Dáil Éireann debate -
Wednesday, 28 Nov 1984

Vol. 354 No. 5

Protection of Employees (Employers' Insolvency) Bill, 1984: Committee Stage (Resumed)

Debate resumed on amendment No. 11:

In page 7, subsection (2) (a), between lines 37 and 38, to insert the following:

"(xii) entitlements arising in the event of a person losing his ongoing pension payments owing to his employer becoming insolvent".

Mr. O'Kennedy

We reported progress on this last Wednesday when our spokesman, Deputy Ahern, put down a special amendment with the full support of our Front Bench and parliamentary party to ensure that in the event of insolvency and pension funds being affected by a liquidation, as has happened in numerous cases — notably Castle Brand, Nenagh — that the Minister of the day would ensure the implementation of the EC directive which requires the indemnity of the pension fund, that is, that the lost contributions on the part of the employees will be indemnified, thus ensuring that the loss is made good here as in other countries.

We gave cogent reasons for our arguments and since then the public seem to have become aware of the extent of the problem in Castle Brand and other industries. We considered this in detail over two weeks ago and, as we were conscious of the implications not just for Castle Brand but for other firms, including Irish Shipping, which have gone into liquidation, Deputy Ahern put down this motion which would in effect protect the pension fund rights of employees in the event of liquidation affecting the solvency of the fund. Since we put down this amendment I am glad to note that it has become a national issue and I am glad that the Labour Party support our case. However, we are capable of making the case for Nenagh without the assistance of Deputy Prendergast here or on the national airwaves. Unfortunately, we are witnessing a trend at present of increasing liquidations. It is evident that this year liquidations will be well in excess of last year and by the end of the year they will be in the order of 900. This directive came into effect in October 1983.

Mr. Carey

It originated in 1980.

Mr. O'Kennedy

The explanatory memorandum says that the Bill is designed to protect employees' interests in regard to pay in the event of their employer becoming insolvent. I am sure the Minister will confirm this.

Minister for Labour (Mr. Quinn)

I can also confirm that Deputy O'Kennedy was Minister for Finance in October 1980 when the Government of which he was a member agreed to the directive.

Mr. O'Kennedy

Before the Minister sits back smugly he should take note of the next sentence in the explanatory memorandum. I also want to address Deputy Carey, through the Chair, whose father taught me at one stage, so perhaps I can instruct him now. He should note that the memorandum goes on to say that it will also implement the requirements of EEC Council Directive 80/987/EEC which came into effect on the same date and which confers certain rights on employees in insolvency situations. If the Minister had read the first two sentences of the explanatory memorandum he would have had the information. Because the directive came into effect in 1983 it becomes a matter of issue and obligation for the Government to implement what has come into effect since 1983, not before it. Secondly, it becomes a matter of crucial importance because of the increasing spate of liquidations. Regrettably by the end of this year we will have at least 900 liquidations. That was not the position in 1980 and there is no point in suggesting or pretending that it was. From 1982 to 1984 there has been a total change and practically every day on the Order of Business the closure of firms or factories is raised.

We discussed this matter at some length at our parliamentary party meeting. It is clear that the problems at Castle Brand — I know about them all too well and we discussed them on the previous occasion — are reflected and repeated in other places throughout the country. Pension funds and the rights of employees are being lost when certain liquidations are carried out because of the failure of management to contribute. There is no point in any Deputy trying to say that this Government have become aware of this problem and have cared about it or in suggesting that no other Government were concerned about the matter. The obligation was not there under the EC directive until 1983 and the need was not there, at least not to the same extent, prior to the last two years. Now there is the need and the obligation and that is the reason I ask the Minister to support the amendment in the name of Deputy Ahern.

I cannot overstate the impact this is having in my home town, Nenagh. I cannot overstate the frustration, the anger, resentment and the feeling of hopelessness of a workforce many of whose members have contributed on average to the fund for the past 30 years and they will not even have the opportunity of getting employment under a new promoter. Quite properly this matter was raised in court yesterday. We have also a role, and that can only be discharged by the Minister, in ensuring that the proposal of Deputy Ahern which would meet this and other cases be adopted. In the circumstances I appeal to the Minister to accept the amendment.

Mr. B. Ahern

I am tempted to go over all the arguments again but I will not do so. Last Saturday night in the programme "Dáil Report" I heard the Minister say that he had listened to the arguments of Fine Gael and Labour Party Deputies. Obviously he did not hear what Fianna Fáil Deputies had to say but I will not put the House through the agony of going through the arguments we put forward in a two hour period on a previous occasion.

The most important amendment has to do with pension funds. As Deputy O'Kennedy said, this matter was discussed by us at party level and it became clear that the cases referred to, such as Castle Brand in Nenagh, have been repeated throughout the country. We must also consider the pensioners who have been on pension for a number of years: where the company concerned goes into liquidation those people lose their pension rights. Last week I referred to Bolands Mills. In that case some people had spent their entire working lives in the employment of a reputable company but when there was a take-over they lost a substantial amount. They had to be grateful they got anything because under present legislation in the event of a take-over they have no entitlements. In the case of Bolands at least the people concerned got part of their pension, but in Castle Brand the fund is insolvent and there will be nothing left. Yesterday there was a statement by Mr. Justice Costello that there should be an investigation into what happened to the funds. We will have to wait and see.

Many such losses have occurred but they have never been highlighted. As this Bill was going through the House at this time it probably focused attention on a number of pension funds. One point I made last week was picked up by Deputy Prendergast. He said that when a company goes into liquidation it is bad enough for employees to lose their jobs and entitlements with regard to wages and salary. However, they also lose the substantial amounts they have paid into a pension fund for a number of years. In many of the traditional Irish industries that are closing now the employees had 35 or 40 years service.

