at the end of it, there might be only ten pence to 20 pence in the £ to meet all the claims. The worker would have to stand in line along with everybody else.
There is the time delay and the loss of income plus the possibility that they may not be paid in full if the company are actually insolvent and have not got enough assets to meet their liabilities. Let us take Irish Shipping as an example. If this legislation were not to be enacted retrospectively to the date in question, having regard to the disastrous level of borrowings relative to assets, it is quite conceivable that the salaries and the arrears would not be paid. Under this legislation, if we enact it, all the money owed to the Irish seamen, ratings and officers on board the ships and the shore staff will be paid in full with minimum delay out of this fund. In the event of there being assets sufficient to recoup the entitlements, they will come back into the fund at the end of the day. I have strayed from the Bill, a Cheann Comhairle.
I allowed that Second Stage explanation. I do not think that we should continue that, because we would never get through the legislation. It was quite helpful, if I may say so.
It was very helpful, because people were beginning to think this legislation out of line with the Companies Act.
That is because of the passage of time between Second and Committee Stages, during which another event took place. Regarding the question raised by Deputy Taylor about employment relationships — the ready reckoner, from a social point of view, as to who is covered by this Bill and who is not — if the person to whom he referred was having his PRSI contribution paid for in part by the employer, then he is covered. If he has entered into some other kind of arrangement with this employer, such as a salesman might, for example, on a commission basis, where the employer is not paying a PRSI contribution, that person, for the purposes of this legislation, is not an employee. He may, in effect, be working for the company and may have arrangements that from his point of view constitute a life-long contract, effectively working for x or y, but for the purposes of this legislation which falls within the socially insured category of the work-force within our society, if he or his employer is not paying PRSI, then he or anyone in that position is not covered.
Deputy Prendergast raised the question of employment relationships. These could be construed to mean, for example, someone "on the lump" on the building site. He is in an employment relationship with the building contractor, but, as many of us know, the reason for that relationship being so defined is that it is specifically to evade a whole raft of responsibilities, insurance from the point of view of the employer and, in some cases in the building industry certainly, for those who are "on the lump" to avoid their tax liabilities. From the point of view of this legislation, that employment relationship is too broad a definition.
I welcome the Minister's clarification of a number of points. As he has said, it is many months since Second Stage. It is for the very reasons which he has outlined that we on this side of the House welcome this Bill. It will clear up many of the dreadful cases which will be talked about later on under the sections, where people are unable to claim and must wait several years to know whether they are going to get their money.
Indeed.
This has caused a lot of hardship down the years. It would be no harm if the Minister were to read the categories into the Bill. There would be a feeling that State employees will go the same way as those in private life. Are for example, all the employees of Irish Shipping or similar enterprises paying PRSI? What categories do or do not pay it? While the Bill mentions those covered under the Social Welfare Acts, it would be helpful to put on the record the categories of employees who are covered in this legislation. Otherwise, at our clinics people who feel that this Bill is going to solve their problems, because of their level in the management of their firm, will find they are not PRSI contributors and are not covered under the definitions of this Act.
The Minister is a colleague of mine and I admire him very much for his humanitarian outlook which compels him to do this. I give him full credit for that. As someone who worked in the field, I take full account of the point which the Minister made that those who are "on the lump" seek afterwards to have the best of both worlds. Manifestly, nobody supports that illegal position, widespread though it be.
There is another aspect — and I am referring to one of the greatest scandals going on here — and that is the exploitation by unscrupulous employers of women whose husbands are idle and who come largely from housing estates. These people must go to work and do commercial cleaning. This is the nearest form of white slavery that I can think of.
As long as the Deputy can relate his remarks to the definition section of the Bill, he will be in order. If I were to open this Stage to a Second Stage debate again, we would never get through Committee Stage.
I am anxious, naturally, to abide by the procedures. Perhaps I can get my answer by asking a question? First of all, does the Bill go back in line with the EC directives instead of just to the date outlined in the Bill?
The date will come up on section 5 and I must insist on that.
I accept that. For example, what of a woman who had to work for four or five hours a week and was told by her employer that she had no other rights, having no union to protect her? A lot of these people do not know their rights. Would she have a right to claim some compensation under this Bill? She has no one to advise her at the moment.
I understand the point that the Deputy is now making would be more appropriate on section 3 and we shall have a wide discussion on that.
There was a certain point which I was about to make and I had been waiting for quite some time, but it will come up under section 3.
There is a point under subsection 3 of section 1, the definition of an employer as one who is about to become insolvent if the person is adjudicated a bankrupt. There are many employers who are insolvent but have not been adjudicated bankrupt. For an employee or creditor to have an employer adjudicated bankrupt is quite an expensive procedure. Bankruptcies are fairly rare.
Paragraph (b) deals with the case where the person has died and his estate, being insolvent, is being administered in accordance with the rules set out in Part I of the First Schedule to the Succession Act, 1965. A very frequent occurrence when a person dies whose estate is insolvent is that it is not a question of the estate being administered in accordance with Part I of the Succession Act. It is just left to lie there and it lapses. Nobody sets about dealing with administration but the estate would be insolvent. Category (b) would not be met because no administration at all would be under way.
We come to paragraph (c), where the employer is a company and it is being wound up or a resolution for voluntary winding up is passed, or as the case may be. Again, a very frequent occurrence is that when a company becomes insolvent nobody, either employee or creditor, is prepared to undertake the substantial expense involved in commencing liquidation proceedings, where the company do not go into voluntary liquidation. The whole thing just winds down, rather than the company being wound up. The definition of insolvency required would not come under category (c) either. Would the Minister comment on the fact that the definition of insolvency required to bring the whole Act into operation as a pre-condition has signal difficulties in so far as categories (a) (b) and (c) are concerned, for the reasons which I have given?
In respect of the definition, I would agree with my colleague, Deputy Taylor. It is for that reason that we have inserted paragraph (d) as a catch out. This states that in the event of difficulties arising out of the first three categories, on which the Deputy has clearly put his legal finger, on being informed by a disadvantaged worker that he cannot support the cost of court proceedings and so forth and on being given the facts — and I have replied earlier to Deputy Ahern on this — the Minister, under section 4 (2), will have the power to make the decision that, effectively, insolvency has occurred and that the worker will, on the production of reasonable documentation to establish his or her claim, recoup whatever moneys are due. The Minister and the fund can then stand in lieu of that worker and seek to reclaim that amount of money and replenish the fund accordingly. That is the very thrust of the legislation. It is specifically to overcome the difficulties which are being experienced, particularly in companies which just fold up and are never fully wound up. The liquidation process, even if it is formally and legally gone into, can continue for quite a long time. We are all, in a constituency sense, aware particularly of some small private companies where this has gone on.
Paragraph (d), in terms of definition, gives discretion. There will be various definitions of insolvency which are within the Companies Act and elsewhere and we have included these to account for those cases which do not fall neatly, naturally or adequately into those definitions. We have added a fourth, paragraph (d), which enables us to have the discretion to stand in the shoes of the worker and to replace the money.
I take the Minister's point about paragraph (d) being a catch-all provision but the reference to that in section 4 (2) is in unusual wording. Perhaps the Minister would clarify the circumstances he would envisage applying. Why are the words "employers who are of a class or description specified in the regulation" included? I can understand that in certain circumstances employers would be deemed to have become insolvent but why qualify that by referring to employers of a different class? How would that work? For instance, would the Minister envisage bringing in a regulation in relation to builders? Does it mean that a type of trade would be deemed to come within the catch-all provision? Would it not have been more logical to deal with the sort of situation I am describing by having a further subsection or by dealing with the insolvency categories with wording such as, "where application was made to the employer for payment of a debt or wages, formal notice be sent to him by registered post and if he fails to pay within 21 days he will be deemed to have become insolvent for the purposes of this Act"? That might be a more efficient and speedy way of dealing with such a problem. Otherwise, to deal with a situation as it arises, the Minister must set out a regulation. That is not something that could be done in ten minutes. It would involve a lengthy procedure. Regulations have to be drafted and laid before the House and there is a prolonged time span before they can come into operation. I shall have more to say on that aspect when we come to the relevant section but suffice it to say for now that up to five or six months could elapse before regulations could become effective whereas what is required is a speedy procedure whereby an employer could be deemed to have become insolvent if the worker concerned or a creditor has sent written notice by registered post to the employer requesting payment of what is due and if within 21 days the money has not been paid.
