Other Questions
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?
9Deputy Dara Calleary asked the Minister for Jobs; Enterprise and Innovation if he will publish the Forfás report presented to him on the impact on employment and competitiveness of changes to sick pay; and if he will make a statement on the matter. [11539/12]
View answerAs I indicated to the House in reply to Questions Nos. 129 to 131, inclusive, from Deputy Willie O'Dea on 6 December last, I asked Forfás to examine the potential impact on competitiveness and employment of statutory sick pay, if such a scheme were to be introduced in this country. I indicated at the time that it would be premature of me to comment on the report provided to me by Forfás until the Cabinet has completed its consideration of the issue.
I reiterated the position to Deputy O'Dea in a topical issue debate on Tuesday, 21 February, when I explained that interactions between an agency and a Minister engaged in a consultative process are not generally published. For this reason, I do not propose to publish the Forfás report at this stage.
The Minister for Social Protection, Deputy Joan Burton, who has policy responsibility for the illness benefit scheme, held a consultative meeting recently to discuss the feasibility and potential impacts of introducing a statutory sick pay scheme in this country. That was very much a first step in considering a range of issues that need to be examined in detail before any proposals can be progressed to possible implementation. The Minister, Deputy Burton, clearly indicated at the consultative forum that nothing has been decided yet on statutory sick pay.
Forfás attended the Minister's consultative forum and commented that any proposal that would increase costs for business would be of concern, and that further work was required to assess the potential cost of the proposal to enterprise, how these costs might be borne across different sectors, what implications the costs might have for employment, and what other actions could be taken to achieve the required goal of reducing the cost to the Exchequer of illness benefit.
I also appreciate the concerns of business representative bodies about the cost a statutory sick pay scheme might have on businesses. For those reasons, while I recognise that there are legitimate issues regarding the management of illness benefit budgets, it is clear that further research is required before any decision can be made by the Government on a statutory sick pay scheme.
The Minister has said that it is premature to publish the Forfás report at the moment. Could I deduce from this that he intends to publish the report at the appropriate time? Could I ask him for an assurance now that he will publish the report before the Dáil debates the matter because if a scheme of this nature is introduced, most assuredly it will be contested and debated in the Dáil?
Does the Minister agree that it is only fair that if one has an expert report on the implications for employment of the proposed action by the Minister for Social Protection that the report, information and research should be available to the Dáil? What interaction has the Minister had to date with his colleague, the Minister for Social Protection, about this potential scheme?
The Deputy is well aware that Government discussions are privileged and are not made known. Where decisions of this nature occur for consideration they are rightly protected by Cabinet confidentiality and collective responsibility, which are very important. Any presentation of such a proposal will be accompanied in the usual way by a regulatory impact assessment. Whatever information is available will be presented to the House in order for Members to see its impact. That would be the normal course which I am sure will be followed in this case.
I put it to the Minister that such a scheme would be unjust in that employers are already paying illness benefit substantially through employer's PRSI. There is no doubt the cost of such a scheme would be passed on to employees. It has a tremendous capacity to destroy jobs at the very time we least need to do something of that nature.
What are the Minister's views on the reasoning put forward that part of the effect of such a scheme would be to combat and reduce absenteeism in the private sector? Does he agree that this is a baseless argument, in that absenteeism in the private sector is running at approximately 2.5%, which is less than half of the public sector's figure?
As the Taoiseach stated last week when the Deputy's leader asked this question, absenteeism is a greater problem in the public service, which generally accounts for a relatively small proportion of PRSI. We need to examine this issue. Most small businesses do not have a sick scheme and this would be a fresh burden were it applied to them.
On the other side of the discussion, the OECD shows that the rate of reliance on invalidity and sickness payments in Ireland is higher than it is in comparable countries. When demographics are taken into account, it is higher still. This presents an issue. A debate that would give representatives of small and larger businesses an opportunity to have their say would be important. We are out of line in this area. If a large number of people must receive long-term sickness payments, they lose the opportunity to use their potential, the State suffers a loss and there is a cost to the Exchequer. The debate is legitimate and we need policy proposals that balance a number of requirements.