In his speech on Second Stage on 26 June the Minister made the following comment:

In addition to providing for the protection of workers' claims relating to pay, the EEC directive also imposes an obligation on member states to protect workers' interests in the matter of company pension schemes. I am very concerned that the entitlements of employees under company pension schemes should be protected.

We fully supported that view. Our spokesman on Finance, and hopefully the next Minister for Finance, made it clear last week he would support the Minister knowing that the contributions would have to be increased if the concession were given. We know the money cannot be provided out of the redundancy and insolvency funds as at present constituted. We are asking the Minister to follow up on what he said on the previous occasion. We all know that his alternative and compromise solution is to wait until there is a national pay-related pension scheme. That will not happen until many of us have left this House, either forced out by the public or having left on retirement. The Minister was not very precise in what he said last week and I checked to see if there was any proposal by his colleague, the Minister for Health, to bring in a Bill that might resemble in any way a national pay-related pension scheme. I was told by his Department that there was no such proposal. In that event I welcome the Bill which I consider a good Bill.

I know that the directive has been around for three years and that the latest date by which we had to implement it was 22 October. By funding 12 months contributions of pensions we fulfil the EC directive in the most minimal way. However, we are putting a case to the Minister in the interests of thousands of defenceless people. They have no one to argue their case, they are out of work, they have no trade union to speak for them and many of them have lost the contributions they have made in the past 35 or 40 years. When the directive was drafted in Europe it was obviously designed to provide such protection and the Minister admitted that on Second Stage. If there is some way for the Minister to put forward an appropriate amendment I willingly withdraw my amendment now and will wait until Report Stage. I am as anxious as the Minister to get this Bill through so that people who have been made redundant since 22 October 1983 may receive their entitlements under the legislation. Surely it is an opportunity to give something back to the thousands of people who have been deprived of their jobs, entitlements and pension contributions. I ask the Minister to consider doing something to alleviate this massive hardship.

Mr. Quinn

I sympathise with Deputies opposite in their attempts to have this matter dealt with. It is the Government's intention to advance the progress made in relation to providing a proper pension framework for everyone. The question arises about whether this amendment is the best way to deal with the problem. Fundamentally there is no difference in approach to the desirability of having a national pension scheme for everyone, including the self-employed and to ensure that adequate protection is provided for people who contribute to a pension scheme to ensure that their contributions are not misappropriated or directed to some other use. It is scandalous that moneys contributed by employees in Deputy O'Kennedy's home town of Nenagh, destined for a pension fund and presided over by trustees appear to have been used for purposes for which they were not collected. It is essential that in any kind of pension fund at least one trustee is nominated by the workers, preferably a member of their trade union who has access to the specialised knowledge that the utilisation of pension funds requires. The tragedy that is undoubtedly Castle Brand's underlines the necessity for dealing with this problem.

This Bill will guarantee that moneys contributed by an employee to his or her pension fund will be guaranteed for the previous 12 months in the event that those moneys were not used for the purpose intended. To that extent there is an added degree of protection for workers which is an interim requirement under the terms of the EC directive. However, that is not the intention of this amendment. This amendment attempts to say that any worker at any stage of his or her employment in a company will be entitled to a full pension in the event of the company going into liquidation. To do that in the manner suggested without consequential amendments to other parts of the Bill is illogical. We would need to establish a substantially larger fund than is provided for. The cost of this fund is being borne entirely by the employer as part of his PRSI contribution. What Deputies now want is that the full pension obligations in relation to workers who are employed in companies who go into liquidation will be carried. If that were to be funded in a proper sense the employers' contribution would be enormous. I do not think they are suggesting that they should be funded entirely by the employer because in all pension funds there is a joint contribution by employers and workers depending on terms and conditions of the fund. The logic of adding a seventh requirement in relation to section 5 is not backed up by supporting amendments in other sections of the Bill.

Deputy O'Kennedy referred to the situation which exists at present in relation to Irish companies. I accept that many of them are in considerable difficulty. He will recall when he was Minister for Finance that many employers argued that they were in difficulty because of their costs in terms of taxation. One of the costs they complained about — I do not say I agree with it — was the cost of PRSI contributions. It is illogical for Deputies O'Kennedy and Ahern to complain about the need for this legislation and the need for extending it to cover pension rights for workers on the one hand and to put down an amendment the consequences of which would be to dramatically increase the cost of employers' PRSI contributions which in turn would accelerate liquidations. As a consequence of that accelerated level of liquidation it would require an increased contribution to fund the fund.

We will introduce a national pension scheme during the lifetime of this Government. The proposal in this amendment is not supported by a complementary proposal to change the nature of the fund or the structure of it. If the motivation for putting down the amendment was to highlight the need to deal with this aspect of workers' protection I welcome and support the motivation. At page 107 of the national plan it states:

The Government intend to publish a framework for a national pension plan. This is in line with the commitment given in the Programme for Government. The proposals will take into account views which were submitted in response to two discussion documents, the Green Paper A National Income-Related Pension Scheme published in October, 1976, and the Green Paper Social Insurance for the Self-Employed published in January, 1978. The timetable of those publications will indicate the difficulties in getting an agreed system of pension funding for everyone including the self-employed. On a number of occasions Deputy O'Kennedy stated that Ireland is the only EC member state, with one possible other exception, which does not guarantee workers pension entitlements in the event of the insolvency of their employer.

To make such a statement is misleading and fails to take account of the wide variety of pension arrangements which operate throughout the EC. A distinction must first be made between State pension schemes, such as the State earnings-related pension scheme in the United Kingdom or the pension legale in Belgium and other private pension schemes negotiated between employers and employees in those countries. In the case of these State schemes, contributions are paid into a central fund. The contribution level is kept under regular review to ensure that the fund is adequate to meet its liabilities. An employer's insolvency does not affect an employee's entitlements under the State scheme. In the case of private schemes, however, there is no guarantee and the liability of the insolvency fund extends only to the payment of unpaid contributions, usually limited to 12 months which is what we have done here.

