Protection of Employment Bill, 1976: Second Stage.

Question proposed: "That the Bill be now read a Second Time."

Minister for Labour (Mr. M. O'Leary)

This Bill will apply to all persons in employment in firms normally employing more than 20 persons.

It establishes new rights for employees faced with the prospect of losing their jobs because of redundancy by ensuring that they receive prior notification and are consulted beforehand by their employer. Employers contemplating collective redundancies must inform, consult and negotiate with representatives of the employees affected at least 30 days before the proposed redundancies are to take place. The Bill sets down that for the purpose of these consultations all relevant information must be revealed to the employees' representatives particularly in regard to:

(a) the reasons for the proposed redundancies;

(b) the number and categories of employees proposed to be made redundant;

(d) the period over which it is proposed to effect the redundancies.

The employer who has in mind the declared redundancy of numbers of employees to the figures mentioned here must notify me beforehand of the proposed redundancies 30 days before. That interval of 30 days will be used by my Department to seek solutions to the problems posed by the redundancies including the involvement of agencies like the National Manpower Service in the placement of the redundant workers in other jobs or indeed redeployment within the undertaking.

Collective redundancies occur for many reasons and may happen in times of prosperity as well as recession. In some cases firms which have to reduce or discontinue their activities because of insufficient marketing outlets or a severe cut-back in orders are compelled to make a corresponding reduction in their workforce. On the other hand, many dismissals are caused by technical and economic development and by mergers or concentration of businesses all of which may bring in their train the need to reduce labour forces.

Employers with good relations with their employees accept that a structural change in their enterprise which may lead to job loss for certain categories should be the subject of prior consultations with their representatives.

The main bone of contention up to now has been the failure of certain employers to consult with their employees before giving them notice. Therefore, one has the case then of employees feeling threatened by insecurity in a society where all the big decisions are taken at the top, without those who are effected being able to exert any large degree of influence on the outcome. It is normally the practice, where workers are organised, that employees' representatives are consulted by employers before dismissals. The legislation now before the House, when enacted, will make consultations compulsory, that is, between the employer and employee affected and will affect in practice only that minority of employers who fail to maintain generally accepted standards of reasonable behaviour towards their employees.

I believe that the proposals in this Bill, by laying down compulsory guidelines for management, will contribute towards the spread of good practices. Essentially the current proposals aim at reconciling the employers' freedom of management and the employees' stability of employment by respecting the interests of both parties, limiting the employers' right of dismissal and reducing the consequences to the employees. The legislation will in no way hamper the ability of an enterprise to adapt speedily to economic, structural, technical and market change.

As statute law stands, individual employees have rights under the Minimum Notice and Terms of Employment Act, 1973, and the Redundancy Payments Acts, 1967 to 1973. They will have further protection when the Unfair Dismissals Bill becomes law.

Under the Minimum Notice and Terms of Employment Act, 1973, an individual employee is entitled after 13 weeks' employment to a week's notice of impending dismissal and his entitlement rises to eight weeks after 15 years of employment.

Under the Redundancy Payments Acts an employee is entitled to two weeks' notice in writing before being made redundant. These Acts however apply only to employees between the ages of 16 and 70 who have been in continuous employment for two years with the same employer and who are insured for all benefits under the Social Welfare Acts. As far as collective redundancies are concerned, there are at present no special legal provisions—a situation which I am most anxious to remedy by ensuring that this Bill will apply to all employees involved in collective redundancies, irrespective of length of service or of age. Their individual entitlements under the other Acts, of course, will remain.

Sections 9 and 10 provide that in future an employer who is contemplating collective redundancies must begin consultations beforehand with the representatives of the employees concerned with a view to reaching agreement. The consultations should be based on prescribed information supplied by the employer and must cover the possibility of avoiding in the first place the redundancies proposed.

One effect of these requirements is to put employers in the position that a decision to dispense with employees cannot be taken lightly. It is desirable that employers should be required to show valid reasons as to why collective redundancies are necessary. It is also desirable that employees who are liable to become redundant are informed as promptly and completely as possible.

