Transport (Re-Organisation of Córas Iompair Éireann) Bill, 1986: Committee Stage (Resumed).

Before Committee Stage of the Transport (Re-organisation of Córas Iompair Éireann) Bill, 1986 is resumed I would like to point out to the House that the heading, Section 14, should appear before amendment No. 17 on the list of amendments.

SECTION 9.

Amendment No. 12 not moved.
Section 9 agreed to.
Section 10 agreed to.
SECTION 11.

Amendments 13 and 14 are alternatives and may be discussed together.

Government Amendment No. 13:
In page 6, lines 19 and 20, to delete paragraph (s) and substitute a new paragraph as follows:
"(a) the number of directors (including the chairman) shall be not more than 6, two of whom shall be members of the Board appointed under the Worker Participation (State Enterprises) Act, 1977;".

What we are proposing here is that the number of directors for each subsidiary company be increased from five to six and that two of those six nominated by the chairman of the board shall be worker directors of the main board elected under the Worker Participation (State Enterprises) Act, 1977. This is a further refinement of the Bill to further improve the position of the workforce in the reorganised CIE structure.

I want to thank the Minister for amendment No. 13 and for defining the number of worker directors who will be on the subsidiary boards. I take it that the main board will have four worker directors elected to it by the workers in the industry, that is in the whole of CIE. They will all be workers in different sections of CIE presumably, depending on the results——

Yes. There is a further amendment later which clarifies beyond doubt that the electorate for the election of the four worker directors to the main board will be all the employees of the board and its subsidiary companies.

I thank the Minister for clarifying that matter. I presume it is possible to say then that the majority of the directors of Irish Rail and Irish Bus will be common to both companies. It is possible that the two worker directors could be common to both companies elected by the chairman to the subsidiary companies?

Senator Killilea was worried as to how it would be decided which two would be common to both companies. That is a matter that we could theoretically argue but in the final analysis it would be the prerogative of the chairman. The most important thing is that they would come from the elected workers to the main board and they will be common to all three — the main board, Irish Rail and Irish Bus.

In practice what will happen is there will be four worker directors on the main board and there will be six worker director places on the subsidiary boards. It may well be that the chairman and the worker directors would wish the same two directors to be on the provincial bus company and the rail company. It will depend on circumstances. I am sure these things will be achieved through discussion in the normal way.

I would like to get further clarification from the Minister on this. The membership of the board has been increased from five, including the chairman, to six, including the chairman. That was the proposal in the original Bill. Now we have a change which means that the directors can be directors of each of the subsidiary companies. There is a further complication in that a person can be a member of the main board and a member of the subsidiary board. It is a total dilution of the powers of the main board of the holding company if directors of the main board, who are supposed to be the arbiters on policy, can equally be members of the subsidiary boards. This does not make sense. The main board of a holding company is supposed to be a policy-making group. Down the line there are two subsidiary companies, the members of which are supposed to deal with the day to day business of the companies under the direction of the main board. If there are four directors on the main board who will equally be members of each of the subsidiary boards, it will not work. I would like the Minister to comment on this.

It is a common feature in large companies and groups of companies that there is a commonality between the main board and subsidiary boards with perhaps some new blood on the subsidiary board. It is not unusual for members of a main board to be also members of several subsidiaries in normal commercial situations. That is what we provide for here in the case of worker directors.

The four worker directors under the Worker Participation (State Enterprises) Act, 1977, are elected to the main board by the workforce in the total transport system. They will all have an opportunity through the election process to elect four people to serve on the main board. Out of those four people at least two must sit on Irish Bus and two must sit on Irish Rail. The Minister's amendment provides for a commonality between Irish Rail and Irish Bus. We were all concerned yesterday that if there was not a commonality we could have competition which would result in unhealthy repetition or duplication. The workers involved will be nominated by the chairman but first they must have been elected. Otherwise it is possible that it would be necessary to have another form of election to the subsidiary boards.

The trade union movement have insisted that there would be two worker directors on the subsidiary boards. When we have agreed common membership for both companies, they will be on that also. This ensures that whatever policy is esposed by the major company will be followed through in the subsidiary companies and the workers' interests will be protected by what the Minister is suggesting and the amendment he agreed to yesterday. This is the most desirable arrangement. It is the only way to ensure that particular boards carry out a policy in line with the top board and have worker participation. The Minister has conceded to this. His amendment to increase the number on the board to six allows that. The majority situation which will come in a new section will ensure that at least four of the two boards will be common. That would include the worker directors.

Senator Ferris has maybe spelt out what the Minister is thinking. The Minister's amendment does not state anything about worker directors. Senator Ferris has now said that agreement has been reached with the trade unions that the commonality of directors shall be worker directors. I would ask the Minister to clarify this. Am I to understand from Senator Ferris that these common directors will have to be worker directors?

No. The position is very clear. It is intended that on Irish Bus and Irish Rail there will be four directors in common out of the six. They can be any four directors out of the six. They may be two worker directors and two other directors or one worker director and three other directors. Out of the six there will be two worker directors. What is likely to happen is that there will be the same two worker directors on Irish Bus and Irish Rail and two other directors in common. I cannot guarantee that that is what will happen on all occasions. It is not specifically required by what we are proposing. What is required is commonality of four directors and also that each board of a subsidiary company has two worker directors.

On a point of clarification for Senator Lanigan, because there will have to be a commonality of four on each of the two companies and because this section states that there will be two worker directors, it will then be a matter for the chairman of CIE and the trade unions represented by the worker directors on the main board to negotiate the desirability, the speciality, the calibre of the four worker directors elected to the main board. If they represent different unions, a discussion can take place. The whole concept that there will be two worker directors on subsidiary boards is important and that on the board of Irish Rail and Irish Bus there will be a commonality. There will have to be four of a commonality which gives the worker directors a decided advantage. It gives them a better chance of at least being duplicated on the two boards. The personalities involved will be discussed between the chairman and the trade unions or the worker directors themselves. A cardinal election will have taken place to the main board which will represent all the workers in Irish Rail, Irish Bus and the Dublin City Service. That is ideal and meets all the points that were made by the Trade Union Movement.

I want to get further clarification on this. A further complication has been brought in by Senator Ferris. The chairman will consult with the unions as to the composition of the board. Is this correct?

No, I did not say that. The Senator should be very careful about what he says.

The Senator should be very careful also.

I am talking about the worker directors on the board. Naturally, there will be discussions between the worker directors as to which board they want to be on; the unions will be consulted by the worker directors and the chairman of the board. This kind of consultation goes on all the time, especially with worker directors. Any time they go into a board meeting they have consultations with their trade unions. Naturally, they are representing the workforce. That is their brief. When they are elected by their colleagues they are on the top board. There is an element of co-ordination between the Minister and the chairman of CIE that in the formulation of these boards that in accordance with the law, there will have to be two working directors. The only way a working director can be achieved is to have one that is elected. The only election process under this Bill is the one which elected him to the board in the first place.

I want clarification from the Minister. Is the consultation going to take place at main board level or between the chairman of the board and trade unions who are not at all involved? If a working director is elected, he is the person who is elected and after that the trade unions have absolutely no part to play in negotiations as to where these people go. If a director goes through the electoral process he is on the board. Then the only consultation that can take place is which company board he sits on this should be between the individuals, the chairman and the main board. From any reading of it they should have absolutely no consultations after that with the trade unions because, though they are elected as members of trade unions, they are no longer trade union people, they are directors of the company. I would like to have clarification on that point.

That is a good point. They are directors of the company and they have all the responsibilities, duties, advantages and disadvantages of all the other directors of the company. That is correct. There is nothing in this law which says that the chairman may only nominate worker directors from among those on the main board to subsidiaries following consultations with the trade unions. The chairman will not be forced to consult the worker directors or trade unions. In practice, these things are usually worked out and any sensible person will consult and will not do things unilaterally in an area intrinsic to industrial relations when the essence of industrial relations is consultation.

I am not satisfied with that answer at all. The Minister continues to suggest that once the worker directors are elected consultations can go on between the chairman of the board and the trade unions which might include the worker directors. What the Minister said is a very dangerous principle. Why elect workers directors if you are going to go over their heads and consult the trade unions again after these people have been elected to the board through the normal electoral process and have gone through their trade union? Their trade union should know exactly what they are at. The Minister is bringing in a further complication. He is suggesting that there will be a separate entity in the board of CIE, that the board will be elected and having been elected they will not have the powers to do their job. They will have to go back to the trade unions and ask them where they should put their elected members.

We are going down an alleyway which there is no need to go down. There is nothing in the law that says that the chairman of the board of CIE must consult with anybody except the Minister to appoint anybody. The number that we have included will ensure that the two working directors who are appointed by the chairman in consultation with the Minister must have been elected by the trade union movement and all the members working in the industry. Surely Senator Lanigan is not suggesting for a moment that once four worker directors are elected to serve as directors on the board and they have all the powers of board membership that they do not, in fact, on a continuous basis, have consultations with their trade union movement.