Mr. O'Kennedy

The Minister is saying what I said. The State scheme covers all these areas.

Mr. Quinn

We did some research on the Deputy's contribution.

Mr. O'Kennedy

The Minister should not have had to do any research. He should have known beforehand.

Mr. Quinn

I am responding to the contribution the Deputy made and answering his questions. To further illustrate the difficulty in making valid comparisons I will refer briefly to the situation which applies in a number of other member states. In the Netherlands, for example, there is a legal obligation on employers to be members of the appropriate industry pension fund and to keep all pension fund moneys separate from other capital. If that were in operation here we would not have the problem we have in Castle Brand.

A somewhat similar arrangement operates in Denmark. In West Germany a pension guarantee association has been established and all employers with company pension schemes are obliged to contribute to the association. Where an employer cannot meet his pension scheme commitments, because of insolvency, these are taken over by the association.

In a report based on a comparative survey of the measures operating in member states to protect employees' entitlements in insolvency situations, conducted prior to the drawing up of the EC directive, it was stated that the question of how to protect employees' rights and future expectations under company pension schemes posed a major problem to which no solution had been found. It was conceded that these rights and expectations were of a completely different scale to other entitlements and could not be covered within the financial means of the guarantee institutions.

Given that background it is not surprising that the EC directive does not place any obligation on member states to pay pensions or indeed to pay pension contributions from the guarantee institution. I do not wish to be petty in this way but Deputy O'Kennedy was in office when this directive was issued and being negotiated and his experience both as Minister for Foreign Affairs and Minister for Finance would have brought him into direct contact with the formulation of this directive. His subsequent experience as an EC Commissioner should have given him an insight into the way in which the directive was formulated. During the period 1981 and 1982 there were three changes of administration here so it is not surprising that it has taken so long to get the legislation before the Oireachtas.

What is being proposed in this amendment is out of line with the objectives of the Bill. The amendment does not propose to change or amend the way in which the fund is to be provided for by the levels of contribution from either side. I am not an expert on national pension schemes but from my limited knowledge I know that the provision of a national pension framework into which existing company pension schemes could interact with State topping up schemes and into which individuals, like those in the VHI, for instance, could opt for certain levels relative to what they foresee would be their own needs, with comparative adjustments in contributions, is an immensely complex matter which we have not yet been able to deal with satisfactorily. Given the level of liquidations we have had, although according to statistics they seem to be decreasing——

Mr. O'Kennedy

There are no companies left.

Mr. Quinn

I am quoting Colm Rapple of the Irish Independent. In his business column he uses the headline: “Worst Over as Irish Firms See Sharp Slow Down in Failure Rates”. He is recognised as an independent journalist.

However, we see far too many companies going into liquidation. The broad implications of this amendment have not been considered sufficiently deeply by Deputies opposite. If they were logically to pursue the implications of the amendment they should have provided for consequential amendments elsewhere in the Bill. We have debated this earlier and I hope the Deputies opposite will not go over the ground again. We are meeting our EC requirements and are even going beyond the requirements of the directive in many matters. We have covered arrears contributions for up to 12 months, which were contributed by employees but were not properly processed or protected by the employers or the trustees of the pension funds.

We are aware of the problems in relation to a national pension scheme and the need to provide an adequate framework for all employees, including self-employed if they wish to come into the scheme. This amendment could not possibly deal with that problem. Within the framework of our national plan the Minister for Social Welfare will advance the proposals for the construction of what is clearly necessary, and I welcome the support Fianna Fáil have offered in relation to this. It will not be done easily and much effort and sacrifice from both sides will be necessary. As I have said, I am not in a position to accept the amendment because it is contrary to the whole thrust of the legislation before us.

Mr. O'Kennedy

The Minister has not indicated the extent of the increase in cost to employers and the State pending the introduction of the proposed national pension plan. We asked the Minister to indicate what those costs would be but beyond telling us that they would be enormous we have not been told, although there has been an opportunity to do research into it.

I wish to make some corrections in relation to what is causing liquidations. There are many contributory factors and I suggest that PRSI contributions are a small element in it. The Minister must know that the entire tax climate for business is causing these problems — I will not go into the dramatic news of the imminent bank interest rate increases. Particularly in relation to Castle Brand, it is the luxury level of VAT imposed by the Government on essential items of kitchen ware that has driven Castle Brand and others like them to the wall.

During the course of the Finance Bill debate last year I pleaded with the Minister for Finance not to impose a 35 per cent VAT rate on essential items in any household, pots, pans, cups and saucers etc. The response of the Minister for Finance was that 35 per cent is not a luxury or penal rate but a standard rate. I had called the rate a luxury one. That penal rate now has become standard under the regime of the Minister for Finance and the Government. Because of that it is standard to have a 35 per cent VAT rate charged on pots and pans. That is the main reason for the drop in consumption of Castle Brand commodities. We are being asked to ignore that. It is killing companies like Castle Brand. I would remind the Minister that in 1980 and 1981 these levels of taxation were not there.

An Ceann Comhairle

We are getting into the causes of company closures.

Mr. O'Kennedy

It is not the job of the Opposition when they put down amendments to go through the entire Bill and make consequential amendments. We have done a damn good job on this Bill having regard to the resources available to us. The Minister has the parliamentary draftsman and civil servants to advise him and he is lucky to have them. We have one secretary, one typist. We have done rather well.

