Companies (Rescue Process for Small and Micro Companies) Bill 2021: Committee and Remaining Stages

I welcome the Minister of State to the House. We wish him all the best for his impending nuptials on Thursday. I know that if it were not for Covid-19 restrictions, we would all be invited to the wedding. He is more than welcome to the House. I believe he is going to Kerry on his honeymoon.

There would be no guillotining of proceedings then.

I thank the Senator for his parliamentary contribution to the congratulating of the Minister of State.

Sections 1 and 2 agreed to.
SECTION 3

I move amendment No. 1:

In page 25, between lines 27 and 28, to insert the following:

Further provision with respect to employees

558S. A rescue plan for an eligible company shall not contain provision that provides for either or both of the following—

(a) a reduction in the number of employees after the date from which the rescue plan would come into effect under section 558ZB or 558ZE, as the case may be, unless this has been done by agreement with employees and their recognised trade union, save in the case of voluntary redundancy, and

(b) a failure to honour a collective agreement.”.

The amendment is important. It concerns cases where a rescue plan is put in place. One of the reasons we support rescue plans being put in place is we recognise that small and micro companies are an important part of our community and social fabric. Indeed, small and micro companies have played a vital role for many communities throughout the challenges of the past year and a half. I am in favour of us rescuing and seeking to support them. One of the reasons those companies are so important is they are employers. In small and micro companies, there is a company owner and then company employees. The employees are part of the fabric of the community and society. They play a crucial role. Their livelihoods feed into the well-being of society and the community as a whole.

We are supporting small and micro companies because we want to support their employees. In that context, this is a positive amendment, which I hope the Minister of State will consider. The amendment seeks to ensure that any conversation about a rescue process is not just with the owners of a business. It seeks to ensure that such conversations reflect positive dialogue with the employees of a business. I am sure other Members cite examples of when employees have stepped up to help or save a company they work for.

It is appropriate and important that their stake and voice in this is recognised. That is why the amendment, which was first proposed by Deputy O'Reilly in the Dáil, is important. I was struck by how constructive it is and that is why I have tabled it in this House which has a very good record of supporting workers' rights legislation right across the floor. The amendment suggests that a rescue plan for an eligible company shall not contain provisions that provide for a reduction in the number of employees unless this is being done with the agreement of the employees and their recognised trade union, except in the case of voluntary redundancy. The other aspect of the amendment is that a rescue plan should not be an excuse to fail to honour a collective agreement. It is when times are most difficult that measures like a collective agreement or dialogue between employees and employers are most needed. It is not an excuse to abandon the principles of dialogue and working together. Those are the times when proper collective agreements that envisage scenarios of potential redundancy and look to how that can be done in a good and ethical way are centre stage. It is when it comes to the question of whether there is a need to downsize the number of employees that dialogue with workers and their representatives is most important.

I hope the Minister of State will accept the amendment. It is very much in tune with the Bill but it brings a very important voice into the rescue process.

It is good to see the Minister of State. I again offer him my good wishes for Thursday. I wish to speak briefly in support of the amendment. It is good of Senator Higgins to acknowledge that my colleague, Deputy O'Reilly, tabled an identical amendment in the Dáil. It essentially comes down to ensuring that workers are given a say at these very difficult times that can arise in any business. Two months ago, I had a conversation with a man who had worked for a small business for 30 years. He had given his life to the business. The business was in difficulty and he suddenly found he had no say whatsoever in the future of the business. He was, effectively, discarded. That is just not right but, as the law stands, that is how things operate.

The amendment would basically instil a degree of requirement for consultation and dialogue, as Senator Higgins stated, so that people who have given a lifetime to the business - not just the owners, but the workers - would have some kind of defence in order to be able to be part of the solution. That does not mean there will not be job losses. Unfortunately, job losses are a part of the economic cycle from time to time. However, it means the workers would have a say in negotiating those losses and possibly negotiating a decent redundancy pay-out or decent terms. Unfortunately, as things stand, there is nothing in law to allow for any of that. As such, it is important to recognise the value of the amendment, which deserves support.