It is provided in section 12 that an employer must also give me advance notice in writing of the proposed collective redundancies. Collective redundancies cannot take effect earlier than 30 days after notification to my Department and during that time the employer will be expected to cooperate as far as possible with me in trying to alleviate the adverse effects of the proposed collective redundancies.

In section 6 we define "collective redundancy" as happening where during any period of 30 consecutive days the number of proposed redundancies is:—

(a) at least five in establishments normally employing more than 20 but not less than 50 persons,

(b) at least ten in establishments normally employing between 50 and 100 persons,

(d) at least 30 in establishments normally employing 300 or more persons.

Under the enforcement provisions of the Act offences will be committed by an employer who fails to advise employee representatives and my Department of the impending collective redundancies, to supply all relevant information and to hold the necessary consultations. It will also be an offence to effect the collective redundancies within the prescribed delay period of 30 days.

Substantial fines can be imposed on conviction by the courts for any of these offences. The employer will also be obliged to keep records showing that the provisions of the Act are being complied with in relation to his employees, though this requirement can in most cases be met by records kept for other purposes. Authorised officers of my Department will have powers of inspection and investigation for the purposes of enforcement of the Act.

During the passage of the Bill through the Dáil it was represented to me that its application to some groups such as building operatives, short-term employees and seasonal workers might give rise to difficulties. While it would be impossible to invent a single formula which would meet fully the diverse wishes of different categories of employers, I am satisfied that the formula I have devised in paragraph (a) of section 7 (2) should resolve most, if not all, of the problems of employers who provide what is generally accepted to be short-period employment.

It was also represented to me that provision should be included to eliminate the possibility that an employer who, before the commencement date of the Act, gives to his employees redundancy dismissal notices which expire after the Act comes into operation, might be forced to give an additional 30 days' notice and engage in the consultation and notification procedures all over again. I should say that this suggested problem would relate in practice only to the initial month of the operation of the Act. However, I considered that that suggestion had merit and I therefore, had section 7 (4) inserted to take care of the problem.

The Bill before the House conforms to views put forward on behalf of the Irish Delegation at the Council of Ministers meeting in December, 1974, which adopted the EEC directive on harmonisation of the legislation of member-states relating to collective redundancies. I express the view then to my colleagues of the other EEC countries that the directive to be adopted should apply to five dismissals in firms employing between 20 and 50 employees. I did not succeed in obtaining a majority agreement for that proposal and therefore the final agreed EEC directive applied only where dismissals amounted to the number of ten. I consider that a minimum of five dismissals in a firm with between 20 and 50 employees relates more to our conditions in contrast to the terms of the directive.

The provisions of the Bill, when enacted, will be brought into operation by ministerial order. It is my wish that the Bill should pass through the House as quickly as possible and become law very soon. I believe that the legislation will be welcomed by all Senators and I accordingly commend it to the House.

Mr. Lenihan

This Bill puts into legislation what has been largely the practice of responsible firms throughout the Irish community for some years. In so far as it gives legislative embodiment to that constructive and responsible practice the Bill is of course, welcome.

As one looks at the group of Bills brought in by the Minister, this is one that we, on this side of the House, can support, as we supported the first Bill introduced yesterday on worker participation in certain specific industries as a start in that direction. I would like to emphasise to the Minister that that is our approach in regard to those two socially desirable Bills. But we see very grave weaknesses and undesirable features in the other Bill, the Unfair Dismissals Bill, which we will have on Committee Stage very shortly.

This Bill deals with the proper and civilised notification that should issue to employees faced with a collective redundancy situation. The meat of the Bill is in sections 6, 7 and 8. It is only proper, to put it mildly, that workers in the categories set out in section 6—ranging from five workers in an establishment normally employing more than 20 and less than 50, ten in an establishment employing at least 50 and less than 100, 10 per cent in the category employing at least 100 but less than 300 and at least 30 in an establishment normally employing 300 or more employees— cover the Irish situation. I agree with the Minister's view that the directive does not fully cover the Irish situation. This proposal introduces, in addition to the Commission's directive, the category of at least five in an establishment employing more than 20 and less than 50.