Senator Lanigan, although an elected Member to this House and can act in any way he likes, still has consultation with his parliamentary party. This is the whole process of democracy. Surely it is desirable that the trade union, who help by their votes to elect worker directors on to the board should have a dialogue with them. In this instance, I sincerely hope that there will be dialogue between them. Now that it is known by the trade unions who elected the worker directors, that there will be subsidiary companies which they will now be serving, it is only natural that there will be consultation as to which worker director will best serve the interests of Irish Rail, Irish Bus and Dublin Bus.

This is a process of consultation and there is nothing wrong with it. I shudder to think that such an important section in CIE, the actual workers, could have no dialogue either with their worker directors or indeed, if they so wished, with all the trade unions — the Irish Congress of Trade Unions, the Council of Trade Unions or any form which encompasses all of them — they would not be in a position to seek a meeting with the chairman of the board of CIE to make suggestions to him. Such rights would be fundamental to the kind of democracy that we would like to espouse particularly in the trade union movement. Their structures are fairly rigid and I know they would like to have the process of consultation. I know that anybody who does something without consulting with somebody else is a fool. I know for a fact that the chairman of CIE is not. He will consult if necessary and he will get consensus from his worker directors.

Nobody will say: "you serve on that board whether you like it or not". Nobody could adopt such an attitude. There will be worker directors who will have a specialised interest in rail and bus, provincial or otherwise. If one knows the worker directors like I do they represent a particular interest on the board of CIE because only in that way will all the workers ensure that at least their interests at board level are put forward. On any board the worker directors are a minority. I would like to see the day when we could have a majority of workers involved where the overall good of the company would be for the workers.

In this instance, the workers represent an important section. They have representation under the 1977 Act initiated by Deputy Michael O'Leary when he was Minister for Labour to ensure that workers have a right to be represented on the board that controls the policy of their livelihood. It is an extension of that that it has been agreed that on subsidiaries there will also be worker directors without the necessity for having a further set of elections to elect the worker directors on the other boards. To comply with our agreement yesterday about commonality, the chairman of the board of CIE will draw his worker directors from the main board. He will have four worker directors available to choose from. That will be done by way of consultation. We should not legislate for it to be done any other way because consultation is a process that needs a certain amount of flexibility. There will be agreement and we should not put up obstacles in the way of people who will be given a certain freedom within the constraints of the Bill at the discretion of the chairman and the Minister.

I want to draw this out a little. Senator Ferris inferred that I made suggestions. This is not the case. I am only reacting to suggestions which were made by Senator Ferris and the Minister. I am still not clear. The Senator continues to say that consultation will take place between the chairman and the trade unions.

If necessary.

I want the Minister to give me a reply. Once the main board of CIE are elected is it within that board that decisions will be made as to where people will sit or as to who sits on the subsidiary companies? After worker directors have been elected will the chairman go over their heads and start talking to the trade union movement to decide where these people should sit? This is exactly what Senator Ferris is inferring. I sincerely hope that he is wrong.

The answer is we can only speculate on what this future chairman might do. I speculate that any wise chairman would have all the necessary consultations. It is important to highlight the fact here that it is the chairman of the board who nominates the subsidiary boards. It is not the Minister. I deliberately divested myself of that power and have given it to the chairman. He is the man we are appointing to run the group of companies. He is the man we hold responsible if the group of companies are not a success. He is the man we penalise if they are a failure. He is the one who is nominating the board of directors. Obviously he will consult his fellow directors. He may feel there is a necessity to have wider consultation. That is a matter for him. I can only speculate. Senator Lanigan and Senator Ferris can have their views as to what they would do in the circumstances.

The Minister is suggesting that there can be a dilution of the powers of directors. The situation, according to the Minister, can be that the worker directors go through the process of being elected to the board, that the chairman might not be satisfied with the calibre of these worker directors and, therefore, will go into consultation with other persons to decide if this worker director or that worker director is qualified to sit on one of the boards.

I would not say it that way.

Is the Minister suggesting that the worker directors will not be full members of the board and that the chairman cannot override their wishes or the good of the company by going outside the board of directors to get suggestions as to which board certain directors should sit on? This is what he is inferring.

I am speculating that a chairman may wish to have wide consultation. I do not think this House, nor do I think Senator Lanigan would wish to hamstring any chairman in having whatever consultations he felt were appropriate. There are four worker directors elected by the workforce of CIE. In future they will be elected by the entire workforce of the CIE group set up by this Bill. Inevitably, some of those directors will represent different unions and different interests within the group and some of them will be more interested in sitting on one subsidiary board rather than another. Perhaps there might be three worker directors wanting to sit on the same board whereas there are only two places. From my own experience of industrial relations — although one scarcely needs any knowledge of industrial relations to appreciate it, that is the sort of circumstances which would prompt consultation as between the interests involved. That is basic common sense.

Will this basic consultation take place between the directors of the company or will it take place with persons outside the board of directors? The Minister is suggesting that, in a situation where there are the four directors from the same union, because they are representing the same body of workers in CIE, you have to go outside that body of opinion to get a proper balance on the directors of the subsidiary companies. I want the Minister to tell me once the main board is elected will the chairman and the main board make decisions as to who sits on the various companies or will there be another element which will tell the chairman not to put X director on X company or not to put Y director on Y company?

The directors of the main board have no role in this. It is the chairman of the board. A wise chairman will consult his directors and will consult the unions as necessary. I hope Senator Lanigan is not suggesting that there should not be consultation with the board of directors or the trade union representatives if the chairman should think it necessary. We can only speculate and as it is not in the Bill, it seems prudent——

I want this tied down. The Minister is suggesting that he has a board selected and part of the board will be elected. The only people who will be elected will be the worker directors. He is now suggesting that, the election having taken place, the chairman will be able to consult outside interests as to which of the worker directors should sit on subsidiary companies. That is what the Minister is suggesting. I would like him to get up and say: "no, the worker directors who are elected by the CIE workers will have a choice of which company they sit on".

They will not. They will not necessarily.

That is exactly what I wanted the Minister to say because that is exactly what the argument has been about. The Minister is now saying that these worker directors will not have a choice.

The appointment to this board will be by the chairman. I will read another subsection afterwards which deals with another point raised by the Minister. The appointment to these subsidiary boards will be made by the chairman. The worker directors he will appoint will already have been elected and will be on the main board. The Minister is not suggesting to the chairman of CIE that he has to do anything in that process. Neither am I. We know that in that process he will not just point fingers at people, and say: "You do this, you do that". He will talk to people, he will consult with them.

They, in turn, may want to consult with the people they represent to know how they can represent the best interests of the people that elected them, should it be on Irish Rail, Irish Bus, or both or should it be just one worker director who might be elected in the interests of the Dublin services alone and may have no interest in the other two boards. He would say to the chairman in this process of consultation: "now, chairman, you know that I was elected basically by the people in Dublin, my interests are theirs". There is nothing in the Bill to say that he must not do it. It is discretionary. As the Minister said, any sensible chairman will avail of all the discretion he has available to him to appoint his subsidiary boards. The reason I mentioned the Minister is that in subsection (b) it says:

The chairman and other directors shall be appointed and may be removed from office by the Chairman of the Board with the consent of the Minister.

I read that as it is written. From what the Minister has said now the chairman and other directors shall be appointed. They may only be removed from the board by the chairman with the consent of the Minister. Are they separate? There will be an element of consultation with the Minister in the appointment by the chairman of the subsidiary boards.

Or any removal.

That is the point I was making. I know the Minister will not be appointing them, the chairman will. The chairman naturally is here. He will be doing it with the Minister's consent so there will an element of discussion with the Minister on the people he is putting on to the subsidiary boards. The Oireachtas in legislating would be losing its control of subsidiary boards, the kind of people who would be on them or the interests they would represent if there was not some process of consent or consultation. I know of no other legislation that has been enacted by this House or the other House that did not involve some ministerial consent or approval.

We must have the final say. We pay the piper, and no doubt, we call the tune at times. This is a very liberal way of doing it. I am glad the Minister is divesting himself of all the political implications that could go on in those situations. The chairman of the board is being given a lot of discretion but in the area of worker directors he will be confined to four people. In that process he will do the best he can to represent them all and have the various interests represented on the boards, taking into account the function of the boards and their policy formulation.

They will be formulating policy and will be carrying out the policy formulation through a management structure which the Minister wants. They will be getting all that, so naturally the chairman of the board will ensure that the worker directors will have a specialised interest in those areas. It is certainly something that the trade unions were looking for. They were looking for proper representation. That is their right, not just a lobby, but with an interest in promoting CIE into something more than what we have.

The workers have an interest in being involved in a new dynamic role for the main company and the subsidiary companies. The workers want to be part of that. The whole principle of the Worker Participation (State Enterprises) Act 1977, reflected that. This is the follow through. Now, because we are moving from the main board down to subsidiary boards, with executive roles, the worker directors want to be in there, too. I am defending their right to be there. This ensures they will be there. It is a good day for the workers and the industry to be able to be involved in their own industry, in what they are working in, in what they have a commitment to. The chairman of the board will consult with anybody who needs to reflect that interest. There is nothing wrong with it. This does not say he must or he must not. We all know he will. Senator Lanigan is not suggesting, because he is a democrat as well, that he should not consult with people if he wants to. He might even consult with the Senator.