If we were to adopt Deputy Taylor's suggestion, the procedure he envisages would be availed of on a broad scale instead of the regular process being followed. While the redundancy fund is normally in a healthy position, there must be some control on it. The winding up of a company can be a lengthy process. It can continue for some years before the courts. If we were to have a situation in which the staff of, for instance, Irish Shipping Limited, or of any other company in that position were to be in a position of demanding wages and salaries for the whole month of November as well as all their other entitlements I do not know what would happen to the redundancy fund. To legislate in the way suggested by Deputy Taylor would be to move away from the social advantages of this legislation. We can deal later with the 21 days stipulation.
I am advised that in regard to Deputy Taylor's question on definition we are prevented by law from naming an employer specifically in a regulation. That explains the reference to class or description. The regulation could specify the type of trade the employer was engaged in, the townland in which he lived and so on, for the purposes of ensuring that an aggrieved worker would be assured of his entitlement under this legislation.
Regarding the Deputy's second point which relates to section 4, we are happy that in this context regulations could be made within a matter of a week. The definition of "employer" in this instance is the same as that in section 1. Again, this is because of the constraints about naming an employer in regulations.
We are dealing with the definition of when an employer is deemed to have become insolvent. I do not see how a regulation in that regard could be made within a week since it would have to be laid before both Houses and a period of at least 21 sitting days would have to elapse before it came into effect. Even assuming that the House were sitting during all of that time, would that not mean that a considerable number of weeks would elapse before the regulation could come into operation? Even longer could elapse if it were a time when the House was not in session. I accept that an individual employer could not be named in a regulation but perhaps the Minister could give the House an indication of what would be the likely format of these regulations.
We cannot allow a full discussion on regulations. Obviously, that is a matter for debate on another section. A reference to regulation in so far as it strengthens the Deputy's case for a more elaborate description of employer or employee is in order but only to that extent.
Obviously, I am not making myself very clear. I am talking about subsection (3) and paragraph (d) in particular which deals with the definition of when an employer may be deemed to have been insolvent. Can the Minister give an indication of the format envisaged for these regulations? What sort of circumstances are envisaged in which employers would be deemed to become insolvent? Would the circumstances be that they were unable to pay their debts, that there was a judgment against them? What is envisaged by the circumstances in which the Minister would make the regulation and how would he envisage complying with the requirement of class or description? Would the regulation provide, for example, that it applied to builders or to manufacturers of a certain type of product? I should like the Minister to comment further on the crucial question of the time element. Might not the prolonged period I envisage be damaging to the position of a worker?
I shall endeavour to answer Deputy Taylor's very real query in this regard. Paragraph (d) represents a catch-all provision designed to facilitate workers whose employer has not fitted in with the other previous categories with which, in a sense, there is no real problem. Let us take the example that an employer leaves the country. In those circumstances an aggrieved employee would either go direct to the Department or to his trade union or to a public representative. Once the representation has been received and since the definition of "insolvency" would not come within categories (a), (b) and (c), the Department would have to appoint an inspector to establish whether the case was bona fide. Human nature being what it is, there would always be the possibility of collusion in such matters. The inspector who would be from within the redundancy-insolvency section of the Department would establish if there was a case. He would act as quickly as possible and if there was a case, the Minister, within the terms of section 15, would have the power to make a regulation within the framework of the legislation covering the making of regulations generally to enable the Department and the fund to recoup the money which the employee is legitimately owed.
That regulation can be activated even if the matter should arise in the summer. A regulation can be made within the framework of the section and it can be laid before the House when it resumes. The regulation can then be annulled. This is a standard provision in many Acts. There can be a motion in the House after the efflux of 21 sitting days. Until such time as the regulation is annulled the Minister can act in anticipation and therefore the concern over the delay that Deputy Taylor-Quinn was concerned about would not arise, because if the employer has left the country the Minister can clearly specify by regulation the nature of the claim, the nature and location of the activities of the company and on foot of that the due moneys can be paid out in bona fide cases. As the former Chief Whip of Fianna Fáil will know, there are regulations laid before the House every day but they are not challenged.
Question put and agreed to.
SECTION 2.
Question proposed: "That section 2 stand part of the Bill."
Would the Minister give us some information about the redundancy fund and its present financial state? How is the money held? Is it invested outside the fund?
I will explain this fairly comprehensively and perhaps answer other questions Deputies may have. I will give the House the note I have on this section. The section provides for the re-titling of the redundancy fund as the Redundancy and Employers Insolvency Fund. Any references in the Social Welfare and Redundancy Acts to an employer's redundancy contributions shall be construed as including a reference to any amount which that contribution comprises by reason of the passing of the Bill. Subsection (1) provides for the re-titling of the existing redundancy fund as the Redundancy and Employers Insolvency Fund. The new title reflects the increased range of coverage of the fund.
Section 28 of the Redundancy Payments Act, 1967 originally provided for flat rate monetary contributions by both employer and employees to the redundancy fund. Under section 3 of the Redundancy Payments Act, 1979 a revised section 28 was substituted for the original. Under the revised section employees were no longer required to contribute to the fund and the employer's contribution was fixed at 0.5 per cent of the employee's reckonable earnings.
The section also provided that the contribution payable by an employer under the Social Welfare Act, 1952 would be increased by the amount of the redundancy contribution — thus the redundancy contributions became a part of the employers' PRSI contribution. The 0.5 per cent redundancy contribution rate was reduced to .01 per cent in 1982 and maintained at that level in 1983. Arising from the level of expenditure from the fund it was necessary to raise the contribution rate this year. The increase of 0.49 per cent in the employers' PRSI contribution rate, announced in the budget, brought the redundancy contribution up to 0.4 per cent; .02 of the increase is designed to meet the additional expenditure which the fund will incur as a result of the measures provided for in this Bill. It is estimated that the .02 per cent contribution will yield an income of £1 million in a full year.
While it is difficult to predict what the expenditure from the fund in respect of the claims covered by this Bill is likely to be it was considered prudent to provide for an additional income to the fund of at least £1 million to meet such claims. Given that workers are unlikely to be in a position to continue to work for long periods without remuneration, claims in respect of ordinary pay should not in the majority of cases be substantial. The experience in the United Kingdom, where a similar fund is in operation, has been that the major items of expenditure are in respect of minimum notice and holiday pay. When estimates of the possible expenditure were being prepared the only hard information which was available was in respect of minimum notice and unfair dismissal awards made by the Employment Appeals Tribunal in insolvency situations during 1982. These amounted to approximately £155,000 and £1,000 respectively. The balance in the redundancy fund at 31 October last was £12,654,975. The fund is not a separate account. It is not invested as are pension funds.
Does the Minister set off the redundancy fund for use in the Department generally? Is the £12 million held aside as a contingency fund, for instance, to provide for the possibility of 100,000 people losing their jobs tomorrow? Is it taken into account in the Estimates each year, or is it invested separately? If the Minister had to call on it quickly would it be available?
The moneys are held by the Department of Finance, and the Department of Labour, in processing redundancy claims, draw down certified amounts as they become necessary. We do not have it in a separate deposit account in the accounting system of the Department of Labour. The fund is accountable for book-keeping but it is held by the Department of Finance.
Can the Minister for Finance use it for any purpose other than redundancy payments? Can he use it in the short term? Say that £10 million will be collected in 1985 — that is very substantial money — is it used only for the purpose of redundancy and employers insolvency payments or can it be used for other purposes? Can it be used only by the Department of Labour.
Perhaps the Minister will clarify one point for me. The Bill seeks to confine payments from the fund to those with legal agreements. Workers claims arising from agreements registered in the Labour Court which had not been fully implemented or Labour Court recommendations which clarify disputed settlements would not be admitted for payment under the Bill. To give an example. The Bill would not enable redundant employees to benefit from——
The Deputy is going ahead of the rest of us. He is dealing with Section 3. We are dealing with the fund.
What is the amount of additional funds which have accrued to the fund since the rates were increased?
We are making provision to collect an extra £1 million to the net amount I mentioned earlier. It started in this tax year.