The Bill is consistent with the provisions in examinership relating to redundancy and collective agreements. Any redundancies that may arise as a result of a company facing trading difficulties must be dealt with within the existing employment rights legislative framework. Regardless of the contents of a rescue plan, employees may be made redundant under the Redundancy Payments Act 1967 if the circumstances of the redundancy fall into one of the five definitions set out in that Act, that is, the closure of the employer's business or its cessation in a particular location, the disappearance of the employee's job specifically, a reduction in the numbers of the workforce overall, the replacement of the employee by someone who can also do the work in a manner for which the employee is not sufficiently qualified or trained, and the replacement of the employee by someone who can also do other work for which the employee is not sufficiently qualified or trained.

When there is a collective redundancy under the Protection of Employment Acts 1977 to 2014, the company is obliged to enter into consultations with a view to agreement with employee representatives. This legislation is separate from the Redundancy Payments Acts 1967 to 2014. Those consultations must take place at the earliest opportunity and at least 30 days before the notice of redundancy is given. The aim of the consultation is to consider whether there are alternatives to the redundancies. The company is also obliged to provide the following information in writing to the employee representatives: the reason for the redundancy, the number and description of employees affected, the number and description of employees normally employed, the period in which the redundancies will happen, the criteria for selection of employees for redundancy, and the method of calculation of any redundancy payment. The existing suite of employment protections will be applicable in such circumstances provided by this Bill.

As regards the issue of collective agreements, the industrial relations system in Ireland is based on a voluntary approach and collective agreements are not binding in law. The effect of the amendment would be to elevate the collective agreement to a statutory footing. It may also have the effect of unduly impeding the process adviser in the development of a rescue plan that is focused on saving the company as a going concern and protecting jobs. Furthermore, collective agreements that relate to industrial relations policy are not within the remit of company law. The amendment would have broader implications outside the Bill and, as such, it is not appropriate for me to accept it.

I highlight to Senator Higgins that I am also prioritising further work relating to workers who find themselves in a collective redundancy situation arising from insolvency. We published a plan of action on 9 June and it is available on the website of my Department. It sets out several commitments to safeguard further the rights of workers in these circumstances, including the setting up on a statutory basis of an employment law review group and the provision of accessible guidance documents to help workers and their representatives to navigate the existing legal framework.

There are amendments in the Bill to improve employees' rights, such as by obliging the liquidator to ensure creditors are aware they have a right to form and participate on a committee of inspection. This committee represents the interests of all creditors of a company going into liquidation and its main roles are to oversee the activities of the liquidator and protect the rights of creditors. It is provided that where such a committee is appointed, it shall include at least one employee creditor member and it is clarified that the liquidator has the power to bring and defend proceedings before the Workplace Relations Commission and the Labour Court.

On a final point, the Company Law Review Group, CLRG, has commenced work on streams 2 and 3, which relate to corporate restructuring, revisiting the 2017 report in the light of the ambition of the Government that employees, as creditors, exercise their rights and have the means to exercise those rights. One work stream involves a consideration of employees as corporate stakeholders, particularly in the context of alleged restructuring and splitting of corporate operations from asset-holding entities. A further work stream will address the legal provisions that pertain to any sale to a connected party following insolvency and transactions around insolvency which remove assets from each of the creditors and, in particular, involve the transfer of assets to connected parties. This work reflects complex policy issues and the CLRG has indicated that it expects to report back in September. On receipt of that report, the Department will review the recommendations made and will provide for any necessary legislation as soon as practically possible.

I am committed to improving employees' rights under restructuring, but we will be addressing this issue later in the year and, for that reason, I cannot accept the amendment.

I thank the Minister of State. I am glad there is an employee representative in terms of the creditors group. Of course, he will be aware that many Senators have pushed for employees to be the preferred creditors in situations of company dissolution. That is really important. It may be a step further, but it is a step that may emerge in the legislation the Minister of State may bring forward in the autumn.