You never know. Another set of irrelevancies has been brought by Senator Ferris into this argument. My main point here is to ensure that the worker directors have as much power as is necessary. Since the Senator brought in this question of non-political involvement, the section says that the chairman shall be appointed and can be removed by the Minister. Therefore, the Minister has a direct involvement in the appointment of the chairman. If the chairman is not acting according to the Minister's plan, he can be removed by the Minister. Therefore the powers of the main board can be politicised because in no section of this Bill is there any power, other than the Minister's power, to appoint the chairman. If the chairman is a political appointee, the membership of the boards can be politicised, because if the chairman does not go along with the Minister's wishes, he can be removed. Therefore, the chairman has not got the powers of consultation that Senator Ferris mentioned. He is a political appointee, but he can also be removed by the Minister. If the situation arises when the chairman might appoint board members to subsidiary companies and the Minister does not like the decisions being made, the Minister can remove the chairman.

That is the way it is at the moment. The Minister can remove the chairman or director of any company for which he is responsible, if it is in the public interest to do so. It is not something that any Minister would do lightly. It is not something that a Minister would do and hope to escape the inquiries of both Houses of the Oireachtas. It is very desirable that the Minister, as the representative of the Houses of the Oireachtas, should have that power, should the public interest demand it. It is only a normal provision.

Basically, this boils down to the fact that the chairman can appoint his own board of directors to the subsidiary companies. There will not be consultation with the trade unions on that matter.

There may be.

If there is to be it is a diminution of the powers of the worker directors. It is going away from the democratic process by which they were elected. The Senator is suggesting that if the worker directors do not suit the chairman can then go out and consult with the trade unions again as to which area these people should represent. That is going away from the situation we all want, where workers will have the say on the boards of the companies in which they work but if, having got a say through the democratic process, the chairman can go back and consult with other people as to where these people should sit on companies, that is definitely a dilution of their powers.

I will ensure that the chairman of the board is aware of the Senators' views.

Will the Minister also ensure that the chairman of the board is aware of my views? I think it is desirable that there be consultation. Senator Lanigan specifically put on the record of the House that there should not be consultation with anybody. I am saying that the chairman of the board should have the freedom to consult with anybody he wishes. The point I was making, which Senator Lanigan has forgotten, was that the worker directors will have consultations with the trade unions who elected them.

Certainly.

There is nothing wrong with that because they were elected originally to the top board. There is nothing to stop anybody else having consultation. The Senator can have consultation with the chairman of the board of CIE, and say: "there is a particular worker director that I have an interest in, he would be excellent on two boards". There is nothing wrong with that if you want to talk to the chairman of the board of CIE. We should not legislate for him to say: "I am sorry Senator Lanigan I cannot talk to you because you said in the House I should not have consultations with anybody". I am saying he should have the freedom to do whatever he wishes in the common interests and the common good in this instance.

I know the calibre of the man who is there now and I know that is the kind of process he will have. I welcome that initiative. He has proved, since he went into CIE that he has turned the company around and done things that are welcomed by all of us and have been itemised by the Minister. I know it can be painful for the Senator's side of the House, if we repeat that there have been improvements and that the Minister has done things. I know politically that can be painful. In this instance we are not legislating to prohibit him from talking to anybody, we are not prohibiting the worker directors from consulting with anybody, if the chairman is to consult with anybody else why not? This Bill does not say that he should not. It does not say that he should either. I am saying he will have four directors available to him and those four directors will in some way represent interests on the other boards.

The process of consultation to achieve that will go on whether the Senator or I know of it or approve of it. Our approval is not required. No worker director need serve on a board to which he feels he has nothing to contribute. Would he not be a foolish man to just accept a nomination on to a board in which he did not have an interest or in which that interest in some way might be contrary to the interests of the people who elected him, because he might be elected for Dublin only by Dublin people, who might not have an interest in provincial rail. No director will say: "I will take it because you told me I have to sit on the board." There will be a process. The worker director will say that he has a special interest. There would not be a refusal but there would be a consultation in the matter of acceptance.

When the chairman of the board of CIE nominates the directors they go to the Minister in a consultative process for his formal approval. That is the same in many boards. Various interests around the country nominate their people to a Minister and the Minister appoints them. I see nothing wrong with it. Any consultations that are necessary regarding the membership of the subsidiary boards, will go on. We should not tie the hands of anybody in that process. I know the Senator does not want to do it that way. Maybe I am not making myself very clear. I know from the Senators' interests and his consultations with the workers and the people he knows in his area, that he welcomes the development of worker participation and their involvement. Possibly there is some breakdown in the communications between us. I am happy that what we are doing will reflect what I feel we want to have reflected on these subsidiary boards.

Is there any way it could be possible that no worker director could sit on the subsidiary companies?

It is required here that two of the six of each subsidiary company shall be appointed to the subsidiary board. It occurs to me that the situation could arise that all four worker directors could refuse to serve on a particular board because they want to be on another board. It is highly unlikely. It is certainly something that we should provide for on Report Stage in the most unlikely eventuality that the chairman was not able to get two of the four worker directors to serve on a particular subsidiary — although if they refuse to act there would be vacanies. It is not really likely.

But it can happen.

I suppose it could happen.

Considering that the Trade Union Movement are anxious for worker participation at this level it can be presumed by all of us that the whole Trade Union Movement in the election of worker directors would require them to sit on the subsidiary board. Their peers will require them to do so. This Bill provides that they shall be on it. In all the other circumstances vacancies would be created for worker directors and an election would take place to elect people who would be prepared to sit on any board. That is why I think the chairman of the board should have certain freedom for consultation and discussion. I do not want to dilute this section. It says "there shall be two worker directors" and there are already worker directors elected to the main board. That is the only source of worker directors that the chairman of the board has available to him. If we are saying "there shall be" that puts a certain onus on the worker directors to serve. The company in which they would best serve the interests is a matter for discussion, negotiation and agreement.

Amendment agreed to.
Amendment No. 14 not moved.
Government amendment No. 15:
In page 6, lines 34 to 37, to delete paragraph (f) and substitute a new paragraph as follows:
"(f) the company shall within a period specified by the Board, set up machinery for the purposes of negotiation concerned with the pay and conditions of its staff and to this end consult with and make every reasonable endeavour to reach agreement with the trade unions concerned."

This amendment is to provide for the setting up of negotiating machinery. It is modelled on the provisions in the Post and Telegraphs Services Act and I recommend it to the House.

There is a section which states:

In determining the remuneration or allowances for expenses to be paid to its officers or servants or the terms or conditions subject to which such officers or servants hold or are to hold their employment, the Board and each company shall have regard either to Government or nationally agreed guidelines which are for the time being extant,

Surely section 29 overrides this new amendment No. 15? I am not sure why the Minister brought in the amendment. It was suggested yesterday that he brought it in in an effort to give the workers a further indication that they would not lose out in the changeover. Section 29 overrides section 15.

Section 29 is to be deleted.

Where is it proposed to be deleted?

Over the page: section 29 is gone.

I am delighted. I read that we were opposing the section. I did not realise that the Minister had accepted our proposal in advance.

What Senator Lanigan did not realise was that the Minister accepted our suggestion that it should go also just in case he thinks that by the amendment process is how it is achieved. Senator Killilea was saying last night that having things down as amendments was the way to get them. Thankfully, we have a Minister with whom it is possible to consult. I will not discuss section 29 because it is not before us yet. I will be complimenting and thanking the Minister and I owe no apologies to Senator Lanigan or Senator Killilea for the process of consultation that went on with us, with the unions and with everybody concerned. That is how you influence legislation and improve it. Could I ask the Chair for guidance on the suggested——

We had an ear in those consultations, maybe not a presence.

Senator Killilea almost gave me the impression that he has a presence yesterday at one of them. On section 11, amendment No. 15 (a) is a ministerial amendment that was suggested at yesterday's Committee Stage — at what stage are we taking that? Are we taking it now?

We are taking it after this.

I welcome this amendment. It is one that was reached by consensus and agreement and discussion. I thank the Minister for having tabled it. It reflects the views of the trade unions concerned and particularly reflects their views following the removal of section 29. I commend the Minister for his amendment.

Amendment agreed to.
Government amendment No. 15 (a):
In page 6, between lines 37 and 38, to insert the following new subsection:
"(3) A majority of the directors of Iarnród Éireann — Irish Rail and Bus Éireann — Irish Bus shall be common to both companies."

We discussed this amendment extensively yesterday. I think the House is well aware of the background. It is providing for commonality of a majority of the directors of Irish Bus and Irish Rail which means that four out of six at least will be in common.

Yes. Could I thank the Minister for agreeing to this? I do not want to let the opportunity pass without doing so in spite of the smile from Senator Lanigan which would not be on the record if I did not mention it. He is smiling because he knows that we made an effort yesterday to reach a consensus on this. I am satisfied with all the discussions I have had with everybody concerned that this achieves what the Minister wanted, what the representatives of workers wanted and, at the end of the day, will achieve what everybody wants. It is new and it is imaginative and the Minister is to be thanked for having agreed to my suggestion.