I can understand what the Minister estimates he will get from it but does he agree that the amounts will be far in excess of that? How much is there already?
The total amount in a calendar year will bring in a net additional £1 million. That figure was calculated on the basis of experience in other EC countries as to the amount of money that would be likely given the rate of redundancies, insolvencies, the level of employment and average wages. The Department had consultations with other EC countries and calculated what would be a reasonable provision. We added to that in case we were not correct. We worked on the assumption that very few workers will be able to work for more than four or five weeks at maximum without getting some kind of income. Holiday pay, sick pay and other entitlements tend in the main to be the amounts of money which people do not get when a firm is declared insolvent.
The total amount of the fund was £12,654,975 at the end of October. It is added to with each PRSI contribution. As regards the location of the fund and its utilisation, this fund is part of the PRSI fund. It is a sub-component of it from a redundancy point of view. It is not at the disposal of the Department of Labour per se. We do not have it on deposit. I presume it is on deposit within the framework of the Department of Finance. I do not have that information but I will try to get it.
I believe funds should be used for the purpose for which they are collected. I do not believe that they should be used to offset one thing against another. The way the levies are used is another argument. When the increase was made it was specified exactly what it was for and how PRSI contributions were divided. If the Department of Finance are to follow their own guidelines, which they are normally good at, I do not see why the fund is not under the control of the Department. If that money is in the Department of Finance it is more than likely that it is being set off or invested in pension funds at their disposal because they know it will not be drawn down. Last April the employers' PRSI contributions were increased at a time when they were hard pressed, over-taxed and when the black economy was rife. The increase was not really necessary. The fund now stands at £12½ million. We are well through the tax year. It will be another while before this legislation is enacted. Why did the Department of Finance look for an increase in the fund?
I hope the legislation will not take another while before it is enacted. I hope to get it through the House today and I am trying to make arrangements with the Seanad to have it carried as quickly there. The demand for the fund could be immediate. Claims have been mounting up. We are not legally entitled to pay out money from this fund until such time as this legislation is enacted. The claims go back to October 1983.
Hopefully further.
Sin scéal eile. No doubt we will get down to Kilrush before the day is out. While the presence of Deputies Daly and Taylor is very welcome I do not think it is unrelated to the demise of a certain company. Provision has been made for money to be paid out and for some arrears. A calculation has to be made as to what amount is necessary to finance the fund. We did our best on this in the Department. If the fund attracts interest that goes back into the fund and is accounted as such. I can get clarification and confirmation of that. Much as the Department of Labour would be able to make good use of this money, it is part of the overall insurance fund and the Department of Social Welfare will have a claim on it as well.
With regard to the amount that has accrued since the charges were increased we are now over one six months period. There must be an indication of what the Minister is likely to get in a six months period.
I will try to get the figures for the Deputy. It is part of the overall redundancy and employers insolvency fund. It was calculated to bring in £1 million in one year. On the basis that we are six months into the year I guesstimate that a sum of £½ million has come in.
It could be far in excess of that.
Will the Minister give a rough estimate of the outstanding claims arising under this Bill?
We have not got final figures for that. I am not in a position to give that information.
What will be the effect of this legislation? How much more money is likely to get into the hands of those who have lost out because of redundancies?
It is very difficult to know. We have only been able to go on limited factual domestic experience, Employment Appeals Tribunal statistics and others. They cover cases where there have been proper liquidation or bankruptcy proceedings. We do not know the position in cases where companies disappear and there is no one to take a case against them. Using that limited information plus the experience in other EC countries we made a provision for £1 million. We are satisfied that we have more than enough resources to compensate anyone who has a legitimate claim within the legislation. It would be unwise and inaccurate if I said I could be more precise. We do not know nor can anyone know until we bring it in. It may be that we have collected more money than is needed but I would prefer to be in that position and able to meet claims rather than be in the reverse position. I cannot prejudge what the Government might do if the funds are in credit to an amount which is believed to be in excess of what is required. We made a reasonable estimate on the limited statistics available to us and covered ourselves so that no worker will be prevented from getting his or her entitlement.
The Minister is now saying he cannot be sure and I accept that because he can only make an estimate. However, if his estimate is £1 million and as the fund is in an extremely healthy state, it should perhaps allow us to go back further with regard to compensating employees. In 1983-84 this country had more redundancies, closures, liquidations and fly-by-night directors than there were since the foundation of the State. This is an opportune time to rectify the injustices which have taken place over the last few years. If the Minister has over-estimated, the money should not be left lying in investments or pension trusts——
That is not relevant on this section.
I am trying to establish that there are sufficient reserves in the fund to go back further than the date of the directive. It looks as if the fund is in a healthy state and that existing claims can be dealt with.
I hesitate to ruin what looks like a very promising argument from Deputy Ahern but I wish to restate something which may have been misinterpreted. I do not want the House to think that we have over-estimated the need. We have made cautious provision for what we anticipate the need will be. I am not saying that we have over-estimated because, frankly, we do not know. However, on the best estimates, we added a certain cautious additional amount to provide for possible inaccuracies on our side. I have just received additional information in relation to the fund which may be of interest. The money is collected by the Department of Social Welfare and transferred on a monthly basis to the Central Bank where it is invested. The fund is separate and any interest accruing is added to the fund and cannot be used as ready cash for any other activity.
Question put and agreed to.
NEW SECTION.
I move amendment No. 1:
In page 5, before section 3, to insert the following new section:
"3.—This Act shall apply to employees' claims arising from contracts of employment or employment relationships which exist against employers who are in a state of insolvency".
This is a crucial section of the Bill. The major portion of the debate on section 1 was taken up by argument about to whom the definition applied. Deputy Prendergast raised the point about the EC directive not being mentioned in the Bill. However, it is mentioned in the explanatory memorandum to the Bill which says that it will also implement the requirements of Council Directive 80/987/EEC which came into effect on the same date and which confers certain rights on employees in insolvency situations. This is not mentioned in the Bill and this section is contrary to the intention of the directive.
This amendment would mean the removal of section 3 and its substitution by the amendment as it is taken from the EC directive to which I referred. It is not restricted to employees in employment which is insurable for all benefits under the Social Welfare Acts, 1981 to 1984, because that restricts the application of the Act to those who work more than 18 hours a week. No other country in the EC has restricted the application of the directive in this manner, that part time workers would not be covered by the Act. In the last couple of years particularly, the number of workers in part time employment has increased enormously and continues to increase. The propaganda from many organisations is that people at work should share their work, which gives the impression that everybody should be in part time employment. Those who give part time employment to young people are praised and told that it is a very worthy act. If the Bill is put through in its present form it will give further encouragement to giving people less than 18 hours work per week. Employers could take on two people to do one job and be seen to be carrying out the wishes of the State in giving more part time jobs to young people.
There are also traditional part time jobs, such as cleaners, to which Deputy Prendergast referred, and which would not be covered by the Bill. We put down this amendment to ensure that the directive will cover all employment. It would cover the points which worried Deputy Prendergast and Deputy Taylor although Deputy Taylor gave examples, apart from part time workers, of people who are employed under strange contracts and to whom the Bill should also apply. This amendment would ensure that the directive which the Bill purports to put into effect would, in fact, be put into effect.
The Minister may say that section 2 of the directive allows for exceptions and that member states may, by way of exception, exclude claims of certain categories of employment in the scope of this directive but if you read further on you will see that it relates to contract of employment or employment relationship or the existence of other forms of guarantee offering the employee protection equivalent to the result of this directive. In other words, there are exceptions for people already covered by various other relationships with the employer or contracts with the employer so that it would be unnecessary to apply the directive to them. That cannot be said of part time workers.
I reflect the views of the trade union movement in saying that the Bill should not limit the workers concerned to any number of hours. I have already referred to the blackguardism and exploitation in relation to commercial cleaners. There should be a national public inquiry into the abuses in that area. What is happening borders almost on legalised white slavery. In this connection I mention the offices of one national daily newspaper in Limerick but that is only one instance. There is exploitation of women clerical workers. They are married women and they are offered employment deliberately less than the number of hours mentioned in the legislation. Naturally the women are glad to accept this work for the extra remuneration, or pin money as it used to be called. It also gives them a legitimate occupation outside the house, it adds a dimension to their normal lives and takes the boredom out of their lives. However, they are being deliberately exploited by unscrupulous employers.