If the Minister says further consequential amendments are necessary he should draft them. Either he accepts the principle of what we are talking about or he does not. He has resources in his private office and in his Department. Incidentally the Department of Labour are the biggest growth Department. We are seeing cutbacks in public expenditure but the Department of Labour have a 44 per cent increase in their Vote for next year. There is a one per cent cutback in the Department of Agriculture. If with £160 million the Minister cannot find somebody to draft a consequential amendment that is a terrible acknowledgement. Our case has been made cogently and there is no point in going into further detail.

Tomás Mac Giolla

I support this amendment. I am amazed at the Minister's last argument. He said he accepts the need for pension rights to be guaranteed in some form but not in this way. That is an effort by the Minister to get out from under his responsibilities. This Bill is introduced in response to an EC directive. It does not say that in the Bill but it is specifically stated in the explanatory memorandum that the Bill is designed to protect employees' interests in regard to pay in the event of their employer becoming insolvent. It states that it will also implement the requirements of EC Council Directive 80/987/EEC.

That directive is quite extensive and detailed. In Article 8 it states that member states shall ensure that the necessary measures are taken to protect the interests of employees and of persons having already left the employer's undertaking or business at the date of the onset of the employers' insolvency in respect of rights conferring on them immediate or prospective entitlement to old age benefits, including survivor's benefits under supplementary company or intercompany pensions schemes outside the national statutory social security schemes.

That is a very specific directive. If it is the Minister's intention to implement that directive he should include in this Bill the provision he says he agrees with. He says it is necessary but not in this Bill. It should be included in this Bill. If the Minister feels this amendment is not satisfactory he should implement what he feels is the correct procedure. He has said that he agrees entirely that this right must be protected. The only thing left to many hundreds of people who have been thrown out of their jobs because of insolvencies is their pension right.

The Minister understands all the arguments for the amendment but he feels this is not the place to do it. I submit that it is. It is laid down specifically in the EC directive that it should be done. It is not included in any other part of the Bill. If the Minister accepts the need for it he should include it in the Bill in whatever way he feels is the correct way. It is absolutely essential that, when rights to holiday pay, sick pay and any other payments due to employees are being recognised in this Bill, pension entitlements and pension funds should also be recognised in the Bill.

Mr. Carey

The Minister has explained that pension rights in private companies are organised under a system of trustees in which the employees and the assurance companies are involved. In providing for 12 months in the Bill the Minister has gone as far as possible. There has been gross negligence by some people. It is going too far to say the employer or the employee should be encumbered with a new charge for an open-ended pension scheme. The Minister quite rightly recognises that companies can have difficulties from time to time. A 12 month period is long enough.

I cannot understand Deputies asking for a period longer than 12 months when there is a responsibility for the collection of funds. There is also a responsibility to the employee and that is not being recognised. There is a great need for legislation to penalise people who are guilty of negligence in this area. Some employers have avoided paying PRSI. This was a grave disservice to people who paid their PRSI. Even semi-State bodies have not seen to it that sub-contractors have paid their PRSI contributions. The Minister has gone far enough in this Bill. He has recognised the dilemma of a company going into liquidation. He would be going too far if he provided for a period longer than 12 months.

Amendment put.

The Committee divided: Tá, 58; Níl, 70.

Tá

• Ahern, Bertie.
• Ahern, Michael.
• Aylward, Liam.
• Barrett, Michael.
• Brady, Vincent.
• Brennan, Séamus.
• Briscoe, Ben.
• Burke, Raphael P.
• Byrne, Seán.
• Calleary, Seán.
• Collins, Gerard.
• Conaghan, Hugh.
• Connolly, Ger.
• Coughlan, Cathal Seán.
• Daly, Brendan.
• Lenihan, Brian.
• Leonard, Jimmy.
• Leonard, Tom.
• Leyden, Terry.
• Lyons, Denis.
• McCarthy, Seán.
• McEllistrim, Tom.
• Mac Giolla, Tomás.
• Molloy, Robert.
• Morley, P. J.
• Moynihan, Donal.
• Nolan, M. J.
• O'Dea, William.
• O'Hanlon, Rory.
• De Rossa, Proinsias.
• Fahey, Francis.
• Faulkner, Pádraig.
• Fitzgerald, Liam Joseph.
• Flynn, Pádraig.
• Foley, Denis.
• Gallagher, Denis.
• Gallagher, Pat Cope.
• Geoghegan-Quinn, Máire.
• Harney, Mary.
• Haughey, Charles J.
• Hilliard, Colm.
• Hyland, Liam.
• Kirk, Séamus.
• Kitt, Michael.
• O'Kennedy, Michael.
• O'Leary, John.
• Ormonde, Donal.
• O'Rourke, Mary.
• Power, Paddy.
• Reynolds, Albert.
• Treacy, Noel.
• Tunney, Jim.
• Wallace, Dan.
• Walsh, Joe.
• Walsh, Seán.
• Wilson, John P.
• Woods, Michael.
• Wyse, Pearse.

