Seanad Éireann díospóireacht -
Wednesday, 17 Jun 2015

Vol. 240 No. 11

Commencement Matters

Employment Rights

Senator David Cullinane

I welcome the Minister of State. I am sure he will join me in condemning how the Clerys workers were treated and the despicable way in which they were left high and dry without wages by the company. I will give some context because this raises serious questions about company law. We raised this issue when discussing the company legislation, which we supported, that was introduced by the Government. We also published legislation dealing with the corporate veil.

Clerys was placed in receivership on 17 September 2012. Later that year, the company was sold out of receivership to Boston-based Gordon Brothers for a figure believed to be €2 million. It is reported Bank of Ireland wrote off debts of €10 million for the company and loaned the same amount to the new owners. Until its sudden closure last week it employed 130 full-time staff, who are SIPTU members, and 330 people in concession outlets, who include members of other unions. I believe eight members of Mandate are among those who have lost their jobs. The store was affected by flooding in July 2013 and was closed for four months. It is believed Gordon Brothers received €40 million in insurance money. The new owners oversaw the separation of the retail company into two elements. OCS Operations Limited dealt with the property asset side of the company before it sold the latter for a figure believed to be €29 million to Natrium on 12 June 2015.

Gordon Brothers also sold properties attached to the site for up to €5 million to other purchasers. After repaying the loan to Bank of Ireland, Gordon Brothers walked off with an estimated profit of more than €19 million in less than three years. They essentially asset-stripped the company and broke it up into two sections, and the section which employs the staff, OCS Operations, was sold off for €1 and then liquidated by Natrium, which went on to buy the company. Therefore, Gordon Brothers is away on its toes with €19 million and the workers are left penniless.

Natrium Limited, which bought the company, is a joint venture between D2 Private, which is 100% owned by Deirdre Foley and Cheyne Capital Management, a London-based property investment and hedge fund business. It is reported that Deirdre Foley is a former KPMG employee and that Cheyne holds 80% of Natrium, whose directors include Deirdre Foley. Many of the €1 billion-plus of properties owned by D2 Private before the crash were put into NAMA and sold off. It is believed that Natrium was incorporated on 27 May last as a vehicle for the purchase of Clerys property assets. The Cheyne shareholding in Natrium is held by two offshore companies, Cheyne Real Estate Credit Holdings in the Cayman Islands and the Real Estate Credit Investments PCC Limited of Guernsey. Former NAMA executive Graham Emmett, who left the agency in 2012, is a senior executive with Cheyne in its London offices.

The difficulty is that no provision for redundancy, wages, holiday pay or other staff-related costs was made in the successful bid for Clerys. Concession holders are owed an estimated €3 million. Workers have been informed by the court-appointed liquidators that they will only receive statutory redundancy entitlements of two weeks per year of service, which will be paid from the public purse through the insolvency fund. The defined contribution pension fund is not fully paid up and details of its current state of health are difficult to obtain. It is also reported - the Minister of State might be able to shed some light on this - that liquidators KPMG have also worked as auditors for D2 Private, and concern has been raised by some within the trade union movement that there is a potential conflict of interest with the appointment of this liquidator. I understand this issue was raised yesterday at a meeting between the liquidator and the trade unions.

There are a number of issues at play. The first and obvious one is what steps the Government can take and what steps it has taken to support the Clerys workers and to make sure they get fair treatment and the maximum that is owed to them. However, it also raises very serious questions about the rights of legal entities and corporates over and above the rights of employees. This is something that comes up over and over again. It is not the first time workers have been left high and dry. We saw it with Waterford Crystal, TalkTalk, Game, La Senza and Vita Cortex. Over and over again we have seen situations where this has happened. Does the Minister of State agree there is a need to bring in legislation to better protect workers? I appreciate the Minister of State is in the process of introducing legislation in regard to collective bargaining and the REA is being restored as part of that. However, this is very specifically in regard to the relationship between company law and the rights of workers. The Minister of State might inform us as to what action he is going to take to better protect workers.

Minister of State at the Department of Jobs, Enterprise and Innovation (Deputy Gerald Nash)

First, my thoughts at this difficult time are with the 134 Clerys workers and their families and with the 330 staff employed by the concession stores. They have been treated in a cold and callous fashion and simply cast aside by the new owners, with neither the respect nor dignity they deserve after, in many cases, many decades of service. Since the events of last Friday, I have been engaging very closely on this matter, staying in very frequent contact with trade union representatives over the weekend, and yesterday meeting with the liquidators in the early morning and the workers and their union representatives late yesterday evening.