Amendment agreed to.
Section 11, as amended, agreed to.
Section 12 agreed to.
NEW SECTION.
Government amendment No. 16:
In page 6, before section 13, to insert a new section as follows:
13.—(1) Where a director of a company is—
(a) nominated as a member of Seanad Éireann, or
(b) elected as a member of either House of the Oireachtas or of the Assembly of the European Communities, or
(c) regarded pursuant to section 15 (inserted by the European Assembly Elections Act, 1984) of the European Assembly Elections Act, 1977, as having been elected to such Assembly to fill a vacancy,
he shall thereupon cease to be a director of the company.
(20) Where a person employed by a company is—
(a) nominated as a member of Seanad Éireann, or
(b) elected as a member of either House of the Oireachtas or of the Assembly of the European Communities, or
(c) regarded pursuant to section 15 (inserted by the European Assembly Elections Act, 1984) of the European Assembly Elections Act, 1977, as having been elected to such Assembly to fill a vacancy,
he shall thereupon stand seconded from employment by the company and shall not be paid by, or be entitled to receive from, the company any remuneration or allowances in respect of the period commencing on such nomination or election or when he is so regarded as having been elected, as the case may be, and ending when he ceases to be a member of either such House or such Assembly.
(3) A person who is for the time being entitled under the Standing Orders of either House of the Oireachtas to sit therein or who is a member of the Assembly of the European Communities shall, while he is so entitled or is such a member, be disqualified from becoming a director of or from employment in any capacity by a company.

This is a standard amendment. It is an accepted formula in relation to people seeking election or nomination to this House and the other House and to the European Assembly.

Why is there a differentiation being made between directors of the company and employees of the company in this matter?

The main purpose of this amendment is to cover the position where people are actually nominated to run for the Dáil or nominated for the Seanad. At that stage they would have to be seconded from their employment or resign from the board. We are only providing that they do not have to be seconded until they have actually taken their seats, are actually Members of either House or the European Assembly rather than being nominated.

I am glad that the Minister has put in the new section which takes into account, particularly for the Members of this House, the unusual situation where you could have been nominated without your knowledge to stand for election. Heretofore, if that happened you would lose your position on a semi-State board as a director. "Nominated as Member of Seanad Eireann" here is taken to be nominated as a Member by the Taoiseach. One has to be elected to all the seats in the other House or to the European Parliament. Through the new process or the list system, candidates would still be elected. The Taoiseach could nominate somebody as a Member so that terminology there is "nominated as a Member", not "nominated to contest the election" as it was in previous legislation which was discriminatory because one could, in fact, be nominated to contest the Seanad election without one's knowledge. Somebody could do it vindictively to remove a person from a board. That was the reality of it. We have been changing legislation and we are affirming person's rights to contest elections in a democratic way but it is only on their election that they then forfeit the right to serve as a director. That should not apply to workers in an industry. It does not apply to any worker. Workers whether they are teachers or train drivers or otherwise who are elected to this House are either seconded from there jobs or in the case of Post Office workers lose their jobs. Directors are different because directors would now be their own bosses if you did not have this provision. We could have a director who would also be a Member of the House. He could dominate a situation; he could influence the Minister about selection of all the other directors. It is an important new section. It takes into account the situation of Members of this House who in the process of nomination to contest would not be included at all and would not be discriminated against but if they were nominated by the Taoiseach as Members would naturally on becoming Members forfeit their directorships. That is appropriate.

I can see that anybody who is elected to this House or nominated to this House could be allowed to continue in whatever job he has because this House is not supposed to be a full-time House. When I say "not supposed to be," it is a full-time House but we do not get full-time salary. I cannot see that a director of CIE, who would have an interest in the operation of CIE, should be precluded from being a member of the board just because he is elected or nominated to this House. Although Senator Ferris said that you could have a director dealing with his own affairs and he could have an influence in this House which might be against the interests of the board, surely it would be of advantage to the board and to this House to have a director of CIE sitting in this House. I can see the point that workers are seconded from employment just as teachers are seconded at present but I cannot see why somebody in a business situation who is selected as a director of CIE automatically loses the seat on the board just because he is elected or nominated to this House. I would like the Minister to give me the rationale behind that sort of thinking.

Undoubtedly there is some point in what Senator Lanigan says. Very often we politicians, perhaps in our disunity and anxiety to score points off each other close off areas to ourselves in a way which may not be totally justified. The counterpoint here is that Members of either House of the Oireachtas, involved in approving expenditure for State companies and approving policy changes, if also directors of those companies would not be as detached as they should be. That is the basic rationale.

Apart from a major company it applies to the smallest semi-State organisation, An Foras Talúntais, the board of ACOT, anything that involves the State and in which a Member of the House is concerned with the allocation of money. There would be an element of — to say the least — some form of vested interest and it would be incompatible with my understanding of what the position should be.

The system of worker participation is very important but we here have certain statutory roles and functions for the allocation of public expenditure and if we could influence the allocation of that into a company of which we were also directors there is an element of incompatibility about it. It has never been accepted by anybody since the foundation of the State that there could be such a dual role. Maybe we should look at it. As I see it at the moment, it would be unacceptable. I wanted to make sure there was no discrimination in legislation. The process of nomination to contest would discriminate and that up to recently was the position. The Minister for Health was the first Minister who changed it in legislation. It was beginning to come through from the Parliamentary Draftsman's office on a regular basis that even being nominated to contest election meant you automatically lost your post. If you were not elected, then you probably had no opportunity to get back. People with a political background should not be precluded from serving on boards; they can make a useful contribution. Once they are elected that political activity should cease; they cannot hold a dual position. I would not mind having a discussion about it with Senator Lanigan. As of now, it is what we have always looked for; it is always done and it is done at every level in the public service and the Houses of the Oireachtas particularly.

Amendment agreed to.

Acting Chairman

Acceptance of this amendment involves the deletion of section 13.

Section 13 deleted.

SECTION 14.

Government amendment No. 17:
In page 8, lines 11 to 13, to delete subsection (5), and substitute new subsections as follows:
"(5) Save in accordance with a collective agreement negotiated with any recognised trade union concerned, every person who, immediately before the vesting day, is an officer or servant of the Board shall not, while in the service of the Board or a company, as the case may be, receive a lesser scale of pay or be brought to less beneficial conditions of service than the scale of pay to which he was entitled and the conditions of service to which he was subject immediately before the vesting day.
(6) Until such time as the scales of pay and conditions of service of such officers or servants are varied by the Board or a company, as the case may be, following consultation and after agreement with recognised trade unions, the scales of pay to which they were entitled and the conditions of service, restrictions, requirements and obligations to which they were subject immediately before the vesting day shall continue to apply to them and may be exercised or imposed by the Board or the chief executive of the Board or by the Board or chief executive of the relevant company, as the case may be, while they are in its service. As provided in subsection (5) no such variation shall operate to worsen the scales of pay and conditions of service applicable to such persons immediately before the vesting day, save in accordance with a collective agreement negotiated with any recognised trade union concerned.
(7) If any of the companies is wound up, the functions of the company shall be exercised by the Board, and the Board shall accept into its employment without interruption of service all officers and servants employed by the company in consequence of subsection (4). Such officers and servants shall resume their employment with the Board on the same conditions of service as applied before the vesting day unless otherwise provided for in a collective agreement negotiated with any recognised trade union concerned.".

There are three parts to this amendment — as can be seen. The first two parts are substantially taken from the Postal and Telecommunications Services Act which was the last major public sector reorganisation with which this House dealt and spell out and reiterate the fact that the security and conditions of employment of workers now working in CIE when the company becomes reorganised into three companies are not one whit reduced.

The third section, the proposed subsection (7) was discussed yesterday with an earlier amendment concerning the winding-up of the company. This provides that the functions of a company and those employed in the company who were employed on vesting day shall revert to the board should the company close down for any reason whatsoever. It is a guarantee that the security of tenure is in no way affected by this change. That is the underlying principle of all the changes here; the wool is not going to be pulled over anybody's eyes. There is no diminution of the security of tenure. If there is to be any discussion regarding redundancies or rationalisation or changes in the future that will have to be done in consultation with the trade unions, as is the normal way.

I am not too sure exactly what this means. Yesterday we were assured by the Minister that there would be no closure of any element of CIE. While I welcome the guarantees being given to employees, nevertheless, there is an inherent recognition in this particular subsection that there is a possibility, remote or otherwise, that elements of the company could be wound up. The Minister is now giving a guarantee which he did not give to people working in other semi-State companies that in the eventuality of a wind-up of either one or other or all of the companies a continuation of employment will ensue at rates of remuneration which will not be less than those that they had on the wind-up. I would like the Minister to explain how that could work. If a company is wound up — say it is the rail section — there is a guarantee now being given by the Minister that the workers involved in the wound-up sitiution will be given jobs at the same remuneration or that they will not be given jobs but will continue at the same rate of remuneration as they had before the wind-up of the company. How will that work?

What we are saying is, if for any reason whatsoever one of these companies should be wound up — and I have to reiterate that this is a most unlikely eventuality but because there is a possibility, however slight — we are making provision that not only will the employment of those who are transferred from the group on vesting day, to the company, be restored under the board without any break in continuity but also that the functions of the company will revert to the board. So the functions will continue and the employment will continue as if the vesting had never taken place. Just as now, if this Bill never came before the House, if CIE have a programme of rationalisation as they have had in the past, they discuss it and come to an agreement with their trade unions. That is what we are providing, that the company should do likewise, whereas in the event of any closure that cannot happen unless there is a collective agreement with the trade unions to deal with it.

