Dáil Éireann Debate, Wednesday - 29 February 2012
8Deputy Richard Boyd Barrett asked the Minister for Jobs; Enterprise and Innovation if he intends to bring forward legislation to ensure that the treatment of workers such as those at La Senza, Jane Norman, Lagan Brick and Vita Cortex does not happen again; and if he will make a statement on the matter. [11609/12]
View answerThe cases referred to specifically by the Deputy relate to a range of circumstances for which several legislative provisions exist.
In the cases of Vita Cortex and Lagan Brick, the issues at the heart of the disputes fall primarily in the industrial relations sphere. While I remain concerned the issues at the centre of these disputes have yet to be resolved, I believe the parties to each of them should be capable themselves of finding resolutions drawing, as appropriate, on the experience and expertise of the Labour Relations Commission and the other dispute resolution services of the State.
The difficulties that have arisen with La Senza and Jane Norman relate mainly to the means by which the intentions of both companies were communicated to staff. Such a failure to keep employees adequately informed of developments and to provide adequate notice of redundancies worsens an already difficult situation.
The Protection of Employment Act 1977 places an obligation on employers to consult employees' representatives on proposals to create collective redundancies. It also places obligations on such employers to supply specific information on these redundancies as a means of providing an opportunity in which to consider the capacity to avoid or lessen the effect of any such redundancies. The Act also places an obligation on such employers to inform the Minister in writing of their proposals to create such collective redundancies.
Both Jane Norman and La Senza were placed into administration by the UK courts. In this jurisdiction, certain exemptions from the collective redundancy obligations of employers are provided for where they arise as a result of an employer's business being terminated following bankruptcy or wind-up proceedings or for any other reason as a result of a decision of a court. I have asked my officials to examine, together with the Office of the Attorney General, whether these exemptions should continue to apply.
The Minister will agree the treatment of the workforce in Vita Cortex, Lagan Brick, La Senza and Jane Norman was outrageous, unacceptable and should never be repeated. Given the current recessionary environment, it is very likely, although I hope it will not be the case, that we will see workers in other firms which go into liquidation or administration finding themselves in the same unacceptable circumstances. The Minister seems to be saying it is the status quo, however, that we do not have to do much. He suggested some possible review of how redundancy is communicated to workers.
Unless something changes in this regard, workers will draw the conclusion they need to engage in occupations to vindicate their rights with rogue employers. The workers in the companies in question only gained some, not full, satisfaction because they engaged in occupations.
Will the Minister ensure companies cannot be allowed to hide assets elsewhere in other companies or subsidiaries in their possession to avoid paying workers what they owe them? In cases of administration or liquidation, can we not put an obligation on the employer to ensure workers get first call on moneys owed to them?
Thank you, Deputy. I will allow you come back with a supplementary question.
I sought to draw attention to the fact the disputes in question are different in their nature. I signalled we need to look again at the law in the cases of the Jane Norman and La Senza disputes where effectively an administration decision in the UK courts led to these companies closing. There is an exemption in law from the terms of the Protection of Employment Act 1977 where a company is in liquidation or the court has initiated the closure. I said we are examining whether that remains a valid approach. If a liquidator is appointed to a company, for example, should the liquidator carry forward the obligations to consult with the employees, operate a 30-day period and so on?
The issue of company structures being used to conceal assets goes well beyond labour law into much wider issues of company law. The Office of the Director of Corporate Enforcement looked at the company structures in the case of one of those companies to which the Deputy referred. While he found there were complex transactions, there were no grounds to indicate illegality in what had been done.
On the second point, it is not just a question of whether there was illegality. It is a question of whether the law is robust enough to vindicate the rights of workers in a case where the owner of a company has assets and moneys elsewhere which, if they could be accessed, would discharge his redundancy payment obligations to the workers instead of leaving them high and dry. The Minister should be considering legislation to ensure this will be the case.
I welcome the fact the Minister is reviewing the exemptions under industrial relations legislation. Would that ensure there could be no question that employers or the administrators who are subsequently appointed could act in the same manner as Jane Norman? Jane Norman is up and running again and is employing other people on lower rates while the company still has not paid off the workers it let go last summer. Is it the purpose of the review to ensure that this will not happen again and that those workers will be paid?
The Deputy raised this issue on the previous occasion and I have checked it out. What happened in respect of Jane Norman is that some of the outlets were sold to an entirely new company by the administrator when it was appointed. The new company also purchased the brand "Jane Norman". Jane Norman Limited remained the company that had a responsibility to the workers employed. The new company that acquired the brand, the goodwill and certain outlets does not have a legal obligation for the activities of the previous company. It purchased the company out of administration. It is not a phoenix-like situation where the same company has re-emerged but the new company is using the old brand as a matter of trading goodwill.
The goodwill was built up by the workers.
Yes, but the company is operating legally.
Currently, a total of 29,000 people are awaiting their statutory redundancy claims. That is an incredible figure. People are also waiting ten months to get minimum pay to which they are entitled from businesses that have been wound up. Has the Minister spoken to the Minister for Social Protection to ensure the issue is resolved for those individuals, many of whom are suffering greatly from the lack of income and are now waiting for the State to get its act together and to solve the problem?
The Minister mentioned the Vita Cortex situation and the complexities around it. The question was whether he is considering legislation to ensure that this can never happen again. That is an important point. Today the workers in Vita Cortex are going into their 76th day of occupation in the factory as the dispute has not yet been resolved. The important issue is that once the dispute has been resolved we must introduce legislation to ensure it never happens again.
The Minister is dead right to say that much of the behaviour of companies that leaves a lot to be desired is not illegal. However, I wish to raise a different point, that much of the behaviour should be illegal. Too often what companies do is legal but it should not be.
Many issues have been raised. The Minister for Social Protection has been intimately involved with the Vita Cortex situation and moved rapidly to ensure that the process that is in place under law where an employer is unable to pay was triggered. I acknowledge that there is a long waiting list for redundancy payments but in this case the Minister intervened directly to ensure that there would be a quick response.
It is clear that the cases of Vita Cortex and Lagan Brick are continuing industrial relations problems. We are seeking to resolve them through the labour relations structures and we will continue to work on them. I met the workers in Vita Cortex just the other day. I fully understand their frustration at what has happened. We sincerely hope we can resolve the problem. On the issue of future reform of the law, I am actively examining the issue whereby putting a company into administration automatically seems to close down some of the obligations. We must look at that afresh.
Deputy Wallace raised wider issues, which Deputy Boyd Barrett also raised, of company law, the relationships between related companies and the priority of various debtors in wind-up situations beyond those involved in the disputes in question. It is clear that the State has moved to ensure that workers are protected through the insolvency fund in the event of a company winding up. The State has not intervened in cases that go beyond statutory redundancy entitlements. Changing company law is a much wider issue on which I would have to take advice. It is not strictly within the sphere of employment law; it is a much wider issue that would have many knock-on effects.
Will the Minister examine the possibility of introducing legislation?