As I understand it, the background is as follows. In September 2012 Clerys was bought from receivership by Gordon Brothers, a US fund which operates as a purchaser of distressed assets. Gordon Brothers set up a new company structure under OCS Investment Holdings Limited, and the Clerys employees were transferred to a 100% subsidiary, OCS Operations, under a transfer of undertakings with terms and conditions intact. I further understand the new company structure had a second 100% subsidiary of OCS Investment Holdings limited, OCS Properties Limited, which became the owner of the property.

Last Friday, it was announced that Gordon Brothers had sold their shareholding in OCS Holdings to a new company, Natrium Limited, a joint venture between a Dublin property company, D2 Private, and a London business, Cheyne Capital Management. That afternoon, OCS Operating Limited petitioned the High Court to appoint a provisional liquidator, with the court being told the company was unlikely to have sufficient moneys to make upcoming payments and was unable to pay its debts. Kieran Wallace and Eamonn Richardson of KPMG, whom I met yesterday morning, were appointed by the court. In dealing with the devastating impact of the news on the workers concerned, the liquidator put a team of ten people in place to immediately engage with the workers in those early hours after their appointment on Friday and, to be fair to them, they have been engaging directly and actively since.

My first priority on hearing the news was to work with my colleague, the Tánaiste and Minister for Social Protection, to ensure the workers receive their statutory entitlements. Officials from the National Employment Rights Authority, NERA, which comes within the remit of my Department, are working closely with the Department of Social Protection to provide advice and assistance to affected workers. Ireland's employment rights legislation provides protections for employees in difficult situations, such as those directly employed by OCS Operations Limited.

The Minimum Notice and Terms of Employment Act 1973 requires employers to give notice of termination or to pay employees in lieu of notice, and outstanding wages, holiday pay, commission and bonuses are protected by the Payment of Wages Act 1991. In the event that an employer is insolvent, the employees are entitled to seek payment from the State through the insolvency payments scheme, which is administered by the Department of Social Protection. The employees may also be entitled to payment from this fund in respect of holiday pay, outstanding pay and minimum notice, among other things.

The Department of Social Protection has assembled a team of people to meet and advise the workers in regard to entitlements to jobseeker payments, secondary payments such as rent supplement, and future options in regard to alternative employment, training and education. Arrangements have been made for Department of Social Protection staff and staff of NERA to meet workers later today in Liberty Hall. In addition, the Department of Social Protection is informing its network of local offices in the greater Dublin area of these developments to ensure that claims from affected workers are processed in a speedy and sensitive manner.

Claims are made through the person legally appointed to wind up the company. Moneys owed up to the appointment of a liquidator are secured by the Social Insurance Fund, subject to statutory limitations. Entitlements are limited to a maximum weekly rate of €600 and there is a limit of eight weeks pay for arrears of pay, sick pay or holiday pay. A representative of the liquidator has verbally advised the Department of Social Protection that all staff have been made redundant and that P45s will issue this week. The liquidator will seek, on behalf of workers, payment from the redundancy payments scheme in respect of statutory redundancy and from the insolvency payments scheme in respect of unpaid wages, accrued but untaken leave and payment in lieu of statutory notice. It is intended that individual meetings will be held between the liquidator and workers affected to determine, on an individual basis, the extent of liabilities. The Department of Social Protection will deal promptly with individual applications submitted in respect of the insolvency payments scheme by the liquidator.

The situation regarding the staff employed by the concessions is somewhat different. I will be meeting later today representatives of the 50 concessions. Many of these concessions have other outlets, and it may be the case, for example, that staff can be redeployed to other locations. The concession holders have very immediate concerns in regard to directly-owned stock and money which they say is owed to them from their own direct sales proceeds. The liquidator has indicated to me that he will be dealing with these issues as a matter of priority and I understand stock is to be returned to concession holders later today, which I welcome.

I consider it vital that workers are treated with dignity and respect at all times, and that they and their representatives are consulted on all matters affecting them. There are clearly entities involved in this transaction that did not respect that concept and left it to court-appointed liquidators to do the communicating for them. The liquidators have met the unions. It is welcome that they will be sitting down with the OCS Operations employees individually to assist them in filling in the necessary forms for their statutory entitlements.

What has happened at Clerys is very shocking and those who are directly employed by it and those who own and work in concession stores have been treated appallingly. Clerys is part of the wider Dublin city centre community and the Clerys building represents an iconic landmark which has played an important part in the life of the city and the country for well over 100 years. I intend to engage with the new owners behind Natrium Limited who should indicate their plans for the property at an early date and how its employment potential can be maximised. I would go further and say I believe it is incumbent on Natrium Limited to sit down with the staff and their trade unions.