This is a reasonable provision. At the moment CIE, being a statutory corporation, cannot be liquidated because the provisions of the Companies Act do not apply to them. That gives a certain security against liquidation to the corporation and their employees. But because we were keen to get the company format for the subsidiaries, as it gives greater flexibility in terms of the aims and objectives of the company and changing those aims and objectives to suit prudent developments, we acknowledged that the company format would have greater risks unless we provided (a) that the shares cannot be sold and (b) that the employment is secure and the services are secure. That is what we are doing.

I hope Senator Lanigan appreciates the importance of the amendment to this section. I thank the Minister for the long process of negotiation, discussion and legal opinion and so on involved in this. It is vital to the workers in CIE that because we want to set up a company format there should be adequate protection. If it was set up in the normal way like any other company, employees would have the benefit of the Employers and Employees Insolvency Fund to fall back on — the Government legislated for that retrospectively to October 1983 — and they would have had protection for all their legal rights on the day their company went bankrupt. This is a company format but, because it is a statutory company, because it is associated with a semi-State company in the event of these subsidiary companies not being able to carry out the directive of the main board and falling down in some way and feeling that it should liquidate, all the assets and employees revert to the main board to continue the service. If management structure at that level of a subsidiary statutory company are unable to do the job, we feel they can do — and I would be surprised if they could not because they need this kind of freedom to do it and this Bill will give them the freedom they need and the dynamic role we want them to have — if something extraordinary happened and they did not do it, if the price of diesel went sky high and they had to decide they could not provide a service and went bankrupt as a subsidiary company of the main board, then all that would pass back to the main board who would then hand the responsibility back to the Houses of the Oireachtas with the allocation we would give and the one-third fraction for the social service, all these things would be taken into account. Most important, it gives some rights to the workers: they are not going to be thrown on to the unemployment register as they know can happen with a company. It is happening in the private sector regularly.

In this instance, after a lot of discussions and legal opinions and so on this ministerial amendment meets the criteria that all of us with an interest in the workforce have. Whatever reassurances we can give them by way of legislation are enshrined in this. A lot of hard work went into this amendment. I commend the Minister for bringing it in. It sounds complicated but the consensus behind it is that those involved in CIE, the workers and their trade unions, will have this process of negotiation and consultation that we all wish for. We feel it is important that the trade union movement, a very important movement, should have the rights and powers we are giving them and also the workers involved should have security of tenure in their employment. I see nothing wrong with that. It is very important because we are dealing with many employees. Senator Killilea talked about 20,000; I think it is more like 14,000 to 15,000 following the rationalisation programme. It is important for their peace of mind that they have some fallback and that they know we did not forget them in this legislation.

I am delighted to see the crocodile tears being shed by Senator Ferris for the workers who might be made redundant or put on the scrap heap when, as it seems to me, there there is a possibility in his mind that one of these companies will be wound up and in that eventuality the workers will be paid for doing nothing, which is basically what is stated here. I agree with every protection being given to workers, but there is inherent in this section a factor which does not preclude the winding up of a particular company within the CIE group and the workers being maintained in their employment at the same level of remuneration. I am wondering how they can have the same prospect of progressing throughout the company they would have if the company kept going. I am sorry the people in Irish Shipping did not have the same protection that is suggested here.

The Minister might be able to have a look at the position of workers in Irish Shipping who are now on the scrap heap and who have absolutely nothing to sustain them after many years of fantastic work for this company.

Acting Chairman

Would the Senator stick to the point?

The point at issue is that there is inherent in this subsection an acknowledgement that there is every possibility of one of the companies being wound up and in that instance the workers will be absorbed and will have the same promotion prospects they would have if the company did not break up. How could this work from a practical point of view?

Effectively, the net effect of this subsection of the amendment will be almost certainly to see to it that no company would be wound up. That is the desired effect. We cannot absolutely and totally guarantee against a company being wound up but we are going as far as we can to ensure that. If a company does wind up, the functions and the employees to which subsection (4) refers revert back to the board.

Elsewhere in the Bill there is provision that people can transfer from one company to another or from the board to the company or the company to the board and be promoted across companies etc. so that there is a coherent workforce for the entire group. The next amendment will make clear that that is one group for the purposes of election to the board. One can see the common strand throughout the Bill that we are not changing one whit the security of employment or the cohesion of the group. We are trying to get the organisation forming the group to maximise its possibilities for success.

I am not shedding crocodile tears at all; I am being absolutely positive. Drafted in consultation with the workers, in consultation with the trade union movement, this is a positive section in the Bill and in spite of any doubts the Senator might have about it, this ensures that in any eventuality they will be protected. If we did not have that section, we would have negative legislation. Nowadays people are competent enough to know that in legislation you try to legislate for every eventuality. That does not mean that it will happen. There must be an element of assurance in legislation that, even if the unforeseen happens, we will have taken care of it. This section takes care of people's rights. In all other legislation in private company law we have initiated legislation that protects the worker before anybody else, before the claim of the Revenue Commissioners, Fóir Teoranta or anybody else. It is about time we had this attitude to people who give their lives in the service of their company or in this case, Córas Iompair Éireann. It is important to recognise that the overall employer is the main board to which the workers have been elected.

I do not wish to deal with Irish Shipping. If the board of Irish Shipping carried out their business correctly, and this Government did not appoint the board, the workers would not be in the dilemma they are in.

Acting Chairman

The Senator should speak to the amendment.

The Minister is now guaranteeing that, irrespective of what happens in the structure of CIE, if the subsidiary companies become insolvent, if for any reason in the future they go out of business, the State will continue to take up the tab for the former workers at the rates of remuneration at the date of the insolvency or the breaking up of the companies. The State will continue to pay the salaries and will continue to provide for them in the same manner as if they were employed by the company.

They will not be former employees. They will remain as employees. The board will retain the functions the company was discharging. It is not a case of paying people for doing nothing. They will be doing the same work as previously. The only difference is that the functions would revert to the board. The people employed on vesting day have exactly the same security of tenure as they have now.

There is no change in their employment prospects. There is no guarantee that CIE, as a semi-State, will continue to operate. All you are doing is giving them the same rights as they have now. There is no security of job given to them other than they have at present. What Senator Ferris has said is not correct. No guarantee is being given to the workers in CIE other than the guarantees they have at present.

They have substantial guarantees at present. Any changes in that are negotiated with the trade unions. Even if that is not stated in law, that is what would happen. We are only expressing its reality.

The most important point for Senator Lanigan's peace of mind is that if this section was not here on vesting day they may not necessarily have the same rights they now have. The Senator should not object to the section.

I did not object to the section.

The Senator did say that because we are including it we are almost saying that one of these companies are going to go wrong. That is negative thinking. We on this side of the House must be positive. We are positive about this being an important section. There is nothing wrong with giving reassurance to people that their existing rights are not compromised in any way by legislation on a vesting day.

That is a fundamental right of anybody. If it were not included here, they would probably have the right to go to the Labour Court or to a civil court on the grounds of our removing something they already enjoyed. This was also done in the transfer of interest in Bord Telecom and An Post. It was done by way of amendment to the original legislation. A process of discussions and negotiations is carried out, particularly involving the workers. I do not owe an apology to Senator Lanigan for doing it in this way. Certainly, it meets the requirements, as we see them and, as a minimum the people are entitled to their existing rights. In the event of anything going wrong with one of the subsidiary companies, they revert back to the original board continuing their rights. If that board eventually want to do something different, it can only be done in consultation with the trade union as is the normal practice.

Amendment agreed to.
Government amendment No. 18:
In page 8, between lines 13 and 14, to insert a new subsection as follows:
"(8) For the purposes of the Worker Participation (State Enterprises) Act, 1977, an employee of any of the companies shall be deemed to be an employee of the Board.".

This puts beyond doubt that the electorate for the purposes of electing worker directors to the main board will be officers and workers of the board in all three companies.

Amendment agreed to.
Section 14, as amended, agreed to.
Section 15 agreed to.
SECTION 16.
Government amendment No. 19:
In page 8, between lines 19 and 20, to insert a new subsection as follows:
"(2) The Board may make to a company a lease or assignment of any premises of the Board to which a licence under the Licensing Acts or the Refreshment Houses (Ireland) Act, 1860, is attached.".
This is a housekeeping amendment to allow the board to transfer licences to companies where they have licences, if they so wish.

Problems arose in CIE where the workers had invested funds in a saving society. Many workers lost money because of this. Can protection be given, not alone to CIE employees, but to workers in other industries, who want to invest their savings? The CIE employees felt they were investing in a company which was a subsidiary of or, at least part of, the establishment of CIE. Can the Minister give CIE employees an assurance that in future, if there is such an investment society which hasde facto the agreement of the company because the funds were transferred directly from their wages or salaries to the savings or investment company that protection will be given to employees in the future to prevent recurrences. What happened in this provident society?

The Tontine Society to which the Senator refers was a voluntary society. It is not a matter for me. I will certainly transmit to my colleague, the Minister for Finance, the concern of Senator Lanigan and ask him to communicate with the Senator on the issue.