As far as the Bill itself is concerned, this sort of consultation, which was always practised by responsible employers, at least 30 days before the proposed redundancy is to take place makes good sense. There may always be ways and means whereby redundancies can be averted if such consultations take place. Indeed, the notification to the Minister for Labour which is embodied in the Bill is also important. There are cases where even at that late stage in the management of an enterprise, a fire brigade operation can be undertaken by the Minister for Labour, in consultation with the Minister for Industry and Commerce through Fóir Teóranta. I have known cases where firms have been rescued in the last 24 hours or even 12 hours and one or two have gone on to prosper after that. If you allow the total situation to obtain where no such consultation takes place where the work is concerned or no such notice is obliged to be made to the Minister for Labour, then you are into a completely naked jungle type situation.

That has not happened in 95 per cent of cases in Ireland in the past number of years. Nevertheless, it is important that what has been the practice of all responsible employers in this matter should be embodied in legislation making it mandatory that such consultation should take place, that such notice should be made available to the appropriate Government authority—the Minister for Labour in this case—so that everybody will be informed at a reasonable time in advance of the proposed redundancies that are to take place.

Sometimes redundancies, unfortunately, have to occur but there are a number of occasions when they need not occur. They need not occur if the management and board bend their energies to try to solve the situation, and that is where the proper consultations with the people most concerned, the workers in the enterprise, can bear fruitful results. That, in combination with the notification to the Minister for Labour, can in many cases give rise to a situation where even if the particular employer or board or management do not want to take a constructive attitude, other people might be encouraged through the aegies of Fóir Teoranta or the IDA to move in and make whatever arrangements would be necessary to salvage the operation and make it fruitful and put it into a profit making position.

There is no question of there being any opposition to this Bill. This is the sort of legislation that from the employee point of view, the company point of view and from the State and national point of view should be on the Statute Book. In the case of the board of management who are taking the attitude of letting people go automatically without applying themselves in any way to the problem at hand, that with this type of notice procedure, before the guillotine drops in that 30-day period, negotiations can be initiated to take them over, get rid of the particular board or management, change the situation and maybe revamp the enterprise. A new management or a new ownership may help to reorganise the operation and secure employment and possibly enhance employment. This Bill makes sense and there will be no opposition at any stage to this Bill as far as we are concerned.

Mr. Harte

I welcome this necessary measure. We have the possibility in a lot of circumstances where some whiz-kid could buy into a firm, a mixed enterprise, and by adopting a whole set of measures strip a person of the security he has had for himself and his family over a long period. When somebody is in that position he is entitled to claim that there is something morally wrong with the system and that there is something cruel about the method by which a person can have the livelihood that he depends on frittered away.

I recognise that redundancy is an accepted fact of life but there are situations where it is unavoidable. I am delighted to see the Minister bringing in this Bill because the reasons are somewhat vague in the Redundancy Act as to when an employer can declare a redundancy. This Bill is not dealing with the question, whether it is vague or otherwise. The fact that an employer has got some definite points of reference before declaring redundancy so that there can be intervention and that a Government agency are available to him is a step in the right direction.

I should like to pay credit to a lot of good employers. I know how people feel when they are affected by a redundancy. I am one of the fortunate people who became redundant in a good concern where it was possible to have long and extended negotiations to drive home a decent bargain on behalf of the people who were being laid off and to alleviate a lot of the hardship that would have been imposed on the persons who were laid off. I think I have stated the sentiments of all of us in the Labour Party. I thank the Minister for bringing in this Bill and I hope that the employers who have not been active in what they should have been practising, that is, to treat their employees in a just and fair way, will take note and possibly not only will the development of consultation on redundancy take place but, coupled with the worker participation legislation, we can see much improvement in the social nature of employment.