Níl

• Allen, Bernard.
• Barnes, Monica.
• Barrett, Seán.
• Barry, Myra.
• Begley, Michael.
• Bermingham, Joe.
• Birmingham, George Martin.
• Boland, John.
• Bruton, John.
• Bruton, Richard.
• Burke, Liam.
• Carey, Donal.
• Collins, Edward.
• Conlon, John F.
• Connaughton, Paul.
• Coogan, Fintan.
• Cooney, Patrick Mark.
• Cosgrave, Liam T.
• Cosgrave, Michael Joe.
• Coveney, Hugh.
• Creed, Donal.
• Crotty, Kieran.
• Crowley, Frank.
• D'Arcy, Michael.
• Desmond, Barry.
• Desmond, Eileen.
• Donnellan, John.
• Dowling, Dick.
• Doyle, Avril.
• Doyle, Joe.
• Dukes, Alan.
• Durkan, Bernard J.
• Enright, Thomas W.
• Farrelly, John V.
• Fennell, Nuala.
• FitzGerald, Garret.
• Flaherty, Mary.
• Glenn, Alice.
• Griffin, Brendan.
• Harte, Patrick D.
• Hegarty, Paddy.
• Keating, Michael.
• Kelly, John.
• Kenny, Enda.
• L'Estrange, Gerry.
• McGahon, Brendan.
• McGinley, Dinny.
• McLoughlin, Frank.
• Manning, Maurice.
• Mitchell, Gay.
• Mitchell, Jim.
• Molony, David.
• Naughten, Liam.
• Nealon, Ted.
• Noonan, Michael.
• (Limerick East)
• O'Brien, Willie.
• O'Leary, Michael.
• O'Sullivan, Toddy.
• Owen, Nora.
• Pattison, Séamus.
• Prendergast, Frank.
• Quinn, Ruairí.
• Ryan, John.
• Shatter, Alan.
• Sheehan, Patrick Joseph.
• Skelly, Liam.
• Taylor, Mervyn.
• Taylor-Quinn, Madeline.
• Treacy, Seán.
• Yates, Ivan.

Tellers: Tá, Deputies V. Brady and Barrett(Dublin North West): Níl, Deputies Barrett (Dún Laoghaire) and Taylor.

Amendment declared lost.

Mr. O'Kennedy

I cannot help saying, so much for words. Deputies Prendergast and Ryan have voted against this proposal.

(Interruptions.)

Mr. Prendergast

Deputy O'Kennedy had two years in which to do something about that situation in his own town but he failed to do anything about it.

An Ceann Comhairle

Order, please.

Mr. Quinn

I move amendment No. 11a:

In page 7, subsection 2 (b), line 39 to delete "this paragraph" and substitute "paragraph (a) of this subsection".

Amendment put and agreed to.

An Cheann Comhairle

As amendments Nos. 14 and 20 are consequential on No. 12, the three amendments may be discussed together.

Mr. Quinn

I move amendment No. 12:

In page 7, between lines 43 and 44, to insert the following new subsection:

"(3) Where—

(a) legal proceedings are instituted by or on behalf of an employee and on foot of all or any of the following—

(i) a claim for arrears described in subparagraph (i) or (ii) of subsection (2) of this section,

(ii) a claim for holiday pay described in subparagraph (iv) of the said subsection (2),

(iii) a claim for damages at common law for wrongful dismissal,

an award is made by the court in favour of the employee, and

(b) had the employee made an application under subsection (1) of this section in respect of any of the matters referred to in subparagraph (i), (ii) or (iii) of paragraph (a) of this subsection he would have satisfied the requirements of paragraphs (a), (b) and (c) of the said subsection (1),

subject to subsection (3) (a) of this section, there shall be paid out of the Redundancy and Employers' Insolvency Fund, to or in respect of the employee, an amount equal to—

(i) the amount of the award, or

(ii) the maximum which would have been payable out of the said Fund by virtue of this Act had the employee successfully sought redress under section 8 (1) or 9 (1) of the Act of 1977.".

Amendment agreed to.

Amendment No. 13 not moved.

Mr. Quinn

I move amendment No. 14:

In page 7, subsection (3) (a), line 45, after "subsection (2)", to insert "or award mentioned in subsection (3)".

Amendment agreed to.

Mr. Quinn

I move amendment No. 14a:

In page 8, subsection (3) (b), lines 3 to 5, to delete "payable under Chapter 2 of Part II of the Act of 1981 to the employee concerned" and substitute "or injury benefit payable under the Act of 1981 to the employee concerned as regards the period (together with, in either case, the amount of any pay-related benefit payable to such employee under the Act of 1981 as regards the period)".

Amendment agreed to.

Mr. Quinn

I move amendment No. 15:

In page 8, between lines 19 and 20, to insert the following new subparagraph:

"(ii) A payment shall not be made under this section in respect of an amount to which a recommendation under section 8 (1) of the Act of 1977 relates unless—

(I) in case an appeal from the recommendation is brought under section 9 (1) of the Act of 1977, the appeal is withdrawn, or

(II) in case there is no such appeal, the time for bringing such an appeal has expired.".

Amendment agreed to.

Mr. Quinn

I move amendment No. 16:

In page 8, lines 30 to 39, to delete subsection (4) and substitute the following subsection:

"(4) The provisions of subsections (5) and (6) of this section shall apply in a case where a relevant officer is either appointed or required to be appointed.".

Amendment agreed to.

Mr. Quinn

I move amendment No. 17:

In page 8, subsection (5), lines 44 to 47, to delete "or, as may be appropriate, the person who is the officer who under regulations referred to in subsection (4) (b) of this section is required to be appointed in connection with the relevant employer's insolvency,".

Amendment agreed to.

Mr. Quinn

I move amendment No. 18:

In page 8, subsection (5), line 49, to delete "or, as may be appropriate, such person".

Amendment agreed to.

Mr. Quinn

I move amendment No. 19:

In page 9, subsection (8) (a), lines 30 and 31, to delete "or a fine, referred to in subparagraph (v)" and substitute ",fine or compensation referred in subparagraph (iii), (v)".

Amendment agreed to.

Mr. Quinn

I move amendment No. 20:

In page 9, after line 46, to insert the following new subsection:

"(9) No reference in subsection (3) of this section to an award shall be construed as including a reference to any amount allowed as regards costs.".

Amendment agreed to.

Question proposed: "That section 5, as amended, stand part of the Bill".

Mr. B. Ahern

Perhaps the Minister would give a brief outline of how, under subsection (3), the sum is made up. I assume it is in line with statutory instrument No. 108/83. Is it to be amended in line with the cost of living? I should like to know, too, if awards granted by the Employment Appeals Tribunal are paid normally by the company concerned or by the tribunal? Does this legislation mean that in future an employee's award against a company who had become insolvent will be paid by the tribunal?