I am sorry for raising this at this point but I did not see any other place where I could raise it. Can the Minister give a guarantee to the workers that if deductions are made from salary or wages, which are being transferred to anybody, that the board will ensure that they will have an investigation into the company before they transfer funds directly from a worker's wages?

Acting Chairman

That matter can be raised on section 17.

Amendment agreed to.
Section 16, as amended, agreed to.
SECTION 17.
Question proposed: "That section 17 stand part of the Bill."

Perhaps the Minister could reply to the queries which have been raised?

The matter I want to raise concerns the power to transfer property from the main board to the subsidiary board. I am thinking in terms of Limerick Junction. The whole village of Limerick Junction was a G S Railway village originally and now it is a CIE village. Most, if not all of the houses, were CIE houses. Extraordinarily enough, the actual roadway going down to Limerick Junction Railway Station from the main Limerick Waterford road was also CIE property. Of course, with the passage of time much of the property by way of houses which belonged to the original workforce has been disposed of by CIE to the workforce in an ordinary common sale situation. Unfortunately, the road went into such disrepair that the County Council of South Tipperary made representations to CIE to take publicly in charge the roadway leading down through the housing estate to the station. It is only in the past couple of years that it has become a public road in the local authority terminology of a public road. The council are now responsible for the maintenance of the road surface and the footpaths. That is as it should be.

In addition, there are patches of wasteland on that roadway. Across the road from the housing estate, the local tenants would like Córas Iompair Éireann to consider the transfer to them of the wasteland so that it could be planted and enhanced by local community effort. In this environmental week, I should like if Córas Iompair Éireann would consider divesting themselves of land they cannot have any use for. It is outside their boundary wall, so to speak, and is siding on to the public road. If this piece of wasteland was transferred into public ownership, to the council, my next move is with the county council, to acquire it from them back to the community or, at least, give the community permission to beautify the entrance to Limerick Junction, which is, to say the least, pretty stark.

Limerick Junction is a difficultly constructed main important rail junction. The owners of property made many attempts to improve their property and the old railway cottages. They are beginning to improve the property but where it is situated on that rail artery it is difficult to make it as presentable as in the case of other stations which are situated and designed differently. If we could transfer the ownership of that land to a local community residents' association who would maintain it and beautify it, it would be a step in the right direction. This is the only section that I can see on which I have an opportunity to ask such a question.

I can assure Senator Ferris that I will take up the question with the Chairman of CIE, whom I will ask to communicate directly with him. The section itself just provides for the transfer of lands and properties from the board to the company unless the board decides specifically without having to go through Land Registry and all sorts of fees, charges and stamp duty. It is in ease of the company.

That was not the point I was raising. Could the Minister confer with the chairman of the board about the worries that workers have about direct debits from their salaries and wages to pay into what the workers considered to be very valuable entities, as was the case in regard to the Tontine Society. Unfortunately, there is no protection for them if the societies into which their funds are going are not made secure. There was a case recently where workers were involved in a savings situation in a private company. The company went bankrupt and the savings of the workers went as well. There is a worry where arrangements are entered into. Protection should be given to them at all times and no deductions should be made unless the board had full knowledge of the operation of the group concerned.

I will certainly pass on to the chairman the points made by Senator Lanigan. I suppose in all cases where money is handled it is a question of confidence. That is so in the case of the banking world. If workers have not got confidence that the money being stopped from their wage packages is going where they want, they can (a) act individually to cease the stoppages or (b) have the unions take them up. It is less of a problem in a company like CIE which is a statutory corporation with all the backing of statuteet cetera compared to private companies.

Question put and agreed to.
Sections 18 to 20, inclusive, agreed to.
NEW SECTIONS.
Government amendment No. 20:
20. In page 9, before section 21, to insert a new section as follows:
"21. —(1) Where at a meeting of the directors of a company any of the following matters arises, namely——
(a) an arrangement to which the company is a party or a proposed such arrangement, or
(b) a contract or other agreement with the company or a proposed such contract or other agreement,
then any director of the company present at the meeting who otherwise than in his capacity as such a director is in any way, whether directly or indirectly, interested in the matter shall at the meeting disclose to the company the fact of such interest and the nature thereof and shall not vote on a decision relating to the matter and, where an interest is disclosed pursuant to this section, the disclosure shall be recorded in the minutes of the meeting concerned and, for so long as the matter to which the disclosure relates is being dealt with by the meeting, the director by whom the disclosure is made shall not be counted in the quorum for the meeting.
(2) Where at a meeting of the directors of a company a question arises as to whether or not a course of conduct, if pursued by a director of the company, would be a failure by him to comply with the requirements of subsection (1), the question may be determined by the chairman of the meeting whose decision shall be final and where such a question is so determined particulars of the determination shall be recorded in the minutes of the meeting.
(3) Section 194 of the Companies Act, 1963, shall not apply to a director of a company.".

The new section 21 is borrowed almost verbatim from the Postal Telecommunication Services Act. It provides for disclosure of interests. It is a very worthwhile improvement to the Bill.

I, too, welcome the amendment.

"Section 194 of the Companies Act, 1963 shall not apply to a director of a company." could I have clarification on that?

Section 194 of the Companies Act makes certain provisions in relation to directors. This section in respect of these companies replaces section 194 and elaborates on this matter of interest.

Could I be told what section 194 is before we pass the section?

It is a very long section. Perhaps the best thing I can do is to give Senator Lanigan a copy of it.

In the first paragraph of section 194 it states

"It shall be the duty of a director of a company who is in any way, whether directly or indirectly interested in a contract or proposed contract with the company to declare the nature of his interest...".

Why have that section deleted from section 21 and introduce another section that they have to disclose their interest? It would appear that section 194 declares that they have to disclose their interests.

This formulation deals more precisely with the situation of a State company particularly where there are directors who are not owners. They are worker directors and other nominated directors. It is felt that this formulation is better in this context. There is a difference between this section and section 194 of the Companies Act. The main areas of difference are (a) the extent to the interest which must be disclosed; (b) the limitations imposed on directors' participation at meetings which discuss the contracts etc. involved; (c) the penalisation or failure to comply with the statutory requirements; (d) the power of the chairman to settle any questions which arise concerning a director's obligations in this regard. In relation to the extent of interest, this section requires a director to disclose the nature of any interest he may have in any arrangement, agreement or contract. Whereas the disclosure requirement in section 194 of the Companies Act extends only to contracts in which the director has an interest.

With regard to limitation and participation at meeting, under this section a director may not vote, take part in discussions or be counted in the quorum present at a meeting while the matter to which the disclosure relates is under discussion. There is no such provision in section 194.

With regard to penalisation at failure to disclose interests, the 1963 Act, section 194, provides for penalisation of failures to meet the requirements in regard to disclosure of interest. A similar provision is not included in this section as the chairman is being empowered to determine what must be disclosed. On the question of the power of the chairman, under this section if a question arises whether a course of action if pursued by a director would be in breach of the section, the chairman may decide the issue. The 1963 Act does not convey such power on the chairman.

Basically, the Minister is saying that there is a diminution of the Companies Act, 1963.

No, an elaboration.

There is a penalty, though a very minor one, in section 194 but there is no penalty from what I can see in the present section. Therefore, if he does not disclose interest, there is no penalty other than possibly removal from the board.

How does this section affect worker directors? Obviously, worker directors would have a certain interest, particularly if a board was making a decision about a major rationalisation programme or something else that would directly involve the workers' interests. Worker directors by their very nature have a vested interest in their employment and the employment of their colleagues. What would happen at a board meeting? Would a worker director be precluded from voting in a particular situation which would affect the interests of the people he represents? I know that under the Companies Act we are talking specifically about financial vested interest as opposed to a worker director who has only the common good and the common interest of his own colleagues at heart. Would he be precluded from making a contribution at the board? Would he be precluded from voting at the board? Why I raise the matter in this context is that we had problems with worker directors on the board of Comhlucht Siúcre Éireann Teo when decisions were being made in connection with closure over a short period of the sugar factories in Tuam and Thurles. In consultation with one of the worker directors, he was precluded from making a contribution on the subject of the closure because he was considered to have a vested interest. It would be a diminution of all that we understand to be the powers of workers' directors. They should be full board members. Their disclosure of interest is known on the day of their election. Their only interest is to represent their colleagues in the trade union movement who elected them and they are the only directors actually elected. So the process of their election is a disclosure of their interest so to speak. When they go in and sit down on the board, I should not like to feel that they would be precluded in any way from participating, being part of the quorum of voting. Perhaps the Minister would elaborate on that?

No, I want to assure the Senator that this section is an exact repeat of a section in the Worker Participation (State Enterprises) Act. This only deals with people who have a personal vested interest, not a representative interest, as Senator Ferris mentioned. This section already relates to CIE itself because it is provided for in the 1977 Act. We are now extending the provisions to include the companies set up under this Bill.

I am sorry to only arrive now. When I left the House at 10.30 p.m. last night, my understanding was that Committee Stage and Report Stage would continue on Tuesday next. I have only discovered this minute that the debate continues this morning.

Unfortunately, I happened to be in the House at the end of business and proposed it.

I have just discovered that now.