I have had men and women, but especially women, come to my office and complain about what is happening. I mention in particular what is happening in the catering industries. I have no antipathy towards foreigners who work here but when one goes to some of these people and explains to them that workers have the right to become a member of a union and that they are covered by legislation even if they are not members of a union, they do not seem to understand. However, they would understand very quickly if they were given the wrong change.
I am making a plea here on behalf of those unfortunate or uninformed workers who have not the intelligence or are not in a position to join a trade union and who have no access to the information we are talking about. I am pointing the finger at the legal profession who are brilliant in their exploitation of that kind of situation because of the knowledge of the members of the profession of what is going on. I am in line with the ICTU in saying that anyone employed for whatever time should be covered and that is also in line with the spirit of the EC directive. There is wholesale exploitation of workers, especially poorer female workers, who are still under the belief which is encouraged by unscrupulous employers that they can be sacked for joining a trade union. They are cut off from all forms of protection. That is going on every day and this Bill gives us an opportunity to protect them.
I appreciate the desire on the part of the Minister that there should be conformity between this legislation and other measures dealing with social matters and employment. However, I urge him to consider that this Bill deals with a new situation and should stand on its own. Let us take the case of a person who works for 17 hours per week and whose employer becomes insolvent. The employee may be left with five weeks wages due to him but because he has worked for only 17 hours a week he will be deprived of the five weeks wages. On the other hand, a person who has worked for 19 hours will get five weeks wages under the fund.
What is being sought here is a modest extension to the concept of the Bill. The concept is that a worker who is deprived of a few weeks wages as a result of an employer's insolvency should be enabled to have recourse to the fund. What does it matter if the person has worked 17 hours, 19 hours or even five hours? If he has worked only five hours per week his wages would be low and, consequently, the amount required to be paid out of the fund would be low. The call a worker would have on the fund would be in proportion to his wages.
It would be a fine gesture and a fair approach to say that any employee within the meaning of the Act whose employer becomes insolvent should be able to have recourse to the fund. In any case it applies only to a maximum of eight weeks and we are not talking about any enormous sum. Why should a person not get his wages, even though he had worked only 17 hours instead of 19 hours? That seems a logical basis on which to approach the matter.
I am not accepting the amendment in the names of Deputy Mac Giolla and Deputy De Rossa because it is defective. Understandably they have taken the term used in the EC directive. This was the document agreed at the Council among the ten member states but it was not couched in legal language. As Deputy Mac Giolla rightly pointed out, the member states sought the right to exclude certain categories and to define in legal terms in their domestic legislation how the directive should be applied. I will not repeat the arguments I made in relation to the potential abuse the phrase "employment relationships" could be construed to have with regard to, for example, lumping. I am sure Deputy Mac Giolla is not trying to make his amendment a charter to protect lumpers but that could be the effect. That is why I am not accepting the amendment.
Deputy Mac Giolla stated Ireland is the only country that had sought an exclusion under the directive. That is not the case. I refer the House to the official journal of the EC, reference L283/26 dated 28/10/1980 in which four of the ten member states sought exclusions of different categories of workers. Those countries were Greece, Ireland, the Netherlands and the United Kingdom. We are not alone here and I am sure the Deputy will accept that correction.
The question of part time working was mentioned. The section uses the words "subject to section 10" and I point out that the two sections should be read together. We are saying that the people who will be covered by this legislation will be those within the social welfare code who are paying PRSI and who are covered under redundancy legislation. Under that legislation people who worked less than 18 hours a week for more than one employer or for one employer for part time income are not covered normally under existing legislation. We propose to keep it that way for the purposes of continuity, harmony and other administrative reasons. However, there is provision for a worker who has a part time job, who has no other source of income and who can demonstrate that to the Department of Social Welfare, to be covered for the purposes of this Bill and to receive the protection this measure will accord. I am taking at a later stage under section 10 the powers to include other categories of workers not currently described, if discretion and experience shows that is necessary. The most vulnerable, the lowest paid, those who have only a part time job and who, as a result, only have a partial income, will be covered, and their cases can be looked at on an individual basis by the Department of Social Welfare.
The House will agree that it makes good logical and administrative sense to try to harmonise different types of legislation dealing in the same area where definitions, eligibility and so on are concerned. As public representatives we all have had to deal with cases where people were entitled to one thing under one category and not entitled to another thing under another category. Matters became quite confused and people ended up not knowing what their rights were. We are using the same categorisation, the same definitions and the same entitlements in the interests of good administrative practice, but we are also giving ourselves two additional discretionary powers, so to speak. One exists already, which is if a person with a part time job which provides his sole means of income can show that it is his sole source of income and he is accordingly at a loss for that money, holiday money or whatever, he will be covered by this fund.
Would the Minister please repeat that?
If a person in part time employment who had no other source of income found himself at a loss as a result of some action taken by his employer, he would go to the Department of Social Welfare and establish his bona fides in that respect that he was exclusively covered, that he had no other source of income, it was not pin money and he was at a loss, and on receipt of the note from the Department of Social Welfare by our Department and by the fund administrators, properly backed up with all the necessary evidence — not in a very bureaucratic way — that person would be entitled to arrears of holiday money if holiday money arose in such a part time job.
Where does it appear in the Bill under section 3?
The basic approach adopted by this country was to exclude workers not covered by the Redundancy Payments Act. In the case of this country among the categories for whom this exclusion is provided in an annex to the directive are persons who normally work for fewer than 18 hours a week for one or more employers and who do not derive their basic means of subsistence from the pay from this work. Where an employee who works for fewer than 18 hours per week satisfies the Department of Social Welfare that such employment provides his or her basic means of subsistence, such an employee is fully insurable under the Social Welfare Acts. The contribution payable by the employee in such case includes his contribution to the redundancy fund although the employee has no entitlement to benefit under the Redundancy Payments Act. The Department of Social Welfare examine all such cases on an individual basis and all income from whatever source is taken into account when assessing means. If under that provision it emerged that somebody had a claim I would imagine that a note to that effect presented to the Department of Labour would get a reimbursement from the fund for whatever arrears the person was entitled to.
I am asking for an analysis of the terminology of the directive. For example, if a woman is working for ten or 12 hours a week as a commercial office cleaner in order to keep the wolf from the door when her husband is idle, and she is living in a housing estate and has six or eight children, as is very often the case, and if she claims that the hours she is working provide her sole means of subsistence, will the Department say that that is not so because her husband has unemployment benefit or assistance? Is she ruled out on that account?
The efficiency and professionalism of employers is unbelievable and they use calculated viciousness to circumvent legislation and exploit these women. When they go below a certain number of hours a week their social welfare contributions are scaled down deliberately. We had what was like a leper colony in Limerick when a new scale of rates was introduced and all the employers went from the top rate of social welfare contributions down to the bottom. The unfortunate women even when they were made redundant or unemployed could not get even the normal proper social welfare level, and they were not even made aware of that. It was reduced in many cases without their even knowing it and when they came to us we discovered that and had to ring their employers. This had been done to suit the employer because his contribution went down far more than that of the workers. If the purpose of this Bill is to cover unfortunate people who are not protected by trade unions or otherwise — I accept that that is the case — then the Bill should apply to all workers and, as Deputy Taylor says, it can be done on the basis of proportionality.
The amendment is not in legal language.
The directive was not drafted legally.
I accept that it is not in proper legal language but it looks as legal as any language to me. However, it says what the intention is and that is the main thing. If it was accepted the legal brains in the Department could put it into proper language. The Minister said that other countries also exclude certain categories of workers; we are not the only country in the EC to do that. Could the Minister confirm that any other country excluded part time workers working for fewer than 18 hours per week? I made the point that we were the only EC country who tried to exclude part time workers working fewer than 18 hours per week from the Bill. The Bill will also exclude other categories of workers such as lumpers etc. and I presume other EC countries have excluded other categories of workers also.
