I propose to take Questions Nos. 163 and 164 together.
Under the Redundancy Payments Acts 1967-2007, the objective is to ensure that statutory redundancy payments, due to eligible employees on being made redundant, are made in accordance with the legislative provisions. The legislation places the onus, in the first instance, on the employer to discharge the obligation to pay redundancy entitlement to employees. On so doing, the employer is entitled, by virtue of the pay related social contributions made to the State, to recover 60% of the lump sum redundancy payments paid out to employees.
In the case of liquidations/receiverships, the Department acts in locus of the employer and pays the redundancy lump sums directly to the employees and then seeks to recover from the appointed liquidator/receiver the 40% which the employer would have been due to pay to the employees.
In instances where the employer does not formally wind the company up but goes into informal insolvency and is unable to pay the statutory redundancy entitlements, the Department seeks from the employer evidence of inability to pay the entitlements to the employees. This involves requesting a statement from the company's Accountant or Solicitor attesting to the inadequacy of assets to make the redundancy payments and, the latest set of financial accounts for the company. The employer is also asked to admit liability for the 40% liability attaching to the company arising from the redundancy payments. If this information is provided to the Department, the employees are paid their redundancy entitlement from the Social Insurance Fund. Upon payment, the Department pursues the company for the 40% share which the company would ordinarily have been expected to pay to the employees. In this instance, the Minister becomes a preferential creditor in a winding-up situation in recovering amounts paid from the Social Insurance Fund and this debt stands against a company for as long as it is live on the Companies Register at the Company Registration Office.
In instances where the employer is not in a position to provide the documentation as outlined, the Department advises employees to seek to establish their rights and entitlements to Redundancy before the Employment Appeals Tribunal (EAT). A positive determination of the EAT enables the Department to pay the redundancy entitlements of the employees directly to them.
Of course it is the case that company failures are a normal facet of business life and it would be unduly penal if, due to a company failure, all the directors and officers of that company were to be prevented forever more from setting up again. That is, provided it is clear that their actions resulted from genuine business failure as opposed to acts of recklessness or inappropriate behaviour.
Under Company law, there are provisions dealing with companies who fail and re-engage in trading under a new name in particular, under the provisions of Part V of the Company Law Enforcement Act 2001. Under section 56 of the Act, Liquidators of insolvent companies are required to submit a report to the Director of Corporate Enforcement within 6 months of their appointment. This report outlines the circumstances of the insolvency and addresses whether the directors acted honestly and responsibly in relation to the conduct of the company's affairs. Liquidators are further obliged to bring High Court proceedings for the restriction of such directors unless relieved of that obligation by the Director of Corporate Enforcement.
A restriction declaration, if made, prohibits an individual from acting, either directly or indirectly, as an officer of a company or from being involved in its formation or promotion for five years, unless the company is adequately capitalised.
The Director of Corporate Enforcement has the power to bring any other prosecution for breaches of the Companies Acts as deemed appropriate in any individual case. If the Deputy is aware of any activities in which the Director may have an interest, I would encourage him to have that information forwarded to the Director of Corporate Enforcement.