I was delighted to hear that the various amendments tabled in the name of the Minister have been approved by the House so far. I welcome the principle behind this amendment. It is one of the ones the Minister and I discussed, I think, during our discussions over the last few weeks. I am aware that it is a replica of the provision in the Post and Telecommunications Act. One matter has arisen which, perhaps, we could seek clarification on between now and Report Stage and it is one which has a broader implication than simply in relation to this particular section. I understand from the Irish Congress of Trade Unions that they are a bit concerned about the provision in (b), a contract or "other agreement". They are not concerned about it solely in relation to this Bill but because this provision is replicated in other legislation, they are seeking legal advice as to whether the phrase "other agreements" there in (b) might have implications for worker directors' ability to report back to their relevant constituent bodies either the Irish Congress of Trade Unions——

Acting Chairman

Is the Senator talking on section 20?

"Disclosure of certain interests": Is that not the one? It is a question of the inclusion of the phrase "other agreement" which is not particular to this Bill, it is a whole set of legislation, whether it might in any way have implications for the ability of worker directors, with discretion, to consult with their relevant bodies, whether the Congress or the workforce on the basis of discretion and so on. It is a matter that is of general interest to the trade unions and it is one that I raise now in the hope that we might have some clarification either now or on Report Stage.

It is a replica of the Posts and Telecommunications Services Act. It is also a replica of the Worker Participation (State Enterprises) Act 1977. We all have wide experience of how that works. It has not had the disabilities feared or expressed as possible.

I welcome the amendment proposed. It is one of the ones we discussed. I did not see any difficulty with it until yesterday when I was talking with some people from the Irish Congress of Trade Unions. Because it is included in other legislation, I think it is a matter if there is a question of doubt there, that can be dealt with in a generalised way rather than in this Bill.

I shall leave my contribution for the next section because it concerns the penalties arising out of the disclosure of certain information.

Amendment agreed to.
Government amendment No. 21:
In page 9, before section 21 to insert a new section as follows:
22. —(1) A person shall not disclose confidential information obtained by him while performing duties as a member of the Board or director of a company or a member of the staff of, or an adviser or consultant to, the Board or a company unless he is duly authorised to do so.
(2) A person who contravenes subsection (1) shall be guilty of an offence and shall be liable on summary conviction to a fine not exceeding £1,000.
(3) In this section—
"confidential" means that which is expressed to be confidential either as regards particular information or as regards information of a particular class or description;
"duly authorised" means authorised by, as may be appropriate, the Board or the company or by some person authorised in that behalf by the Board or the company.

This amendment is borrowed almost exactly from the Post and Telecommunications Services Act. It provides for the prohibition of unauthorised disclosure of information by people in the companies set up by the Bill. It is a protection if people who are on the boards or in the employment of the boards do not disclose confidential information which would be unauthorised or inimical to the interest of the company or the board.

This amendment has worried the trade union movement especially regarding the position of worker directors on boards. The Minister should realise that, in the normal process trade unions are privy to certain confidential information in discussions with companies, whether semi-State or private companies. They are at times privy to confidential information which could influence the course of a wage negotiation, for example. A company could, and does, disclose confidentially to the trade union certain information about the capabilities or otherwise of the company. We could tell them that it is to be confidential.

Here you have a worker director whose interests are known the moment he contests and is elected. If he wanted to consult with the members of the unit which elected him, on a fundamental matter which would be coming before the board — in the knowledge that they would be expecting him to do a particular thing as their representative on the board, or to be putting their view — a difficulty could arise if he was precluded from consulting with them. In that process he may be disclosing what the board might consider confidential, but what he as a worker director might consider to be valuable information which, of course, would not be made public. He might want to discuss a particular trend or some information with the executive of his union.

We do not wish to penalise worker directors for this process, because it would not be deliberate disclosure of confidential information but by their very nature they might want to consult with their union executive. I am worried in case we would be penalising that kind of director. I would have no reservation about penalising a normal director who would have forgotten about the confidentiality of his responsibility on the board and disclosed to a newspaper something that could undermine the company or the subsidiary board. I just have reservations now. The Minister will probably have experience because he has said it is a replica of something that is in another Act already which involves worker participation. Perhaps we might tease it a little bit further. I am sure Senator Flor O'Mahony will want to speak on it again because he has had consultation with the same people as I had on the subject.

I wish to express the same concerns as Senator Ferris has expressed. I am, as he is, aware that this provision is included in a similar fashion in the Postal and Telecommunications Services Act, 1983, and I imagine in other legislation also governing other State companies where worker directors are represented as members on the board.

While I have no doubt that it is not the intention in this provision to spancel worker directors in terms of their ability to maintain contact with those whom they represent whether through the Congress of Trade Unions or through the executives of their own unions. I am just concerned that it might open up the possibility that these normal and discreet reporting back or consultation arrangements might be seen to be in breach of this proposed section. The phrase is there, "unless he is duly authorised to do so," and that is a phrase that is in the other legislation that has been mentioned. The problem is duly authorised to do so by whom? Is there due authorisation for worker directors to consult with representatives of the workforce, as they would be expected to do, given the nature of the function of worker directors? Are they authorised to do so in some other legislation? Where would the authorisation come from beyond the common sense authorisation that worker directors do have responsibility on some occasions and in the most discreet manner possible to consult with those whom they represent, through whatever means are thought suitable? This process of consultation goes on at the moment. Of course, no worker director has ever been penalised to my knowledge under similar kinds of legislation. There is a question mark there which needs to be looked at.

I wish to join with Senators in expressing my reservations about this section. There are obvious problems which will be encountered by worker directors as a result of this section. Between now and Report Stage perhaps we could have a further look at it to ensure that no worker director could be penalised for discussing with his special interest group — whichever union is involved — before decisions are made. I wonder if this section would apply to the Minister in his revelation of confidential Government memoranda which were produced to this House yesterday?

Duly authorised.

We spent enough time on that yesterday, without getting back today to it.

Who authorised and if it was not authorised would this fine of £1,000 be forthcoming from the Minister? We could all suggest places to which it could be given.

Disclosure of information of a confidential nature from any board is something that we should not condone. During the past few years we have seen newspaper reports giving confidential information from board meetings, whether they be Cabinet or otherwise. We should not condone the disclosure of information other than that which is authorised.

There are inefficiencies here which worker directors might suffer from if this section goes through.

I note the concerns expressed by Senators but they are unfounded. This is a very wise and necessary provision. Worker directors have responsibilities like other directors. It is very important that worker directors understand the need for confidentiality on boards. Otherwise management of companies will use as an excuse for not bringing to board, for circumventing board, the fact that they cannot bring anything to the board because, it will be disclosed publicly or that they have not got this opportunity of private analysis which is very necessary. If documents put up for discussion — and it may apply to memoranda to Government as well — are to be revealed as if they were one's last thoughts it would certainly be difficult to have a calm analysis of issues. It is very important that all directors, including worker directors, understand the need for confidentiality. It may be used as an excuse that they cannot go to board with very confidential information of importance to the company. I have known cases where that has happened in the past. That was the excuse given. Effectively it means that the board is losing control and therefore, this Parliament is losing control. We should not let that happen. The provision in this amendment is a wise one. This provision already exists in relation to Telecom Éireann and An Post, although there are additional reasons there why confidentiality would be necessary for instance, the confidentiality of mails and telecommunication messages that people might come to know about. It is not intended to stifle or silence completely worker directors in their communications with the electorate and the people they represent, although it is intended to ensure that they do not disclose even to those they represent, confidential information which it would not be in the overall interest of the company to have disclosed prematurely, just as the Minister would be very neglectful or wrong in his duty to disclose information merely because he wanted to consult with the electorate about it. It could be very inimical to the public interest.

The Minister has reassured us to some extent. He recognises, as we all do, that trade unions particularly have an element of confidentiality about them and that would be the process regarding a decision of the board. Because the worker director, above all other directors, has to have a regard to the views of the people who elected him, the Minister is saying that there is nothing wrong with the fact that he should be able to consult with the executive of the union he represents. In that process we would not like him to be penalised, although we are aware of the fact that if it is confidential it will be treated by the executive of the union as confidential and would not be made public. If it was made public, then the union and everybody would be in contravention of the section. What we want is a certain element of freedom to the worker director to have a process of consultation with the people he would represent. The Minister has assured us that he can do that within this situation, having regard to the overall responsibility that he would have as a member of the board. Worker directors in all semi-State boards have proved to have a very high degree of intelligence and competence and also they are not prone to going off making wild cat statements of a confidential nature. Naturally, they would give a view on a board's decision when it is reached and when it becomes common knowledge. They might say: "I objected to it, I voted against it and I was outvoted". This process of confidential information which could lead to a policy decision perhaps involving all the workers in some way should not preclude them totally from consulting in a confidential way with somebody to whom they in turn are responsible to and were elected by. I trust them to deal with it in the confidential way we want them to do it, but I would not like to preclude them totally from having an avenue available to them for assurance about which particular role they are going to play when the decision is being made. That is basically what we are worried about.