The intention of this amendment is to include in the Bill people who work for fewer than 18 hours per week. The purpose of the Bill is to make sure that employees' claims arising from their job, contract of employment or whatever should be paid to them from the fund if the employer goes bust. In other words, money is due to the employees and this fund is set up to ensure that they get what they worked for, what they are supposed to get, what is due to them, for the work which they did. Whether they did ten hours, 17 hours or 40 hours a week, they worked hours for which they are entitled to payment, the employer goes bust, there is no money to give them. They have put in their work. Whether it was manufacturing an article or doing something else, they have added to the value of something, whether it is the environment or something being fabricated. They are due payment for that, they are not getting it. This fund is to see that they get it. Why does it exclude workers who work fewer than a particular number of hours? They have also worked their hours, they have done something which has added to the wealth of the country, they are due payment and the purpose of this Bill and the EC directive is to see they get their entitlement. After all, the only thing a worker has are his hands. He has no other property that he can fall back on such as a factory, farm or office block. He has put in his work. If he does not get payment this fund is there to see that justice is done. We are asking the Minister to see in this section that part time workers who work fewer than 18 hours are included. The way we felt would be best to have it included was to put down the EC directive as it was written. If there are other ways in which they can be included, that is fair enough. The Minister says they are included already under the Social Welfare Acts.
Deputy Prendergast has put forward a case. If they worked the hours then it is proved that there was another source of income to the family, whether it is the husband or wife and that it was not the sole source of income. A family could not live on the income derived from working ten hours per week and, therefore, must have another source of income but they will not get paid even though they may have put in the hours and completed the job they were entitled to be paid for. That is not satisfactory and does not cover the whole purpose of the EC directive. It amounts to introducing a means test for this and it appears that if people can manage to live without this they will not get it. It is almost a charity. The purpose of this was to ensure that they got their entitlement under their contract of employment. I am asking the Minister, whether in this or some other language, to ensure that part time workers are included in the terms of the Bill.
It would be helpful if the Minister put on record the categories of people entitled to benefit. A problem here is trying to harmonise one piece of legislation with another. Social welfare legislation precludes people who work under 18 hours per week. If a person works for one day he or she must pay a stamp and section 3 states that it is insurable for all benefits under the Social Welfare Acts. A number of people have certain benefits under the Acts but not the entitlements for most other things Deputies Mac Giolla and Prendergast spoke of. I agree with Deputy Prendergast in his reference to contract companies. I am referring particularly to the cleaning area. To the best of my knowledge a report has been prepared highlighting a number of the inadequacies that exist. They apply to State, semi-State companies, health boards and hospitals. I have had experience of a number of these contracting firms who tender against each other but play the various pieces of legislation to cut their cost. By retaining a large staff to work for less than 18 hours per week they save substantially on the employers' part of the contribution. Any Government Department could put a stop to that by ensuring that one firm does not get an advantage over another due to the fact that they have cut their contributions to the State.
Can they not all do it together by a tacit agreement among themselves with the result that they all drop their contributions in a given area? It amounts to a gang-up on the unfortunate workers.
Some of them will argue that they are a legitimate company paying taxes and are unionised. I am aware of one company that is very big in this city and operates elsewhere in the country that maintains that because they stick by the Act and regulations they lose out on major contracts. Workers will co-operate with companies in other areas. It would be unfair to go through a debate such as this without stating that there is collusion on the other side as well as on the side of the employers. Investigations by the Department of Social Welfare into some of these companies ascertained that some employees used false names. Apparently, those employees had been in receipt of other social welfare benefits at the same time. It is not a matter of corrupt employees only. It occurs among employers, particularly in the cleaning area. In that area the staff do not understand legislation and employers can avail of the opportunity of misleading them into working a limited number of hours.
This also applied in the case of British Home Stores where there was a long strike last year. Certain productivity deals were put to the staff which brought them under 18 hours work per week but when those people were told to go they were informed that they were not entitled to certain benefits. I accompanied deputations from that store to the Department of Social Welfare to try to argue their entitlements. I understood the Minister to say that if a person works these hours and it is their only employment they will be entitled to benefits under this legislation. Does that include or exclude members of the family? Will it mean that if a wife is working 15 hours per week and her husband is also employed she is entitled to benefit under this legislation?
Will the Minister outline where public servants stand in this regard whether they are civil servants in the clerical or administrative area or State or semi-State employees? In most cases they do not pay PRSI. For many years there was a myth that such employees would never lose their jobs but that myth has gone and the question I have posed is relevant. A State employee will not be covered in the majority of cases by section 3 because he or she is not insurable for all benefits under the Social Welfare Acts from 1981 to 1984. Such an employee is excluded from the provisions of the Social Welfare (Consolidation) Act, 1981 because under that the categories of workers not paying PRSI were excluded from a lot of benefits. I was a member of a committee that considered that Bill. We met for months considering the terms of the Bill which brought all the Acts for 65 years together.
Civil and public servants always felt they would not lose their jobs and, consequently, would not have to claim redundancy or seek the protection of the various pieces of legislation that protect employees. Some of the workers of Irish Shipping now find themselves in that category. What is their position? The company was liquidated last week and workers were told that from 1 November they would not be paid although they had completed two weeks work. Staff remaining have been told that they may or may not get paid, that it is all subject to what the liquidator will do.
Surely that insurance applies only to State employees and does not apply to semi-State employees? Surely semi-State employees, like those in Irish Shipping, have the full normal insurance?
I am not clear if they have or not.
I believe they must have.
Even if they have I do not think we can say any longer that employees in that sector will not lose their jobs. Threats are announced daily of what is likely to happen in the public service. Is it likely that public servants will be made redundant and, in that event are they entitled to any benefits? Will the Minister amend this legislation to cover such people or can such people take it that they can never be fired? This is an important question. What entitlements has a State employee who does not pay PRSI? The Minister's officials are in this position. If they were made redundant tonight because of cutbacks in the public service or if hospital or health board employees were made redundant, would they be covered because they do not pay PRSI?
I shall try to deal with the points raised in sequence. With regard to the general point raised by Deputy Mac Giolla and others I should restate what we are doing today. We are establishing a fund to provide for workers entitlements without any effective delay where they have those entitlements and where, for whatever reason, an employee becomes insolvent. We are extending that provision and protection to all insured workers. Deputy Mac Giolla raised a question about the definition of that. I accept that there is a problem about the legal definition. The Directive was used in the Council in a general way and frequently this terminology is used because of problems of translation from one Community language to another. However, if we were to take the amendment as worded by The Workers' Party it would become a lumpers' charter for exploitation and collusion. We have enough evidence of collusion, in the building industry in particular, between certain road contractors who give bona fide contractors a bad name and we have certain roadworkers who give bona fide workers a bad name in relation to the manipulation and exploitation of what is the money of workers, employers and taxpayers. It is not some isolated fund delivered from abroad; this is our own taxpayers' money, and everybody knows how difficult it is to collect that money.
We have used the definition of employee to exclude the possibility of abuse and I have used a shorthand definition to enable Deputies to establish who would be covered from the employee's point of view. If the employee and employer are paying their PRSI contributions, they are covered.
This is a broad debate and I do not want to extend it beyond what is relevant to this legislation. Part time work is becoming an increasing economic reality because of productivity levels and other factors. The Social Affairs Council of the EC have recognised that problem. They have also recognised that there are difficulties arising from the mismatch between the social protection for workers in part time employment and workers in full time employment. For that reason we are at present working on a directive to cover part time workers bearing in mind the contract cleaners scandal. I have taken the initiative of establishing a joint labour committee on contract cleaners because of the exploitability of many workers in this area. We all know the type of people who are being exploited by some employers — Deputy Ahern was right in the way he presented this case. The only way to get around that and to provide for fair competition between employers tendering, in this instance, for State contracts is to have a proper floor for wages. It is very difficult for the trade unions to organise some categories of workers and part time cleaners fall into that category.
As do hotel workers and catering workers.
Yes, and it is for that reason that we have introduced the joint labour committee which will establish minimum wages. When that committee make their conclusions — and they will not do so very easily I gather from the reports I have from the chairperson of that committee — it will be my intention to ensure that all public contracts for contract cleaning utilise the provisions and findings of the joint labour committee to get some degree of comparability. That has been done in the last couple of months, during my term as Minister for Labour.