Mr. Quinn

To answer the Deputy's first question, the figure is linked with the figure used in the redundancy legislation. It will be adjusted accordingly. As I said on the last occasion, I am trying to harmonise worker protection legislation so that the same standards will apply in respect of rates of pay and hours thresholds. In this legislation the threshold is 18 hours. That is the case also in the redundancy legislation which has been interconnected.

Subject to correction, my understanding is that for the purposes of this legislation where an Employment Appeals Tribunal's decision relates to an increase in a worker's pay or extra holiday money or the resolution of some dispute relating to money, it would be deemed to be a worker's right that the award would be in addition to arrears of wages or holidays. It may happen that extra cash granted at arbitration had not been paid to a worker. In that instance and in the event of a company being insolvent, the money would come out of the fund just as the other moneys would.

Mr. B. Ahern

Would there arise cases in which after a company had become insolvent, employees could bring a case to the Employment Appeals Tribunal?

Mr. Quinn

The principle basically is the same as that which applies to arrears of wages that had not been paid up to the point of insolvency or up to the point of filing for liquidation. That money in addition to any other arrears would be recouped from the fund.

Mr. Daly

Has the cost per year been estimated?

Mr. Quinn

The total amount or the amount in respect of this provision?

Mr. Daly

The amount in respect of this provision.

Mr. Quinn

We do not have a breakdown but we estimate that an amount of the order of £1 million would be required. We have made provision for that in this year's contributions from the employers.

Mr. B. Ahern

As regards subsection (7), will the Minister give a run down on the kind of system he has set up to prevent collusion between an employer and an employee to claim money from the fund which should rightly be paid from the assets of the company? What mechanism will be used?

Mr. Quinn

I have received some additional information which I shall give to the Deputy lest there be any misunderstanding. In relation to the Employment Appeals Tribunal, if a case was filed by a worker in a company in September and the company went into liquidation in October and if the tribunal hearing did not take place until October and they made a recommendation after the company went into liquidation for cash to be paid to the worker, it would be payable out of the fund. The application for a hearing would have to be made while the company was still trading and solvent.

We will be relying on the liquidator in cases where there are formal liquidations to ensure there is no collusion between workers and employers. We will inspect the documentation submitted. Where no liquidator is appointed and where my Department at my request move into the shoes of the liquidator for the purposes of this legislation, we will take the normal precautions to satisfy ourselves that there was no collusion. In doing so we will have recourse to the tax office to get records. If somebody claims he was due eight weeks' money and was not paid, one way of checking would be to see what was paid through PAYE and PRSI.

Mr. B. Ahern

In present circumstances there is rarely a claim for more than one week's pay because employees will not continue to work for more than a week in the event of a liquidation if they are not paid. Under this legislation employers will know that their employees can claim up to eight weeks pay. There will be an inbuilt enticement to employers to keep their firm going for a number of weeks on the basis that their employees will have a claim. Surely it is in the interests of the Department to have some mechanism which would make employers inform them in time that they could not pay their employees. The Department should be informed on day one. If it is stipulated in the regulations that they must inform the Department after the first week that they are not paying their staff, the Department will know what that company is doing and thus be saved from having to meet the employees' claims.

Mr. Quinn

We will look at that when we are formulating the regulations. We could request it or make it a requirement. I see the point the Deputy is making in relation to some companies which would attempt to stagger on for a number of weeks. Companies which are put into liquidation or receivership by a main creditor, invariably the bank or Revenue Commissioners——

Mr. B. Ahern

This Bill covers voluntary liquidations as well.

Mr. Quinn

Yes. It is in the case of people who disappear in the night or in the case of voluntary liquidations that the danger is greatest. We will certainly look at it to see how it can be tightened up.

Question put and agreed to.

SECTION 6.

Mr. Quinn

I move amendment No. 21:

In page 10, lines 43 to 50, and in page 11, lines 1 and 2, to delete subsection (5), and substitute the following subsection:

"(5) The provisions of subsections (6), (7) and (8) of this section shall apply in a case where a relevant officer is either appointed or required to be appointed."

Amendment agreed to.

Mr. Quinn

I move amendment No. 22.

In page 11, subsection (6), lines 7 to 10, to delete "or, as may be appropriate, the person who is the officer who under regulations referred to in subsection (5) (b) of this section is required to be appointed in connection with the relevant employers' insolvency.".

Amendment agreed to.

Mr. Quinn

I move amendment No. 23:

In page 11, subsection (7), lines 18 and 19, to delete "as being so payable, or to have been so deducted, by the relevant officer" and substitute "by the relevant officer as being so payable, or to have been so deducted".

Amendment agreed to.

Question proposed: "That section 6, as amended, stand part of the Bill".

Mr. B. Ahern

Will the Minister give a run down on subsection (3) which provides that the sum payable under this section in respect of unpaid contributions of an employer shall be the lesser of the following amounts. How will this work in practice?

Mr. Quinn

The Department in conjunction with the liquidator will decide, or if there is no liquidator the Department will decide.

Mr. B. Ahern

On subsection (4), how do pensioners fit into this? The subsection states that any sum payable in respect of unpaid contributions on behalf of an employee shall not exceed the amount deducted from the pay of the employee in respect of the employees' contributions to the scheme during the period of 12 months. Is a pensioner covered?

Mr. Quinn

No, they are excluded.

Question put and agreed to.

SECTION 7.

Question proposed: "That section 7 stand part of the Bill".

Mr. B. Ahern

What kind of documents are the inspectors likely to try to get? What items will they check for audit purposes?

