Ceisteanna – Questions. Priority Questions. - Job Losses. – Dáil Éireann (29th Dáil) – Thursday, 5 Dec 2002

Ceisteanna – Questions. Priority Questions. - Job Losses.

Brendan Howlin

Question:

2 Mr. Howlin asked the Tánaiste and Minister for Enterprise, Trade and Employment the main features of the redundancy and severance package offered to employees of Irish Fertilizer Industries; if her attention has been drawn to the serious disappointment expressed by the employees at the contents of the package; the steps she intends to take to address these concerns; the reasons it was decided to place the company in a voluntary creditors' liquidation, rather than a members' voluntary liquidation, as recommended by the board; and if she will make a statement on the matter. [25189/02]

Ms Harney

Former workers in IFI will get their full statutory redundancy entitlements and I can confirm that my Department is aiming to issue payments in respect of such entitlements before Christmas in respect of valid claims received to date.

In addition, the shareholders have established a special ex gratia severance fund with almost €24.5 million for the workers. When combined with statutory entitlements there will be a total of more than €35 million available. This is sufficient to provide average payments of about €57,000 per worker. At this stage, most of the workers have received an interim payment of €5,000 from the fund to help them in the short-term pending the determination of the basis for the distribution of the available funds. It will be for the ex gratia fund's trustee to decide, after consultations with employee representatives, how payments from the ex gratia fund will be made.

While I am aware of the workers' views on the adequacy of the package, both the Government and ICI believe that in setting up the ex gratia fund they are providing severance arrangements which are fair and reasonable in the circumstances.

Employees are also free to pursue with the liquidator any legal entitlements, which they may feel they have to redundancy payments, though any payments in that respect would be offset by the amount of any payment from the ex gratia fund.

In order to allow it to opt for a members' voluntary liquidation, the IFI board concluded that it would have needed the shareholders to provide, in effect, an open-ended guarantee in respect of the payment of all liabilities, including any contingent or prospective liabilities, within a period of 12 months. Apart from covering any deficit, regardless of size, which might arise in the liquidation, this would also have required the shareholders to provide significant funds to the liquidator pending the realisation of assets. In the circumstances, neither shareholder felt it could provide such an open-ended commitment on top of the significant support given to the company over the years, including the provision of €34 million recently. In any event, ICI was of the view that it would have had to put a proposal for such a form of indemnification to its shareholders for approval and the State would have needed legislative approval for such a course of action.

However, it should be noted that by agreeing in principle, to subordinate loans of more than €34 million in favour of the other creditors, the position of those creditors is significantly improved. In addition, the provision of funds for ex gratia redundancy payments should also help ensure an orderly liquidation, which is in the interests of all parties.

Mr. Howlin

Is the Minister aware that workers employed in the Belfast IFI plant have a binding and legally enforceable contract, which has been accepted by Mr. Jackson, the receiver, as entitling them to between three and four and a half weeks' payment per year of service?

This contrasts with the two weeks per year of service being offered in the so-called package put together by the Government and its co-owner, ICI. Does she accept there is clear discrimination between workers in the same company who happen to live in a different jurisdiction? Specifically, what plans does she have to ensure all workers are treated not only fairly but equally? Does she not accept that it is an unsustainable position to allow workers in the Belfast plant to get between three and four and a half weeks severance pay per year of service while workers in the Republic receive a mere two weeks severance pay?

Ms Harney

The workers in the Republic, to use the terminology used by the Deputy, will get three to three and one quarter weeks severance pay, inclusive of statutory pay.

Mr. Howlin

The figure is inclusive of statutory pay.

Ms Harney

Most workers in the North are entitled, inclusive of statutory payments, to three weeks severance pay – four and a half weeks in certain circumstances – subject to a maximum of 90 weeks. On this basis, the balance due, if any, after the statutory ex gratia payment is likely to be small in most cases. As the Deputy will be aware, there are also significant differences in pension entitlements. I am not certain workers in Arklow and Marina Point would wish to substitute their pension entitlements for those the workers in Belfast are likely to get. I am aware of the information to which the Deputy referred regarding the legal advice obtained by the workers in Belfast and I understand it has been accepted by Mr. Jackson.

Mr. Howlin

The Minister has now accepted there will be a disparity between the severance package available to workers in Arklow and Cork and that available to former employees of IFI in Belfast. Does she accept that this is not a sustainable position? Does she further accept that the notion that people whose pensions are now in jeopardy should feel better off in the Republic because they have a slightly greater prospect of their pensions being funded than their co-workers in Belfast is an appalling reaction given that the people in question are being put out of work after decades, in some cases, of loyal service to a company?

Ms Harney

As I stated, I am not certain the workers in Belfast will receive much more than workers here once the statutory payment is included. In any event, they will become unsecured creditors and will have to pursue their entitlements in the context of what the liquidator may have left over after the secured creditors have been dealt with. While we all wish circumstances had been different with IFI, unfortunately this was not to be. However, given the circumstances, the Government and the other shareholder, ICI, have made a reasonable sum of money available to pay on average about €57,000 per worker. Some will receive much more than this while others will receive much less. In the circumstances in which we find ourselves, I find this fair and reasonable. I gave an undertaking to the trade unions during our meeting that if there are moneys left over after the liquidation has been completed we will be willing to reconsider the position as regards the workers.

Dáil Éireann debate -
Thursday, 5 Dec 2002