Deputy Ahern asked about the categories of workers who were covered. The not I have here gives approximate fixures. There are approximately 140,000 persons employed in the public sector who are deemed to be insurable at the full rate. They are employed in the following areas; within the broad category of the Civil Service, there are unestablished civil servants, 10,000; industrial staff, 6,000; contract staff, 3,000; defence civilians, 2,000—21,000 in all. Within local authorities there are 26,000; health board employees within the State hospital system, 12,500 and in the various voluntary hospitals and nursing homes, 12,500; within education, universities, VECs, third level generally, 5,000; semi-State bodies and other public authorities, 53,000 and in the miscellaneous category, which covers other areas, 10,000, giving a total of 140,000 employees.
I have tried to deal with the points raised, but we are not prepared to accept the amendment for the reasons I have given. There is provision in the application of the social welfare code if people are deemed to be solely dependent, substantially dependent or significantly dependent. This is a means test in effect which takes into account other sources of income within the family. Then, provision to avail of their rights under this legislation when enacted will prevail. That provision, in terms of eligibility for an insured worker to benefits from other forms of social welfare is there and we are extending it to part time workers.
We have used 18 hours as the threshold for eligibility in this instance but we have gone further in this legislation than the directive specifies. We have improved it by a conscious political decision in the Department of Labour. We have lowered the threshold for eligibility in relation to part time work in redundancy payments and unfair dismissals from 20 hours to 18 hours a week. They are now harmonised; it is good legislative sense to have the same level of qualification. Instead of scaling down, we are scaling up, although the numbers are coming down. This has been a positive improvement. The exploitation of part time workers by unscrupulous employers will continue because the threshold of 18 hours will mean that somebody will be working up to 17 hours but if we were to lower the threshold to 15 hours, some employees would be working only 14 hours. We know that from experience, hence the need for a directive on part time work.
This is a subject on which I will be coming back to this House because I have consistently said that worker protection legislation is a function of economic and industrial relations. If we start to fundamentally change the economic structures and activities within any society, as they are changing now, we must of necessity reflect that change in legislation. It is our intention to harmonise and modernise that legislation but we must ensure that we do not throw out the baby with the bath water. We must bring into line and extend where possible that protection in the spirit in which the labour movement has always sought to do so. One of the changes in the economy which is evident to many people is the increasing desire for part time work for some people and the increasing need for part time work for others. About 30 or 40 years ago a five day week would have been described as part time work and a person entitled to four or five weeks holidays would also have come into that category. This is the kind of shift I am talking about. I realise this is broadening the debate and the Chair has been very tolerant in allowing me to respond to these points.
I would like to answer the question raised about Irish Shipping workers. I will get confirmation of this but the information I have to date is that they are all insured workers in the full sense of the word under PRSI and social welfare and are fully covered and protected. Irish Shipping was established in 1941 under the companies legislation and is governed and administered by the Companies Act referred to earlier. As Deputy Taylor said, a company set up by the State in those circumstances has the same protection and benefits as any other company. There is no question of redundancy in the public service. There is a constraint on the increase in numbers in terms of additional people being taken on or in relation to some replacements. There is no question of redundancy. There is no question of any other State company being liquidated. The situation in relation to Irish Life——
Irish Shipping.
Is Irish Life on the Minister's mind now?
The Minister is going off course.
If you steer a tight course I will respond but if certain vessels are launched into the middle of this debate I must on behalf of the Government pursue them.
The position of Irish Shipping is sui generis. It is quite unique. I reiterate that the workers in Irish Shipping will get full protection in relation to all their rights and entitlements.
What would it cost if the provision in relation to the 18-hour week were excluded? I am grateful to the Minister for bringing out this note on the question of insurability. Not being an expert on social welfare matters, I found it most helpful. I should like to be certain that he is telling the House that people in that category will come in under section 3 if the decision is taken at a later date by the Department of Social Welfare. The section states that it is confined to employment which is insurable for all benefits. In the case of the part time category to which the Minister refers an application must be made to the officials of the Department of Social Welfare who examine the circumstances and make a decision as to whether that person has rights under the Social Welfare Acts. That comes later. Can the Minister assure me and the House that where a person is found to be entitled retrospectively it still comes within the definition in section 3 that the employment was insurable for all benefits? The Department of Social Welfare having examined the circumstances might then have to decide whether the person was entitled to benefit and it seems that some addendum might be necessary to section 3, stating that the Act will cover employment which is insurable for all benefits or which is deemed by a decision of the Department or of the Minister for Social Welfare to be insurable ex post facto— in other words, at a later date. Perhaps that is not necessary but it is as well to have the point clarified.
Recognising that the Minister has stated that he will be dealing in due course with part time employment, it still troubles me that we, alone in Europe, should find ourselves putting a penalty on our part time workers in a manner that does not apply in any other country in the EC. There is no basis or logic for it. It highlights the poor rate of development in our social welfare system in comparison with the rest of Europe. It is certainly not the fault of this Minister or of this Government alone. It is a reflection on successive governments over the years. One has only to look at the annex to the EC directive to see the situation. We have more exclusions than anybody else. We have five, while Greece has one, the Netherlands has one and the United Kingdom has two. France and Germany do not have any. The person working 17 hours per week in France who requires to have benefit has no problem. It makes no difference whether he is working 19, 17 or five hours. There is no exclusion for any French or German worker. This 18-hour limitation is confined to Ireland alone. What is so special about our part time workers that we have to exclude them from benefit? How much money would be involved in dealing with the matter? I suspect that the amount involved would be relatively small. I do not know if the Minister has the figure. If not, perhaps he could get it for us later in the day so that we would know what amount of money would be needed to achieve parity on this issue with all the other countries in Europe.
I must go back again to the point and purpose of the Bill. The Minister is introducing elements which confuse the issue. The explanatory memorandum says it is designed to protect employees' interests in regard to pay in the event of their employer becoming insolvent. It has nothing to do with disadvantaged people or poor people. It is simply a matter of paying people what they are due. The banks are already covered under other Acts so that they will get what is due first. They are well covered in cases of insolvency. Is this an attempt to cover employees in the same way? It could be an employee who was very well paid and had put by something over the years and had another income from investments. It could apply to all sorts of people, regardless of whether their income is high or low. That is the social welfare area. The Minister is confusing the whole issue by bringing in social welfare regulations which might cover certain categories of people. It has nothing to do with that. It simply concerns people who are employed under a contract of employment and who were not paid for the work they did. The purpose of the Bill is to protect employees' interests in regard to pay in the event of their employer becoming insolvent irrespective of whether they are very well off or very poor. There is no point in confusing the issue by talking about other ways in which part time employees would be covered and would not be allowed to starve in the event of not benefiting under this legislation. The purpose of the Bill is to do a specific job and, irrespective of any other Act, it should cover part time or full time employees who work to earn pay.
The Minister is also introducing the lumpers to confuse the issue further. He could easily include part time employees if he wished to do so. He can very easily put in exclusions for various other categories but not an exclusion for part time employees who work less than 18 hours. Under section 10 he will have powers of inclusion and exclusion of categories of employment. All we want to know is whether he will include part time workers who are not covered by section 3. Those who have spoken have simply asked that they should be included within the scope of this Bill, whether they work 18, 17, ten hours or whatever. They should be paid for the number of hours they work. That is the purpose of the Bill. We want to see them included.
We have put down this amendment on the basis that the EC directive intended that such employees should be covered. In that directive there is provision for exclusions. No restrictions have been included on the employers' side. There is no restriction in the Companies Act. Why should we bring in this section when it comes to a question of workers' pay and entitlements in the case of an insolvency? This smacks of further discrimination against part time workers who, as the Minister has said, are an increasing phenomenon and will increase rapidly in the future. That has been the case in the past number of years. When there are exclusions in a Bill such as this, employers are encouraged to increase the number of their part time workers rather than full time workers.
We are asking the Minister to include in this section, or some other section, part time workers who work under 18 hours. This would have to come under section 3 because it is in that section that he has excluded them in the alteration to section 3. Our amendment may not be in suitable legal terms. We did not have it drawn up by any legal eagles. We simply took it from the directive whose purpose is to ensure that all workers get what they contracted for in the case of an insolvency. Did any other EC country exclude part time workers under the terms of this directive? It excluded other categories of workers and the Minister is entitled to exclude workers such as lumpers.