Mr. Quinn

What we are doing here is covering employees who work for an employer and who have not been paid wages or holiday pay. The documents we will look for are the normal ones kept by a company in a wages office. Where there was a liquidator he would certify any arrears of money that were due to an employee. On the production of a certificate to say that the documents were in order and that the amounts due were correct the Department would respond by paying them. If we put in an officer from the Department of Labour the same practice would follow. What we are trying to do is establish the amount of money due and to act on that basis. We are not specifying any documents because they can vary from company to company but they will be the normal records kept by a company.

Mr. B. Ahern

The system envisaged is that an inspector of the Department of Labour will go into the company and examine the evidence.

Mr. Quinn

Where there is no liquidator.

Question put and agreed to.

SECTION 8.

Mr. Quinn

I move amendment No. 24:

In page 12, between lines 22 and 23, to insert the following new subsection:

"(3) Where a claim for payment is made under section 5 or 6 of this Act and it appears to the Minister that a doubt exists as to whether or not such claim is allowable, either in whole or in part, he may refer any matter arising in connection with the claim to the Tribunal for a decision by it as regards the matter.".

This is a technical amendment.

Amendment agreed to.

Mr. Quinn

I move amendment No. 25:

In page 12, between lines 26 and 27, to insert the following new subsection:

"(4) Subsection (14) of section 39 of the Act of 1967 shall apply to a decision of the Tribunal on any matter referred to it under this section as it applies to a decision of the Tribunal on a question referred to it under that section.".

Similarly this is a technical amendment involving the insertion of a new subsection which provides that the decision of the EAT on any matter referred to them under the section would be final except that any person who is dissatisfied with the decision may appeal to the High Court on a point of law. We are removing the possibility that the decision of the EAT can be appealed, as distinct from the procedures.

Amendment agreed to.

Question proposed: "That section 8, as amended, stand part of the Bill.

Mr. B. Ahern

Why is there a distinction between EAT in this and all the other legislation?

Mr. Quinn

It is already provided, I understand, in other legislation.

Mr. B. Ahern

Is it in all the other relevant Acts?

Mr. Quinn

Yes.

Question put and agreed to.

Section 9 agreed to.

SECTION 10.

Mr. Quinn

I move amendment No. 26:

In page 13, lines 36 to 40, to substitute the following subsection for subsection (6):

"(6) The reference in section 2 (4) of the Act of 1977 to the First Schedule to the Act of 1973 shall be construed as being a reference—

(a) in case an order under this section amending that Schedule is for the time being in force, that Schedule as amended by section 20 of the Act of 1977, by section 12 of this Act and by the order.

(b) in case no such order is so in force, that Schedule as amended both by the said section 20 and the said section 12."

This is a technical amendment.

Amendment agreed to.

Section 10, as amended, agreed to.

SECTION 11.

Question proposed: "That section 11 stand part of the Bill".

Mr. B. Ahern

Section 11 provides for the reduction of the weekly threshold, as provided in the Redundancy Payment Act, from 20 to 18 hours. Needless to say, this is welcome in that it will standardise all legislation in bringing it down to 18 hours. The Minister knows as well as I do that a number of employers will now reduce their normal working week from 19 hours to 17 hours. Can the Minister see any way that people who work any minimum number of hours, let it be one or two hours a week, can be covered under the Bill? Unscrupulous employers engage in sharp practice and employ people of poor educational background — we spoke about cleaning contract companies and catering type companies — in such a way that they are never entitled to anything. As soon as they become aware of this legislation through their employer bodies they will reduce from 19 hours to 17 hours and again their employees will have no entitlements under the Redundancy Payments Act or any of the other Acts which are amended by this section. Can anything be done in this Bill or in future legislation to do away with this anomaly?

Mr. Quinn

There can. We are working on it in conjunction with other member states because the phenomenon of part-time work is increasing and is likely to increase in the foreseeable future. A draft directive on part-time work is being prepared in the EC during our Presidency and that will supply the framework. In much the same way this legislation comes within the framework of EC directives to extend cover to part-time work. I accept that once you lower the threshold people will drop just below it. The original threshold in the 1967 Act was 21 hours, subsequently amended in 1979 to 20 hours and now we are harmonising it down to 18 hours. The movement has gone with it in the number of employers who want to evade their responsibilities and obligations. Having an hourly threshold on its own will not be sufficient, but we will be in a position to reply more substantially when the part-time directive is finalised.

Mr. B. Ahern

Is that likely to be in the immediate future?

Mr. Quinn

It will not be finalised during our Presidency. I think it will be in the next 12 months. There is considerable conservative opposition to it.

Mr. B. Ahern

Conservative opposition would seem strange because in the conservative democracies in the case of both the Thatcher and Reagan Governments one of the reasons that their economies are thriving is the part-time and split work operation they are using. What is their objection?

Mr. Quinn

While the American economy appears to be thriving, they have abandoned much of the protective legislation that the labour movement obtained over many years, and the British Government appeared to be opposed to extending any kind of protection in this area. Therefore, I use the word "conservative" with a small c.

Question put and agreed to.

Sections 12 to 14, inclusive, agreed to.

SECTION 15.

Mr. B. Ahern

I move amendment No. 27:

In page 15, lines 19 to 25, to delete subsection (5) and substitute the following:

"(5) Every regulation proposed to be made by the Minister under this Act shall be laid in draft before each House of the Oireachtas and the regulation shall not be made until a resolution approving of the draft has been passed by each such House.".

Mr. B. Ahern

We had a fairly lengthy debate recently on the other Bill concerning how regulations can be brought before the House. The Minister for the Public Service made what I thought was a good case in support of the Ombudsman Bill: that in future rather than regulations being laid before the House for 21 sitting days, unless somebody puts down an order to amend a regulation, the regulation automatically passes at the end of 21 days. In the debate a number of Deputies said that this should be done in most Bills and in order not to hold up the House perhaps an hour could be set aside each week and then if somebody wished to raise an objection or a point on a regulation going through the House it could be done. This would be preferable to the present system of a regulation being laid before the House for 21 days and then it automatically passes. Members should have a right to debate a regulation. The Minister could say that it is on the Order Paper.