As regards the issue of collective agreements, the concern relates to micro companies that, effectively, have one, two or three employees and may not come under that collective redundancy frame. Although there may only be two or three employees, they are nonetheless entitled to be represented by a trade union and should have due and proper processes in terms of their representation. The Minister of State is correct that Ireland has what is referred to as a voluntarist approach.

Collective agreements are meant to represent a balancing of power. The idea is that workers who lack the power of capital have the power of numbers and can make their voices heard. The concern about the voluntarism approach is that companies are choosing whether they want to work constructively with workers. That is not effective in creating a constructive workplace.

At a European level, there is a push for better recognition of collective agreements because it is recognised that they contribute to better business and better outcomes for everybody. It is unfortunate that the Minister for Enterprise, Trade and Employment, Deputy Varadkar, is one of those blocking the recognition of collective agreements and blocking collective bargaining measures that have been proposed at EU level. He has written to the EU to block them. We should try to put it into national legislation because, unfortunately, the EU directive measures are being delayed and frustrated. It would have been good to start it at this level so, rather than a trickle-down approach, we begin from the ground up and start getting things right in the smallest companies.

I will make a point in response to the question of what is a small and micro company. The context for the need for this Bill is the fact small and micro companies are under pressure. Part of that context is that, unfortunately, Ireland has prioritised the financial well-being of a small number of large pharmaceutical companies by being one of the handful of countries in the world to resist while 100 countries call for an Agreement on Trade-Related Aspects of Intellectual Property Rights, TRIPS, waiver to accelerate the distribution of vaccines, the end of this pandemic and the reopening of society and of small and micro companies. We are still in limbo, worrying about variants and small and micro companies are, as a result, less able to plan. This is largely as a result of the fact that we are still looking at one or two years for the world to get vaccinated because we are unwilling to say "No" to some big companies. This point was made by the South African ambassadors to the World Trade Organization. They highlighted the economic case for a TRIPS waiver and outlined how moving on this area would free up and speed up the global end of the pandemic and benefit all economies and societies. We have seen small businesses taking a hit for the last year and a half as large companies make billions in profits. The Government is still unwilling to say "No" to the large companies and or to limit their profits temporarily to get society and the economy up and running, support small, medium and micro businesses and, most important, save lives.

It is important to remember there are macro choices here. Although this Bill deals with the small and micro, they are at the end of macro policies at a European level, where Ireland could do better. I know the Minister of State has had a strong position on this but I have to point it out in this context. I urge the Department and the senior Minister to step up and do better on collective bargaining and on a TRIPS waiver.

I want to reiterate a couple of points that have just been made. On the Minister of State’s response, those existing rules around consultation do not apply to micro companies. There is no requirement for consultation regarding someone working in a company of, I think, fewer then nine or ten people. I stand to be corrected. That is the situation the employee I spoke to a couple of months back was in. He was in a state of shock that he had no say or right of being consulted. That does not even mean negotiation. There is a big difference between consultation and negotiation. He did not have negotiation rights or even consultation rights. That is why I think this amendment is useful.

During my work on the Council of Europe I often bring this up and other countries are shocked when they hear that Ireland is one of the few countries in Europe that does not have a right to collective bargaining. I cannot say how depressing it was to see the Tánaiste write to the EU Commission asking it not to make that directive binding and to ensure that there is no step forward in terms of collective bargaining of any kind for workers. For a country of our scale and development to still be denying a basic right to work is fundamentally flawed, wrong and immoral.

I saw the Commencement matter with the positive response from the Minister of State on the TRIPS waiver. I was delighted to see the response from the Leader of this House yesterday. She said she did not want to see our country standing with big pharma and profits as opposed to the needs of people. At the World Trade Organization meeting, we need Ireland’s voice to be raised. I fear it will not be. It looks like the Fine Gael element, in particular, will align itself with big pharma as opposed to where we need to stand, which is with the people of the world.