The Minister is being badly advised. His arguments and the arguments of his advisers are weak. To me the implication in the Minister's statement is that he cannot reduce the hours bar because of the danger of benefiting people who manifestly should not benefit, for example, lumpers. I have resisted a type of argument put forward by employers over the past 20 years. There is a well known maxim that the best is always the enemy of the good. When a group of workers say to an employer: "In the name of humanity we think we are entitled to a sick pay scheme", the employer says: "No, I cannot give you a sick pay scheme because it will be abused." That is human nature and it applies everywhere.
Anyone who has read the McGraw Hill book by Hallor Gillmor on Industrial Psychology can give you a fairly good breakdown of the people who are likely to do that. You hear the same argument when you talk about increased holidays or overtime for Saturday work. You are told workers will come in on Saturday for the double time and stay out on Monday, and off balance the tax effects. We know the blackguardism that goes on. Nothing I can say in English or in Irish could condemn sufficiently workers like lumpers and other people who abuse sick pay schemes. They are the enemy of the workforce because they are used by employers, and in this case by the Department, not to give what is manifestly a very desirable scheme on the grounds that it will benefit the miscreants or the blackguards. If possible we should enact a law covering all workers even on the grounds of proportionality, but introducing a caveat or an exclusion expressly denying the extension of the scheme to workers who are in breach of the law.
Let me give an example. Recently two employees took their case to the Employment Appeals Tribunal. They had been working a scheme under which they were taking so much under the counter. They were paid £50 a week into their hands. Their cards were not being stamped. They were young men and they did not understand. If they had any intelligence they would not have exposed themselves to ridicule by going before the Employment Appeals Tribunal. There are also very devious employees and there can be collusion between employees and employers to defeat the various Acts. They can be expressly identified in legislation. The type of worker we are referring to here should not be penalised by the blackguardism of a few.
I want to compliment the Minister — and the trade union movement have already done so — on the fact that he has reduced the threshold in several Acts which hitherto debarred workers from going before tribunals or qualifying for benefit. In all fairness and modesty I can take some credit for being the person responsible within my own union, which is the biggest union in the country, for having the JLCs established for part time cleaners. I ask the Minister to take my suggestion on board. He might put a section into this Bill outlining the bona fides of himself and his Department and saying that to prevent the exploitation of unorganised or part time workers it was the intention of the Minister to establish JLCs to cover every conceivable type of employee. They are easily identified and some of them are already covered. I appreciate that.
Under section 222 of the Companies Act a liquidator — and this happened in the case of Moracrete — can overrule all entitlements. Despite the fact that a worker went before the Employment Appeals Tribunal or a rights commission and got a favourable hearing, that could be ruled out by the liquidator. He could stymie him and force him to go to the High Court and the cost of the case could outweigh the benefit he might get. The Bill should include some specific provision to stop that kind of blackguardism and kicking to touch by unscrupulous employers. I ask the Minister to consider those points.
Deputy Prendergast has made some very good points. I welcome what the Minister said about the joint labour council proposals. I presume he means legislation will be coming before the House and we can debate it. Part time work is the reason why the United States is thriving at the moment. Perhaps it is not a concept we like but people are doing two and three jobs. The United States is thriving and people are happy. We would all be happy if we only had the problem of cleaning contractors and we did not have 30,000 people unemployed. I would like to feel that there will be incentives for employers to employ people in any proposal the Minister brings forward. We can get caught up in trying to cover and protect everybody. We badly need incentives for employers and entrepreneurs to take a few chances.
That is outside the scope of the Bill.
It is, but I am making the point that we can get caught up in the philosophy of protection. We must also consider the opportunities.
Let me respond to some of the points raised. I had forgotten an earlier intervention by Deputy Mac Giolla seeking an answer to a question which he had asked. The only other country in the EC which has sought an exclusion for part time workers is the Netherlands. In answer to Deputy Taylor, we cannot give a detailed estimate of the cost of the entire operation of the scheme. We can make "guesstimates", but we cannot be much surer than that. We do not know the cost of extending the scheme to part time workers and I share very much Deputy Prendergast's view in relation to the need for extension to these workers. We should recall what is happening, which was the thrust of Deputy Mac Giolla's last intervention. A fund has been set up to cover the position of workers whose rights could be at risk as a result of employers, negligently, culpably or innocently, going into bankruptcy. That fund is being funded by the employer. The employee is making no contribution, as is right and proper. In this legislation we are requiring all employers to be made responsible for either the failures, in bona fide economic terms, of some or the evasion of responsibilities of others. Employers of part time workers under the 18 hours threshold do not pay full PRSI and will not be making a contribution to that fund. The extension of the Deputy's argument is that he will be requesting employers to provide for a fund which would be to the benefit of some part time workers whose employers would not be contributing to the fund.
They should be brought into it.
Let me go on to the second point. It has frequently been said in this House — and it was the point which Deputy Ahern raised — that one could regard, in one sense from an economic point of view, PRSI as a tax on employment and the cost of PRSI contributions, not only from the employee but from the employer as well, as a labour unit cost that has to be paid for by the employer before wages are paid out. If we increase that contribution, we are increasing the cost of labour to the employer and this argument that PRSI works against employment has been expressed by Deputy Ahern in another manner.
There is one supremely important weakness in that line of argument. It is that one is then giving the unscrupulous employers who are employing the lower paid workers an unfair competitive advantage over the legitimate, bona fide employers, and I do not often defend employers. Such as they are, they should be defended and prevented from exposure to the effects of the unscrupulous employers who are using the situation where they do not have to contribute to a fund. In the building industry they are all expected to contribute to the CIF fund but some employers are not contributing and are using workers' entitlements to get in unfairly against bona fide employers. We should watch that side of it.
I do not know if I can add any more to what I have said. We are talking about the application of a specific insolvency fund to cover workers entitlements. There are many issues related to this which impinge upon it. I recognise the validity of the argument in relation to extending protection to part time workers. It would be my desire to do this. It is not coincidental that in France such protection extends to all categories of workers, but they have Socialist Government, similarly in West Germany where they have had the benefit of Social Democratic Governments for a long time. That is the reality.
We have one here.
You only have to compare the legislation of those countries with what we have here and what is available or practical and you can see the contrast.
Section 3 should be read in conjuction with section 10 which enables me, or any Minister for Labour to extend the protection of this legislation to further categories of employees. I am not averse at all to what is being proposed by Deputy Prendergast and other Deputies. I want to see what the implications of such legislation are, what the cost will be and the impact on other areas. What the Deputies are raising is a much broader question of the application of worker protection legislation to part time workers.
That is true.
It is not just exclusively in the context of insolvency legislation. The debate is broadening. The House will have to address itself to that problem and it would be my intention to try to do so within the framework of the part time workers directive of the EC.
I do not know if the Minister was saying, when he referred to France and West Germany, that he would put it in, Fine Gael will not put it in, that under a Socialist or Social Democratic Government it would be possible but not with the type of Government we have here at present. He has said that under section 10 the category of part time employees could be included. It is very important, before we leave this section, to have clarification on that.
I would much prefer to deal with section 10 when we come to that section. I accept that there is a relativity between sections 3 and 10, but I could not allow a joint debate on those sections.
I am aware of that. The Minister referred to it and I just want clarification of what he said. Section 3 states "subject to section 10 of this Act, this Act applies to employees..." and so on. We must refer to the possibilities under section 10 before we leave section 3. Could the Minister clarify the point he made? It is very important that we be aware whether he will include part time workers. This has been fairly well debated. The reasons are acceptable to the Minister and he understands them. However, he seemed to want to postpone it until some legislation in regard to part time employees has been brought in. That is very laudable and we would hope that such legislation will be brought in. It is very important that it should be. However, we should not wait until that legislation comes in. Something else may happen and it may well not come in. There may well be changes of Government or other matters.