Professor Quinlan

I join in the welcome to this Bill. Anything that can be done to conserve employment is something that must have our wholehearted support and also must not fail for lack of funds. At present and as far as we can see into the future, certainly the next five years, our problem will be lack of jobs. We are not unique in that. All other countries are experiencing the same difficulty, and consequently conservation is a top priority. Every job lost is one addition to the unemployment register. It does not count that that person may be into another new employment area, because obviously somebody else would get that job if he were not available. Conservation is at the top of the list and I take the point of Senator Harte about the whiz-kid coming in; more damage is being done by whiz-kids than by any other group, especially the whiz-kid with the idea that capital can solve everything. It is cutting against everything planned for in this country to have the whiz-kid who neglects the effort to solve the problem at a human level and instead brings in the more expensive machines, thus involving large numbers of redundancies, to do the job.

This Bill can give an opportunity for intervention even at a critical stage, and it is to be welcomed. The only thing that occurs to me in reading this is that I am not very happy with the definition of "collective redundancy". It does not go far enough because "collective" only relates to any period of 30 consecutive days. As I read it, a firm could almost reduce its work force by 50 per cent in a period of less than six or eight months while still being outside the Act. There should be some broadening of the definition of "collective redundancy". While applying it to a period of 30 consecutive days in the first instance, there should be something that provides for twice that number in the period of a year —something that would get over somebody complying with the law and still effectively stripping down the work force. Perhaps we will be able to have an amendment on Committee Stage to provide this necessary safeguard in the measure.

Mr. M.D. Higgins

I welcome the Bill but there are a few points on it I should like to raise. It is a very necessary piece of legislation. In the last two years I was reminded of the necessity for such legislation when at least three factories in the area in which I live were closed, announcing to their workers that they would no longer have jobs on the basis that the company were in difficulties. Examination revealed that the company were not in difficulties due to the workers' commitment to their work or their productivity but due to a mixture of bad decisions by management and pressure from banks who had supplied to the company short-term finance with atrocious conditions to enable them to continue.

I would strike a note of caution and differ from the Minister's speech where he referred to workers who feel lost and threatened by insecurity in a society where all the big decisions are taken at the top without those who are affected being able to exert any large degree of influence. I should like to feel that the Minister is not in any way substituting for the inevitable effect of investment in giving the type of society we have a corporate effect. Workers' insecurity is not brought about primarily by corporate structures but rather by the precarious nature of investment, nationally and internationally. It is not accidental or a symptom of a firm or an industry when workers lose their jobs but the outcome of a rational investment decision on the part of people who want to maximise profits.

I mentioned the presence of banks on the boards of some companies. Sometimes when companies are in tight circumstances they enter into arrangements for funding, particularly for current expenditure, in a way which very often is not revealed beyond the board and certainly not to the workers. It is the way banks operate. Often a condition for getting finance to enable one to operate for a few weeks longer is that the arrangement remains secret. It might be more difficult now for that secrecy to remain unquestioned and not subject to any scrutiny. I would welcome the Bill in that respect, too. It means at least that if one was to be cynical about it a bank would have to continue losing money for another 30 days or more accurately a board may be urged to behave more responsibly towards workers.

I mentioned two practical examples of where this legislation is necessary, in my own experience. I was thinking in particular of one firm which employed about 200 female employees and under the same roof there has been five changes of ownership. Senators made reference to whiz-kids earlier. In the case I am referring to a group of people from a department of the university, indulging in that other not so academic exercise of making a fat profit, had combined their ability to borrow money, which is a very academic activity, to undertake what might be regarded as an essay on their part into venture capitalism. They were involved in textiles and, having secured money through their ability to borrow jointly, they proceeded then to get into enormous financial difficulties and announced at just a week's notice to 200 employees that they were not longer able to employ them. That particular case involved women workers, who are often the most vulnerable to this kind of threat from an irresponsible employer and who sometimes are non-unionised. But even where unionised, sometimes by virtue of their previous experience in our society of being less than equal, to put it mildly, they tend to accept it as almost an authoritative decision. Let us be perfectly clear on the authority or the basis for the type of activity I refer to. If one had cut through all the technical jargon which we produce for conveying funds from a bank to a firm, the bank were now looking for their pound of flesh.