Unfortunately, regulations on the Order Paper can be missed. This happens in every session and I can quote a notable example of it in this session where I and all other Members missed a regulation that the Minister for the Public Service put down that we would have transferability in the public service. Nobody noticed it until some sharp journalist picked it up. Then there was uproar about the fact that it could have been debated in the House. I understand that the Minister for the Public Service or any Minister can implement a regulation subject to its being passed in the House. What I suggest seems the better way because, with all the regulations listed on the Order Paper in any period of 21 sitting days, major amendments could be made by regulation without any chance of this House debating the point. I accept that if we were to debate every regulation in this House we would have a major problem, but they could all be listed in one comprehensive list and they could all go through. If people wished to raise them, say on Thursday afternoon during an hour, they could raise points relevant to them.

Mr. Quinn

I support what the Deputy is saying. However, I am reluctant to accept it unilaterally because we are talking about changing procedure generally in the House. As the Deputy knows, this is a standard section which is put into virtually all legislation.

Mr. B. Ahern

It is. But in the case of the Ombudsman Bill, the last Bill passed in the House, the Minister for the Public Service accepted what I am saying, that we have got away from that standard. We can take it in conjunction with reform of the House. This wording has been in use for three decades now, but the Minister for the Public Service has accepted what I have said and I would ask the Minister to do likewise. I do not believe it would cause any problem.

Mr. Quinn

Unfortunately, it would cause some delay and I am anxious that a number of people who are due arrears of money would get them as quickly as possible before Christmas. If I were to accept this amendment now. I would be prevented from paying moneys out before Christmas.

Mr. B. Ahern

One of the advantages of the arguments made and the amendment to the Ombudsman Bill is that there would not be delays in future. For example, if the Minister wished to adopt that procedure today, 28 November, and bearing in mind that we have approximately ten more sitting days before the Christmas Recess and we will be returning at the end of January, he will have to wait a further ten more sitting days which will bring him to the end of February. Under the terms of my amendment, which has been accepted by the Minister for the Public Service, it will not be necessary to wait 21 sitting days. The Minister will be obliged to lay the regulations before the House within a week. Therefore, there will not be any delay. Each week a Minister could have regulations before the House and if the House wished to debate them there will not be any difficulty about doing that. Rather than delaying a Minister, and his Department, my amendment will help to speed up the operation. The 21 day procedure has had the effect of delaying a number of important regulations.

I accept that in some instances a Minister has the power to implement an amendment to an order by regulation without waiting but on an important issue he would not take that chance and wait the 21 sitting days to bring it before the House. Part of the reform of the Dáil we are trying to carry out is to have built into all legislation a system whereby all regulations made under various Acts by Ministers will be dealt within a week. We are hoping to forget about this silly 21 day procedure.

Mr. Quinn

I am in a difficult position. I support what the Deputy is suggesting but it is a procedural change which could affect all legislation. I am reluctant to adopt that change without consultations. I was not aware that this had taken place in regard to legislation introduced by the Minister for the Public Service. My concern is to move as quickly as possible to make regulations so that money can be paid out. It is possible, having regard to the debate that has taken place on this Bill, that we would have a further debate on the regulations although I accept that is not the intention of Deputy Ahern. However, other Members might want a further debate. Reluctantly I am not prepared to accept the amendment.

Mr. B. Ahern

I am not interested in delaying the legislation. The Bill was drafted some time back. I should like to draw the attention of the Minister to the fact that my amendment contains the exact wording of a provision in the Bill dealing with the Ombudsman which was passed recently. I understand that other Departments are adopting a similar position in regard to legislation. I accept that the Minister's officials when they drafted the Bill in April or May last were not aware of such a provision. If this causes the Minister any problem we will not press it but it would be better if all Departments updated their positions and brought them into line with what the Minister, Deputy Bruton, as Leader of the House, is doing and with what has been accepted in recent legislation.

Mr. Quinn

I accept the bone fides of Deputy Ahern's suggestion. It is not that I do not trust the Deputy but I want to have consultations about the matter. On the assumption that what the Deputy has said is correct we will move the Deputy's amendment in the Seanad as a Ministerial amendment. We will notify the House accordingly.

Mr. B. Ahern

I accept that undertaking.

Amendment, by leave, withdrawn.

Section 15 agreed to.

SECTION 16.

Mr. Quinn

I move amendment No. 28:

In page 15, between lines 28 and 29, to insert the following subsection:

"(2) The Minister may pay out of the Redundancy and Employers' Insolvency Fund to a relevant officer or a person to whom an appointment under section 5 of this Act relates, in respect of the functions performed by him under this Act, such fees as the Minister shall, with the concurrence of the Minister for Finance, determine.".

This is a technical amendment which enables the Minister to pay fees to a relevant officer or a person whom he appoints under the new section 5. It is consequential to a certain extent on the new section 5. It relates to a person appointed to perform the functions normally carried out by the relevant officer. The level of fees will be subject to the approval of the Minister for Finance and will be discussed with the Institute of Chartered Accountants. We will be prepared to pay the liquidator, if an outside liquidator is appointed, a fee to do the type of work required in getting the necessary documentation together.

Mr. B. Ahern

He will not be overpaid?

Mr. Quinn

I do not think so.

Amendment agreed to.

Section 16, as amended, agreed to.

Section 17 agreed to.

Title agreed to.

An Leas-Cheann Comhairle

When is it proposed to take Report Stage?

Mr. Quinn

Now.

Agreed to take remaining Stages today.