10Deputy Mick Wallace asked the Minister for Jobs; Enterprise and Innovation when the development capital scheme outlined in the action plan for jobs will be operational; the way Enterprise Ireland will identify indigenous companies eligible for the scheme; if consideration has been given to targeting indigenous companies operating in unemployment blackspots such as the south east; and if he will make a statement on the matter. [11569/12]
View answer42Deputy Mick Wallace asked the Minister for Jobs; Enterprise and Innovation if priority will be given to indigenous companies located in unemployment blackspots such as the south east in addressing the funding gap for mid-sized, high growth indigenous companies with significant prospects for jobs and export growth, as per the development capital scheme outlined in the action plan for jobs; if he will detail the time frame for the design and launch of this scheme; and if he will make a statement on the matter. [11570/12]
View answerI propose to take Questions Nos. 10 and 42 together.
The development capital scheme as outlined in the Action Plan for Jobs 2012 has been developed to complement the existing range of financial supports offered by Enterprise Ireland. Other initiatives are already in place for the provision of capital at the early stage and scaling phases and a clear market failure was identified in the availability of risk capital for established companies seeking to sustain growth and achieve greater scale. Longer term investment capital is not readily available to growth-focused companies in the form of debt or equity and there is little private equity funds or debt available to innovative small and medium-sized enterprises, SMEs. This situation has resulted in an equity gap, which is constraining the development of a key cohort of established growth companies. Development capital can be defined as equity funding for the expansion of established and profitable firms, that is, those that have passed the start-up stage.
It is proposed that the scheme will be launched and marketed by end of the first quarter of 2012. This will entail a call by Enterprise Ireland for expressions of interest from fund managers followed by a three-month period prior to a closing date. The timing of actual investments under the scheme will depend on the ability of the fund managers selected from the expressions of interest to raise the matching funding to "close" their funds and to commence investing. While both funds are development capital funds - there are two tranches - aimed at established companies, they will be managed by separate managers, thereby generating competition in the market. Investment in two funds also allows Enterprise Ireland to commit to two funds with slightly differing investment strategies, thereby benefiting the market.
The scheme will be demand led and will target the cohort of companies that are growth focused. It will be open to all firms in that cohort regardless of their location in Ireland. However, under the south-east action plan, Enterprise Ireland is taking steps to target opportunities for start-up and expansion among enterprises in the region. These are the sort of growth-focused companies that would avail of the fund.
We are all aware that Ireland is organised in a centralised fashion and it is not easy for the Minister to address counties individually. Instead, he must discuss the south-east region. County Wexford's population is 145,000 whereas County Waterford's is 113,000, yet no town in Wexford could even dream of having the benefits enjoyed by Waterford city. Wexford loses out due to the centralised way Ireland is organised.
The unemployment rate in the south east is 18.9% whereas the national average is 14.2%. In the Action Plan for Jobs 2012, the section on assisting indigenous business to grow by accessing finance reads: "Design and launch a new Development Capital Scheme, aimed at addressing a funding gap for mid–sized, high–growth, indigenous companies with significant prospects for jobs and export growth." I have asked the Taoiseach and the Minister for Finance about this matter, but a strategic investment bank as promised in the programme for Government would be of significant benefit to many people in the indigenous business sector. Will the bank ever come on stream or has there been a change in plan?
I must call the Minister, as we are almost out of time.
The proposal on a strategic investment bank is being studied within Government. A series of banking products are emerging from the Government, for example, the micro-finance product, the partial loan guarantee product, the development capital product and the innovation funds. We are providing products across the range of SME needs to respond to what is recognised as a market failure in the banking system. The banks are risk averse and are not meeting businesses' needs. Maybe they never did. They need to be refocused on the needs of export-led, small companies.
A strategic investment fund is being established. This will tap into the National Pensions Reserve Fund, NPRF, and make funds available to be drawn down by small companies. While it is not a bank in the strictest sense, we are introducing a range of banking products to complement what is available from the banking system and to address the issues raised by the Deputy.
Written Answers follow Adjournment.