I welcome the Bill. To some extent it will contribute more towards workers not being regarded as mere chattels. Where textile factories were closed down, greater attention was paid to bales of cloth than to numbers of workers. There was the general notion that somebody else would be coming in soon and they could all be interviewed again and become somebody else's employees once more. This turnover of people, to use that dreadful phrase, allows for maximum flexibility. We should be perfectly clear that what it allowed for, of course, was the maximum exploitation of workers.

I would not go to the same extent as the Minister to give assurances to those who want to claim what they refer to as structural, technical and market flexibility. Structural, technical and market flexibility can be possible when one has economic planning. In regard to the suggestion that perhaps some new norms will emerge and that it will encourage people to behave better than they have in the past, I have always thought, as a pessimist rather than an idealist, that in matters of this kind of industrial morality and harmony the one thing you could rely on was that a chancer who establishes an industry will keep chancing his arm for as long as he can with the minimum cost to himself. Obviously there are people who will be hampered by this new piece of legislation. It may exercise an effect and it may dissuade such people from entering industrial venturing altogether.

There is a myth in this country which is frequently trotted around that it does not matter at the end of the day what people do, under what circumstances or for what purpose, to generate whatever profit or loss. As long as people have been provided with jobs, pretty well any circumstance can prevail. Of course that is patent nonsense. A person is either working in an atmosphere which enables him to develop confidence and dignity or he is not and is working in something which is altogether the adverse of that situation.

For too long women were working in the most precarious circumstances, frequently under management systems that were probably the most irresponsible in Europe or the world. One survey after another shows that, while the Minister may suggest that new norms of responsibility will emerge, the evidence to date is that there is room for such an improvement. It is not only at the time when the communication has to be made to the workers that the jobs will no longer be there but in many cases the workers are already suffering because of the sheer inefficiency of management.

Perhaps this Bill will serve as a spur to people either to stay out of industry altogether or if they have control over the jobs and lives of other people that they will behave responsibly. In his speech the Minister said:

One effect of these requirements is to put employers in the position that a decision to dispense with employees cannot be taken lightly.

I offer this hypothesis to the Minister and my colleagues in the Seanad. At any time one could predict the amount of the rate of unemployment that will follow from a decline in profit. If one could relate the rate of investment to the rate of decline in profit and one could refer it at an aggregated level to the rate of unemployment, within that rate the precise incidence of dismissal is a matter for individual decision and individual handling by the person in charge of the firm. It is possible that this Bill will frighten people who have been behaving less than humanely at least to deliver their bad news in a better fashion that they have hitherto. I doubt if there is any security for employees in general that can be given outside of economic planning, but for its limited purpose I welcome the Bill. It will be welcomed by the trade union movement in general.

I was interested in how a sanction might be imposed for non-compliance with measures of the Bill. I note that the Bill conforms with views put forward on behalf of the Irish delegation at the Council of Ministers meeting in December, 1974, which adopted the EEC directive on harmonisation of the legislation of member states relating to collective redundancy. We have had legislation giving effect to the consequences of our membership of the European Community, but we have not had to pass food price increases by way of legislation. It might be no harm if some of the good effects of European membership were felt more generally.

