I thank the Chairman for the invitation to attend today. I will address the committee on my own behalf and that of the Minister of State, Deputy Robert Troy, as we both work in this area in relation to the review of Duffy Cahill report and the other necessary discussion and debate around insolvency and redundancy.
The committee invited me to discuss the implementation of the Duffy Cahill expert report. I understand the committee recently discussed the report with the experts themselves and that was a worthwhile discussion, which I have had a chance to review. The work of the committee is very timely because our Department has been going through a similar process over the past few months and weeks, which we hope to finish by December. We are very happy to engage further with the committee over the next month and to consider its finding and deliberations.
I am also very much aware of the backdrop of these discussions with the situation Debenhams workers find themselves in following the liquidation of that company. I am highly sympathetic to the plight of those workers. However, I must make it clear that the Duffy Cahill report was drafted in a completely different context and to the best of my knowledge, the Debenhams situation is not comparable to the scenario that gave rise to the Duffy Cahill report and its recommendations.
I note that Ms Cahill and Mr. Duffy set out the context and the parameters of the terms of reference for that report, which were quite narrow and specific. The specific scenario the report aims to address is where assets of a significant value are separated from the employer company, also known as the operating company, and where the employer company subsequently enters into liquidation. The purpose of the recommendations is to better protect employees in circumstances whereby corporate restructuring is availed of in an effort to avoid the company having to meet its obligation to its employees. The authors themselves emphasised that the recommendations are not based on the specific facts of any particular liquidation. It is also very important to bear in mind that the report’s recommendations address a very hypothetical and highly unusual situation and do not address the generality of redundancies that arise in insolvency situations.
The report contained six proposals that the authors assert could potentially protect the interests of employees in circumstances where assets of significant value are separated, or where the separation of the assets is being contemplated, from the operating entity, that is, the employer body. These proposals include amending various sections of the Protection of Employment Act 1977 to ensure that employees will have the opportunity to consult with their employer for a period of not less than 30 days before key collective redundancy can take effect, whether the employer is insolvent or not. It proposes provisions to ensure that a related person must notify the employer if he or she is considering any action regarding an asset of significance that may result in collective redundancies, the possibility of injunction applications in certain circumstances, the provision of enhanced redundancy payments, and a mechanism for recovering an asset or proceeds of an asset in circumstances where the transfer of the asset had the effect of perpetrating a fraud on the employees.
This is dealt with in company law but we also have to examine why the various remedies are not being used by creditors, their representatives or the State in some cases.
The authors stress that the proposals made need to be considered in conjunction with each other, as no one proposal alone will provide solutions to the narrow focus in question. The experts also opined that the success of any proposal to deter or address what are sometimes called tactical insolvencies will be heavily dependent on the use that is made of existing statutory provisions, including sanctions. This is something on which we are focusing our work. Part of our work now is to research why existing statutory remedies have not been availed of in certain circumstances and we are examining if there are better ways to enhance workers' rights in these situations.
There was a previous public consultation on this report, but no consensus was reached among the stakeholders in support of the implementation of these recommendations. This was largely due to the very narrow focus in which the recommendations were made. In our work, we are examining the report and other areas to see whether we can strengthen the measures.
As things stand, company law and employment rights governing redundancy situations arising from corporate insolvencies fall under the remit of the Department of Enterprise, Trade and Employment and officials are working together on the various cross-cutting policy issues that have been identified. This is why Ms Coogan and her colleagues who are working on this in the Department are with me. The Duffy Cahill recommendations concerning employment law, and other considerations relating to company law, are being revisited by, respectively, officials in consultation with stakeholders, and by the Company Law Review Group. The Minister of State, Deputy Robert Troy, who has responsibility for company law, and I have initiated a process with union and employer representatives to establish what would make a real difference to employees who find themselves in a redundancy situation due to company insolvency. There are no quick solutions but we are working to find consensus around where any gaps might be and I would welcome any observation the committee has. I am very happy to take on board its work from these sessions.
The issues we are looking at and focusing on, including the Duffy Cahill recommendations, are employees' access to information concerning the company’s financial situation, consultation periods, employees' rights as creditors, asset transfer, the treatment of collective agreements in insolvencies, and the establishment of a stand-alone fund to handle ex gratia payments in insolvency situations
I firmly believe that it is important to ensure we have the most appropriate legislative infrastructure in place to ensure every worker's rights are protected in a redundancy process while recognising there are redundancies that arise in different corporate contexts. Some redundancies are about securing the company's survival while others, unfortunately, happen in the context of the company closing its doors for good. It is my aim and that of the Minister of State, Deputy Troy, and the Minister, to amend legislative provisions where an improvement is required and where it is workable and effective. The key part we are working on is what we can do that is workable and would be effective and would enhance the situation.
It is also important to note that any employee who is in insurable employment, regardless of whether the employer can afford to pay the statutory redundancy entitlement, is protected by the Social Insurance Fund. The persons seated in this room understand this challenge better than others. The State cannot create a system whereby one worker is treated more favourably than another worker in a similar situation. This theme also ran through the Duffy Cahill report. What we bring forward has to work for everybody and has to be fair and implementable.
With regard to the timing of today's session, this is an area we will work on in the coming weeks and months and I am happy to engage with the committee at a later stage, as is the Minister of State, Deputy Troy, when appropriate, to tease out some of the changes we propose to make.