On the final point made by Senators Gavan and Higgins, they know my position on the TRIPS waiver. I made it clear on the floor of the Seanad some weeks ago in response to a Commencement matter from Senator Higgins. Earlier this week, I replied in writing to Senator Gavan, who also wanted to raise this issue. I have made my views known internally to Government colleagues. I am at one with the Senators on that.

Collective bargaining is not under the remit of company law but employment law. Working with the trade union representative, ICTU, we have committed to establishing an employment law review group, similar to the company law review group, which will be there on a permanent basis continually reviewing legislation to look to how we can improve it. ICTU has signed up to the process, we have committed to doing it and that will happen in the fall of this year.

I will make a point on employees' rights under this summary rescue process. Employees are involved from an early stage in developing the rescue plan. The process adviser, it is stipulated in the legislation, must inform employees of his or her appointment and must give an opportunity to employees, as to all other creditors, to make an input and disclose information they have which may be pertinent to the restructuring plan. They will be consulted in relation to any plan put before the creditors. If they, as a bloc of creditors, feel the restructuring plan is unfair, they will have the opportunity to appeal it to the courts, as will any creditor. We have to remember other creditors are small companies and jobs are dependent on their survival. There are protections for employees but the best thing we can do for them is ensure their jobs are protected. The best way to do that is by giving small and micro companies an opportunity to restructure, get out from under a shroud of debt, start again and protect jobs.

I was going to make the point the Minister of State just made, which is that we want to protect jobs in small businesses and micro companies.

A point I have heard my colleague, Senator Garvey, make is that many of these employers work side by side with their employees all the time. During the Covid pandemic especially there has been a real sense that we are all in it together. There is very little difference day to day in the work all these employees are doing together to keep their companies and businesses alive. We talk about employers and employees but sometimes there is not that much of a distinction between them, and a lot of the time the employers work all around the clock to keep their businesses going.

I thank the Minister of State for his reassurance. I highlight again that a high-level working group has been established to look at collective bargaining and industrial relations.

I thank the Minister of State for his comprehensive explanation. It is very clear from his response that micro companies and small businesses are at the heart of this recommendation. That is good to hear because I am aware that small businesses have found it very hard, especially in the past 12 months or so. The fact that the Department is willing to work with them and that there has been consultation is very clear from the Minister of State's response. We look forward to supporting the Bill.

I do not know whether it is a case of hypocrisy or whether I am just confused or what is going on because this Bill is all about helping small businesses yet Sinn Féin is again bringing up the workers' rights issue. It is such a simplistic, polarising message to put across when this Bill is everything about the workers, the employees and the small businesses. I do not know what kinds of small business owners Senator Gavan knows, but all the small business owners I know are workers. They will put their pay last, before their small group of employees. This Bill is so important to help small businesses to stay afloat and come up with a rescue plan. It is a really positive thing for the workers and the employers. They are all the one. We need to stop with this polarisation and the oversimplification that anything we do for any business of any size is for the employer and not for the poor employee. I expect a much more nuanced and much more intelligent debate in the Seanad than that kind of rhetoric.

It is a pity Senator Garvey has not been paying attention. We in Sinn Féin are supporting the Bill. We supported it on its previous Stage as well.

I am not talking about Senator Gavan.

We are simply pointing out, as per Senator Higgins's amendment, that we believe it could be improved in this area. As I said, let us try to pay attention.

I take your point, Senator Gavan.

On a point of information, I was not referring to the Bill; I was referring to Senator Gavan talking about employees and employers in a really simplistic, polarised way that is not helpful.

I am conscious we need to be out by 12.45 p.m. I call Senator Higgins.