We have this Act in front of us now, the whole purpose of which is to protect employees' wages in cases of insolvency. All that needs to be done is either to alter section 3 or in section 10 to have the Minister amend the section to extend the application of the Act to part time workers. All I am asking is that the Minister agree to do this under section 10 and we could allow section 3 to stand. This section is fundamental to the whole Act. To whom does it apply? As the number of part time workers has increased so rapidly in the last few years and will in the next couple of years, the Act would apply probably to only 50 per cent of the people unless this extension is included now. It will be applying to fewer and fewer as the years go on. I ask the Minister if he would be prepared to accept — the amendment has not been put down in legal language — that other categories should be included. I am asking if the Minister in section 10 will include part time workers specifically, as he is entitled to do under that section. Then we could accept section 3. Otherwise we cannot accept it.
I am not prepared to amend section 3 as it stands. I am prepared, within the framework of the enabling section 10, to look at the question of extending full protection to part time workers. However, the definition of part time workers can vary from industry to industry, from sector to sector. It is a very loose definition. Quite frankly, I am not in a position at this stage to give a clear or firm undertaking that this would be extended within a given period of time to all part time workers. It is my intention to move along that road but it would be unfair to go beyond saying that to the House at this stage. There is specific provision in the Bill, and this was sought by me, to enable me, by regulation and without coming back to the House, to extend the provision to categories of workers by class or description. That is in section 10 and it will enable me to make the regulation in the knowledge of all the consequences and to have it in the context of proper consultation between the social partners. I should like to talk with the ICTU and the FUE as to how this legislation would affect their operations.
Is it true that there have been discussions between the Minister and his officials and Congress on this matter?
As is right and proper, there have been extensive discussions with both sides.
Yet the viewpoint of Congress has not been accepted by the Minister. This section specifically excludes part time workers. There are a number of other categories that it does not exclude but we cannot accept this specific exclusion. The Minister talks about taking certain steps under section 10 but without some guarantees in that regard we cannot assume that he will do so. Consequently, we are pressing our amendment.
Question, "That the new section be there inserted" put.
Deputies
Votáil.
Will those who are demanding a division please rise?
Deputies Mac Giolla, De Rossa and Gregory-Independent rose.
Amendment put and declared lost.
In accordance with Standing Order No. 59 the names of the Deputies dissenting will be recorded in the journal of the proceedings of the Dáil.
SECTION 4.
I move amendment No. 2:
In page 5, subsection (1) (e), between lines 30 and 31, to insert the following:
"(ii) the date on which the receiver finally winds-up the company, or".
I would like to return to the winding up arguments on this matter on Second Stage. This section is one of the three most important in the Bill. The Minister said that to get over the problem of some of these industries, particularly Kilrush Potteries, we should use the date on which the companies were wound up. He spoke of the assets that would be left and the extra money required from the fund.
In the past few years many industries have gone to the wall either by actions brought in the courts or by voluntary action. We argue that employees of such industries would be entitled to something, some form of compensation. We know that in future people will be covered in cases of liquidations from 22 October 1983. That was the effect of a directive from the EC. We have been arguing that in the case of companies which went into liquidation prior to 1983 and in which liquidators are still in operation the effective date should be the day of the final winding up. There are substantial reserves in the fund to ensure that such people would be covered.
Other sections in the Bill cover additional benefits. There were many closures in 1983, a particularly bad year. Many of these cases are still being dealt with by liquidators. This amendment, and the one on pensions, are the two most important amendments proposed. Some employees in industries in which the liquidators are still operating have suffered grave hardship. If a person knows that on the date on which a liquidator finally winds up a company he can get some payment from the liquidator or from the courts he would be reassured to know he was covered by this Bill. This amendment would cover many of the people who have been suffering undue hardship.
I support the idea that we should be in harmony with the EC directive and extend this to the date of the EC directive which goes back to 20 October 1980. Companies throughout the country have become involved in tragic situations and they would be covered by the appropriate EC directive. I do not know what prompted acceptance of 22 October 1983, which is three years from the date of the directive.
I support Deputy Prendergast. We should give favourable consideration to workers who were made redundant in the three years between 1980 and 1983. The Minister should consider the date of the directive rather than the direction to have it implemented by a certain date.
I agree with the spirit of what has been said by other Deputies. On Second Stage the Minister indicated that he would examine favourably amendments to the Bill on Committee Stage. He gave a definite promise about the way in which he would approach this matter. He is probably aware that companies in the Clare constituencies had employees who suffered. I ask the Minister to re-examine the date.
I support the amendment which has been put forward. I am glad that Deputies agree with the point of view expressed here that by making this amendment the Minister will tidy up the position of people who would not be covered. On Second Stage I made this point in relation to a number of companies where employees would lose out because the legislation was not operative from 1 January 1983. The Minister is using the last date set down in the directive. It is 22 October 1983. He could quite easily go back to 1980. We are not seeking that. A later amendment seeks to bring the date back to 1 January, but this amendment is an effective way of dealing with some of the problems that will arise when the legislation has been passed.
In his reply to Second Stage the Minister acknowledged that. He said it would not affect the general principle involved. He put forward the argument that if we wait until the date of the final winding up there could be delays in making payments. It would be better to have delays in making payments rather than not be paid at all. If the Minister accepts the amendment people who under existing law will not receive payment will have some prospect of being paid. I hope the Minister accepts the amendment. The amount involved is not significant. It will be covered under the new fund. From the limited figures the Minister gave us there is clear evidence that the fund will be well capable of meeting the demands on it. In the meantime we are endeavouring to ensure that people will have a prospect of being paid.
With your agreement, Deputy Ahern, amendment No. 6 to section 5 is very relevant to amendment No. 2 to section 4. Could we debate both of these together?
That is the question of the date.
It is a separate issue. What we are doing here is making it easier for the Minister to do what he might not be prepared to do in a later section. It would not involve the same level of expense.
I only suggested that we have a joint discussion. They would be decided on separately.
I should like to hear the Minister's view.
I am not in a position to accept the amendment put down by Deputy Ahern. Since the debate on Second Stage we have looked at the implication of moving the commencement date back to accommodate a difficulty in a particular constituency or region. I understand the views expressed by Deputies. There is a cost implication and perhaps we are being a little cautious in relation to the exercise of the discretion we have about the commencement date but we are being cautious with taxpayers' money and money which is scarce by any definition. We do not know the level of insolvencies in the economy. We know how many notified bankruptcies there are and so on. It is impossible for us to calculate with any degree of certainty what the potential or estimated cost will be.
Deputies opposite have chosen two ways of achieving the same objective. One is a specific commencement date, 1 January 1983, and the other is winding up by the liquidator. Deputy Ahern knows more about accountancy practice than I do and he will accept that there are many companies which are technically insolvent and have ceased trading but are not properly wound up by the liquidator or receiver. There may be outstanding claims. This legislation in terms of a claim against the company will have to be seen in the context of the Companies Act. Compensation will be paid out of a fund which is taxpayers' money. If we could refund workers going back five or six years, which could be the effect of this amendment, with taxpayers' money to which no contribution had been made by the employer or the employee, why could not a bona fides creditor who was getting 35p in the £ equally be refunded?
We had to take a date. We took it from the date of legal requirement, that is, 22 October 1983. I know it does not go as far as some Deputies would like but it is a fixed point of reference to which there is a clear legal obligation. If we move away from that point there will always be someone who will ask if it cannot be moved further or extended to cover a certain category. I do not want to debate the relative merits of the two amendments but the other one has the benefit of being fixed in time. This one is open.
Deputies opposite have far more collective experience of administration of a Government Department than I have and will readily appreciate that there are limits in terms of what is administratively feasible. One of those is determined by what can reasonably be anticipated or calculated for. With the experience of the Department of Labour, the Department of Industry, Trade, Commerce and Tourism and the Office of the Attorney General we have not been able to go further. I indicated on Second Stage that we would look as sympathetically as possible at the points raised by Deputies. The same Deputies were in the House then as now because of their concern with a company in Clare. Having regard to the considerations and the anticipated cost, not what the request in relation to the specific concern in Clare would bring about but the other incalculable costs and the administrative implications, I am not in a position to accept the amendment. The reasons advanced earlier by Deputy Daly suggested the fund was in very good nick and well serviced. Regrettably we still have substantial numbers of redundancies. It would be misleading to think that the £12½ million is there for the purpose of insolvency. We estimate that the total amount of money we would have collected would be of the order of £500,000.
Progress reported; Committee to sit again.
Sitting suspended at 1.30 p.m. and resumed at 2.30 p.m.