I can think of a number of firms in the recent past, even in my own area, where the greatest irresponsibility has been shown by management. Very often the trade union have been left picking up the pieces after a work force had been completely shattered by a decision that had been delivered to them. I have mentioned that many academics frequently lend their talents towards putting together venture capitalism packages. It is a great pity that the universities have not been as concerned with the responsibility of the implications of capital as for the efficient gathering together of profits for those who decide to invest capital. As one looks at the economics and business studies department, the lesson is that they have been craven in their adherence to satisfying the need of people interested in maximising profit rather than maximising the rights of people who produced the commodities within the individual factory. When a factory is going very well that is the time when one can carry out some research on how more productivity can be gathered from workers. This all goes when profits fall—it is all thrown away. The naked teeth of the person intent on making a profit are revealed. Then the manager appears and suggests the capital of the factory has a liquidity flow problem and the great spectre of the banks' representative on the board, or the loan which was secured on the tightest possible terms, becomes obvious. Then it is time to wind up the show and the people retreat into the academic woodwork again only to be lured out on another possible venture making garments out of——

Mr. Lenihan

Somebody is getting the works. This is great stuff.

Mr. M.D. Higgins

I am not sure whether the people I am referring to are friends of his or not.

Mr. Lenihan

I agree with the Senator.

Mr. M.D. Higgins

I am glad he does. As far as this Bill will enable workers to be regarded not merely as chattels, it is to be welcomed.

Minister for Labour (Mr. M. O'Leary)

I thank Senators for their support. It is accepted on all sides of the House that the Bill is both in accord with our responsibilities as members of the EEC and simply provides a legal prescription to ensure that a minority of employers who do not carry out consultation at present will do so in future.

Senator Quinlan referred to the possibility of an employer spreading out the timing of redundancy dismissals for the purpose of avoiding provisions of the Bill—stripping the work force, he called it. It is possible if you take any combination of periods of time coupled with numbers of workers whom the legislation is to protect, that such action which the Senator mentioned could be tried by employers who wish to escape the obligations of this legislation. We must choose for purposes of this legislation a specific period in time, and we must count the number of dismissals in that period. That is why we have chosen 30 days as an appropriate reference period and five dismissals to constitute a suitable number in a firm having more than 20 and fewer than 50 employees.

I do not agree with much of what Senator Higgins had to say. On the interesting area of the accountability of capital to those who assist in its further development by way of investment, share debenture and so on, that discussion lies outside the scope of this legislation. This legislation simply seeks to ensure the protection of employees who may be working in a firm, against decisions which can work out to the detriment of employees. If such decisions are made, for whatever reason—the Senator is right when he says that reasons may be connected with redundancies—they may have the most rational basis behind them. Redundancy situations do not arise very often from irrational reasons.

This Bill seeks to ensure that account will be taken in future of the need to consult with employees in redundancy situations. While the general speculation of the accountability of capital lies outside the provisions of this Bill, under section 10 representatives of managements will have to explain the reasons for the redundancy and there is a possibility for representatives of employees to inquire into the background of the proposed redundancy, perhaps including whatever mysterious financial reasons may be held to be responsible.

The question of putting employees in possession of some of the fundamental facts regarding their worker situation is a matter which more concerns the legislation which was enacted here yesterday, the Worker Participation (State Enterprises) Bill. The Bill we have before us gives to the numbers established here the right to be consulted beforehand. If that right is not fulfilled, if the obligation in this Bill is not carried out by the employer, there are fines laid down for non-implementation of those provisions. I would hope that when this Bill is enacted unions and employees generally will be aware of its provisions and will ensure it is carried out to the letter. All we seek is full consultation beforehand, allowing all of us, State agencies included, the opportunity of providing alternative employment where that can be done. If that cannot be done in the time given, at least full information on the reasons for the redundancy should be given. I stress that it deals with redundancy in its collective aspect. The other pieces of legislation deal with the problems of individuals. The Unfair Dismissals Bill, which we will come to shortly, deals with unfair dismissal as it bears on the individual and his or her rights. It deals with the individual outside the collective situation. We also have that other piece of legislation laying down certain rights of the individual, the Minimum Notice and Terms of Employment Act, which we passed in 1973.

Question put and agreed to.

Seanad Éireann debate - Wednesday, 30 Mar 1977

Protection of Employment Bill, 1976: Second Stage.

Seanad Éireann debate -
Wednesday, 30 Mar 1977