That is the point. Obviously, worker directors are the same as other directors in the sense that they have an obligation to see to it that nothing is said or done that damages the company or the board. They are different from other directors in the sense that they represent the workforce. Other directors presumably represent the Minister, or the Minister as shareholder, and are not directly accountable to anybody outside that remit; whereas the worker directors have an obligation to represent the position of the workforce on the board while at the same time not undertaking any action that would be detrimental to the board. In order to fulfil that representational role there must be a possibility for them to consult from time to time in a discreet manner and in a manner that is not detrimental to the interests of the boards. To clarify their right to do that is what is at issue.

I am not sure the phrase — which is not particular to this legislation and is more generalised —"unless he is duly authorised to do so" is clear enough. It does not take account of the particular circumstances of worker directors as opposed to the general circumstances of all directors. That ability to be free of a concern about a charge under this section in a circumstance in which a worker director would act in the way I have described is important to establish. I want to raise the question at this stage. I do not have a particular answer at this point, but perhaps between now and Report Stage I can consider one. The phrase "duly authorised" means authorised by, as may be appropriate, the board or the company or some person authorised on their behalf by the board or the company. That does not necessarily take account of the particular circumstances and responsibilities of worker directors as opposed to other directors. It leaves open the possibility that the board would create its own internal guidelines whereby worker directors would consult with the workforce through an appropriate institutional arrangement, but it does not necessarily say that that must happen. There is a question mark in my mind and, I think, in the minds of worker directors, although from past experience there has not been a problem with this section in relation to worker directors. It is very important also, of course, that the worker directors are aware that they have a responsibility to the whole company as a company, and therefore cannot consult left, right and centre about the most confidential nature of the decisions being taken or the considerations of the board. I do not know whether we can improve on the amendment on Report Stage, but we can at least think about it.

I do not think the worries expressed are justified. What we are trying to provide against here is people copying out memoranda and posting them on a notice board. Unfortunately, that has happened in some cases of worker directors. This deals with all directors and not only worker directors. It certainly works in the case of An Post and Telecom Éireann. Worker directors are going to have a certain amount of consultation, but within that consultation they have to be clear that there are things that are confidential to them. Each director has to make up his own mind on issues like that. Therefore, I think the worries expressed by Senators are not justified.

Would the Minister inform us on Report Stage as to the situation regarding worker directors in this particular instance, because I can see that once somebody is appointed to the board they have the overall responsibility of the company at heart and not just a sectional responsibility. Under no circumstances should a worker director or any other director be running back to his sectional interest for consultation at every stage. Nevertheless, in section 20 there is no penalty for a director who does not declare interests. In 21 there is a penalty of £1,000. I would suggest that, if there is a penalty in this instance for disclosure of confidential information, equally in the other section there should be a penalty for non-disclosure of interests. I would like the Minister to consider these points between now and Report Stage.

I certainly will.

Amendment agreed to.
Sections 21 to 23, inclusive, agreed to.
SECTION 24.
Government amendment No. 22:
In page 10, between lines 21 and 22, to insert a new subsection as follows:
"(3) A direction under this section shall, if the Board so requests in writing, be given by the Minister by order.".

Where the Minister gives a direction, and it is requested in writing by the board, the board do not have to accept the direction except it is given in writing; and, where they request it in writing, it will have to be tabled beforehand as an order so that both Houses will be aware of the order and will be able to vote on and reverse that order within 21 sitting days. It is a protection against unwarranted interference by Ministers in the affairs of the company while at the same time giving Ministers those powers if they are warranted.

Amendment agreed to.
Section 24, as amended, agreed to.
SECTION 25.
Question proposed: "That section 25 stand part of the Bill."

Does the board have to have consultation with the local authorities when we have compulsory acquisition of land? As a member of a local authority I am aware that semi-State bodies do not have to apply for planning permission. Sometimes buildings or developments undertaken by semi-State bodies are totally in opposition to the plans laid down by local authorities. In connection with compulsory acquisition of land do the local authorities have any say under this section?

What we are providing here is that the existing powers and privileges be transferredmutatis mutandis to the companies. CIE are required to get planning permission, like everybody else, except in the immediate area of the railway itself. Even in those cases I think they would consult with local authorities. Other than that, they have to obtain planning permission and the companies themselves will likewise have to get planning permission. In this section we are making sure that the companies will be empowered to make by-laws and so on in relation to their functions just as the board are at present.

This compulsory acquisition power is something the board will welcome. Obviously from time to time they will need to acquire land that may not necessarily be available by consent or by agreement to purchase. County councils have the same problem. As a member of a county council I find that the process of compulsory acquisition of land is quite slow. Will this section as it relates to Córas Iompair Éireann be any swifter than the one which the local authorities are saddled with? The Minister gave a commitment to the Joint Committee on Building Land of which I was a member, to speed up the process of acquisition. I am thinking in terms of the benefit to the board if they need to acquire land for a specific reason if they can do so quickly.

Yesterday we agreed that the new boards would have a new kind of dynamism and that they could enter into areas which would generate more business. In that process they might decide to build a construction in a town which was too close to a bus stop, for instance, and naturally they would not do that without discussion with the local authority. Under the Planning Acts, that would be the normal process. If a railway station needed to be replaced it would not be necessary to obtain planning permission to do that. I would like to think their powers of CPO are quicker and more efficient than those of the local authorities.

I regret to tell Senator Ferris that they are not. We are not changing anything here. We are just transferring them to the companies and there is no change.

Question put and agreed to.
Sections 26 to 28, inclusive, agreed to.
SECTION 29.
Question proposed: "That section 29 be deleted from the Bill."

I am proposing to accept the suggestion of my colleagues to delete this section from the Bill. We will still expect CIE and the companies to have regard to national pay guidelines. A consistent strand of this Bill is that we are not changing anything in relation to terms or conditions of employment or security of employment. In that spirit this is not the Bill to make this provision though, in practice, of course, all State companies must have regard to national pay guidelines and Government directives.

I am glad this section is being removed. It is one of the major problems CIE workers have with this Bill. I agree with the Minister that obviously there will have to be consultation with the Government and Government guidelines will have to be taken into account in any negotiations on salary and remuneration or allowances of whatever. One of the major problems regarding this Bill is now being eliminated as a result of the opposition to it by Senator Killilea and our group and by the Labour group. I want to thank the Minister for realising that this section is totally abhorrent to the workers in CIE.

I welcome the Minister's decision to delete this section. It is the one about which we had most concern in our discussions over recent weeks. I am glad the Minister has been able to accede to our request to delete it. This provision, which is already in existence in some legislation, relates to State bodies, is unwise. It is more likely to cause industrial relations problems that it is to solve them. Had the section been left in, it would have imposed an artificial constraint on a State company which would have been entirely inappropriate and troublesome.

I share the view of the Irish Congress of Trade Unions who made the point that, if we are in the business of operating State companies in the commercial world, and CIE are to a great extent operating commercially, we have to treat them as we would treat any other company. They have to have the ability to negotiate pay and conditions with their workforce and, should there be disagreement at that point, the matter can be resolved in the Labour Court as heretofore. I welcome the Minister's decision to accede to our request to remove this section.

In reply I should like to say that this is a vexed question. There is no doubt that State companies have to have regard to national guidelines or to Government directives. Whether we need to express this statutorily in this Bill is what is at stake here. One of the main momentums for that sort of guideline is that unions go into the Labour Court and quote analogues as between the ESB, Aer Lingus and CIE. They cannot have it both ways. By saying each company must be treated on its own and when it suits them saying: "They are getting something, so we should get it". We have to be a little bit consistent.

It is important that trade unions in their discussions and negotiations should have regard to Government pay guidelines, and they do. All these guidelines are subject to negotiation and discussion. Far be it from us that we should ever remove the right of trade unions to have discussions even on guidelines. During the past few months we have proved that you can set down all the guidelines you like, but they are all subject to agreement, discussion and negotiation. That is how it should be. Otherwise we are working in a dictatorship. I am grateful to the Minister. I compliment my colleague Senator O'Mahony who did much work on this section and I was present at some of the meetings he chaired on this subject. In the past number of months we have proven that. Guidelines can be set down but they are all subject to agreement in discussion and negotiations. That is how it should be. Otherwise we are working in a dictatorship. We are grateful to the Minister and I compliment my colleague, Senator Flor O'Mahony, who has done a lot of work on section 29. I was present at some of the meetings that he chaired on this subject. We felt, and rightly so, and the Minister conceded it in the end, that we would be, for the first time in the public sector, statutorily legislating in the area of wages and conditions. In my opinion as a trade unionist, that would be a dangerous precedent for one particular section of employees. For that reason we welcome its deletion. We can talk about all the other things that we would like to have but that is the essence of it. It would have been statutory control of wages. That would have been unacceptable to us. The deletion of the section ensures that the normal process of agreement in discussion, negotiation and in making use of all the employer-labour conferences the Labour Court and every other procedure will be followed.

I do not want to drag this out and I am grateful to the Senators. It is important because this provision is in most legislation dealing with State companies over the past 10 or 12 years regardless of who is in office. I am accepting it in this Bill in relation to CIE because it is a re-organisation Bill. It is not the appropriate Bill for it.

Question put and agreed to.
Section 30 agreed to.
Title agreed to
Bill reported with amendments.

It is proposed to take the next Stage on Tuesday, 17 June.

We have put in amendments for Report Stage. We consulted the Minister and got agreement to table them.

Report Stage ordered for Tuesday, 17 June 1986.