I will be very brief. Employees and employers are not being talked about in a simplistic or polarised way. It is a matter of recognising all these elements. The Minister of State has engaged very constructively and recognised that there are issues with how we manage employees. Yes, when we look at a company we should look at the employers and the employees not in a polarised way but in a way that makes sure both are represented. I know there are great companies in which everybody has made sacrifices, and employees and employers have done impossible things together to keep those companies going. However, I also know of other examples. I can think of one, a butcher's shop owned by one person, where the person who everybody thought owned it, who was there for 40 years and who is everybody's friend and the reason people went to the shop was, it turns out, just an employee for 30 years. When it went under, he got nothing. In many cases the right thing will be done. The reason we have laws and the reason the Minister of State has indicated he will look at how he can further improve employees' rights laws in the autumn - and I welcome that - is that we put laws in place for the generality as a safety net. Of course, we hope those laws will not be needed. This is a constructive debate and I thank the Minister of State for his constructive engagement on it.

Does the Minister of State wish to say anything further on this?

No. I think we have debated it. Unfortunately, I cannot accept the amendment today, but I give a commitment that in the autumn we will bring forward further legislation relating to employees' rights. I have no doubt but that it will go through the various channels such as the Oireachtas committee etc., where all Members of the Oireachtas will have an opportunity for an input. We look forward to further engagement at that stage.

Amendment put and declared lost.
Section 3 agreed to.
Sections 4 to 12, inclusive, agreed to.
Title agreed to.
Bill reported without amendment.

When is it proposed to take next Stage?

Bill received for final consideration.

When is it proposed to take next Stage?

Question proposed: "That the Bill do now pass."

Before we finish I wish to say a couple of things. I will bring the Minister of State back in in a moment. I wish you the very best and offer my congratulations to you and Aideen, both of whom I have known very well for many years. We have soldiered together as councillors and in the Oireachtas for a number of years, and I wish you and Aideen the best day on Thursday and the best for your futures together.

This is possibly the last day we will be in the convention centre. I will not say "definitely" because who knows? It is, however, the last scheduled sitting of the Seanad in the convention centre. I thank everybody involved with the convention centre - the convention centre itself for giving us the venue and all the people involved, including the broadcasting people, the catering people and the facilities people who have helped us out. There have been sittings here for longer than the time since I have been back as a Member but, on my part and I am sure on all Senators' behalf, I thank everyone for that. It was helpful to have a venue that could accommodate us when it was needed.

The Minister of State indicated that he wanted to come back in.

I thank sincerely all Members of the Seanad and the Dáil who have helped to progress this legislation and bring it to a conclusion today. I thank the Company Law Review Group, which did the initial preparatory work, the officials in my Department and the officials in the Office of the Attorney General. They have worked really hard to ensure we could get this legislation passed before the summer recess. It is important it has been passed before the recess because it is about protecting our small and micro enterprises and the jobs they support. Research by the Central Bank indicates that the horrendous financial situation of the past 18 months has disproportionately affected our small and micro businesses, 78% of which operate in sectors either moderately or highly affected by the pandemic. That equates to about 156,000 enterprises supporting 788,000 jobs. It was therefore necessary for us to give viable businesses an opportunity to be able to restructure in an administrative process, a process that will be more timely and more cost-efficient than the examinership process. Those businesses will now have the opportunity to restructure and to restart and will be able to protect the jobs they support. These businesses are present right throughout the length and breadth of this country, in every parish and every town. That is why it was so important that this legislation was passed before the summer recess. We would not have been able to do this were it not for the co-operation of all sides of the House, particularly the members of the Oireachtas committee for waiving pre-legislative scrutiny. I thank them for that. It was my priority on being appointed a Minister of State that we would have this legislation done before the summer recess.

Some people said that it was too ambitious and we would not be able to do it, but thanks to the Senators' co-operation, we were able to do it. It goes to show that when we work together in this House for the betterment of the people we are elected to represent, we can make a positive difference. I have no doubt that this piece of legislation is going to make an immense difference to many of our small and micro companies.

I thank the Senators for their support of the Bill and for their good wishes ahead of my marriage on Thursday.

It is my first time in the Chair since the Deputy has been appointed as a Minister of State. It would be remiss of me not to congratulate him on that. He can consider having the legislation passed before Thursday as an early wedding present.

Question put and agreed to.
The Seanad adjourned at 12.40 p.m until 9.30 a.m. on Thursday, 15 July 2021.