Senator David Cullinane

I welcome the Minister of State's call for the company to meet unions and staff, which should happen as a matter of courtesy. It should have happened before now and while that is outside the control of the Minister of State, we can only make that call.

It again raises the question as to whether the former owner, Gordon Brothers, engaged in sharp practice when it broke up Clerys into two separate companies. OCS Investment Holdings, the company that held the property and assets of Clerys, walked away from the sale of the site with a handsome profit, while OCS Operations, which employs the staff, was sold off for €1 and liquidated before the company could be required to give workers in Clerys the 30 days' protective notice required by law. While none of this was illegal, it was in train for two years and was potentially an example of sharp practice. The company knew exactly what it was doing. It engaged in the asset-stripping of Clerys and maximised its profits before walking away from the company, leaving its workers high and dry.

We all share the Minister of State's welcome expression of shock. However, we must ensure these events are not repeated. Company law was must be reviewed to ensure the rights of a legal or corporate entity are not allowed to trump the rights, needs and responsibilities of workers. Sinn Féin will work with the Government and support any legislation it may introduce to address this issue. Failing this, we will consider introducing our own legislation.

I welcome the moves afoot to ensure the workers are paid under the redundancy payment scheme. It is good that progress is being made quickly and I hope workers will receive payment as soon as possible.

Deputy Gerald Nash

The matters raised by the Senator are of great concern to all right-thinking people. In recent days, a number of representatives of business organisations have contacted me to express disgust at the manner in which the workers at Clerys have been treated and the practice that led to their dismissal. The Senator raises some important matters which, strictly-speaking, fall within the ambit company law. I understand the Taoiseach, speaking in the Dáil yesterday, expressed concern about the adequacy of company law, the way in which it interacts with employment law and the position in which employees may be left in circumstances such as the Clerys case. I do not have any direct responsibility for the company law functions of the Department. However, the Taoiseach has asked me to do a report on this appalling episode. I will be supported in compiling this report by officials in the Department of Jobs, Enterprise and Innovation as, strictly speaking, company law matters fall within the brief of the Minister for Jobs, Enterprise and Innovation, Deputy Richard Bruton. The Minister will work with us in reviewing this entire area. Ultimately, it may be necessary to have the matter examined by the Company Law Review Group, a standing body which has performed extremely well in recent years in addressing lacunae in company law.

Many people find this particular episode galling. All right-thinking people, including Members, will condemn the treatment of the Clerys workers. Since late last Friday evening, when this issue first came to my attention, I have been doing my utmost to support the workers, both individually and collectively, and I will continue to support the staff and trade unions. I will work to address any gaps identified in Irish law that allow circumstances such as these to arise. Two separate areas of law arise in this regard, the first of which is a range of different elements of company law, while the second is employment law.

We must ensure the rights of employees are protected and cases such as this are avoided, if possible, in the future. If legislation or regulations need to be changed, the Government and all parties in the House will need to front up and say this. There is certainly a strong case for having the matter reviewed. The Taoiseach stated in the Dáil yesterday that he had asked me to provide him with a report and I will do so at the earliest possible date. Ultimately, the Company Law Review Group may need to examine all of the issues in this case and it is possible that a change in the law will be required. I look forward to receiving the review group's advice on this important matter.

Planning Issues

Senator Paul Bradford

I am pleased the Minister of State at the Department of Transport, Tourism and Sport, Deputy Ann Phelan, is present, given that she also has responsibility for rural affairs. The regeneration of rural areas and the ability to sustain farm families will depend on having in place planning rules, guidelines and laws that are appropriate, fair and balanced. I am concerned at what appears to be a blanket policy being pursued by the National Roads Authority on new developments, specifically regarding permission for new access points to national secondary routes. This policy is having a detrimental impact on farm families.

I speak on behalf of the sons and daughters of farmers who take over and operate a family farm and, understandably, wish to build a home. They find it increasingly difficult to obtain planning permission for a home where the farm adjoins a national secondary route. I am aware of cases where local authorities, in their wisdom and having taken into account all relevant factors, have decided, on balance, to grant planning permission and the National Roads Authority has successfully appealed the decision to An Bord Pleanála and had it overturned.

I am fully cognisant of the need to ensure road safety is at the core of any decision on planning. I would run a mile from any planning application if I believed it would compromise road safety in any way. However, the idea that all developments on national routes and all access to them will generate excessive traffic and create road hazards is not fully accurate. Those involved in policy in the National Roads Authority and local authorities who are demanding that sons and daughters of farm families build homes elsewhere should consider the road safety issues being caused by young farmers having to drive miles every day to reach their farms. What about the road safety issues that arise for a dairy farmer who must drive one or two miles to his or her place of occupation twice in a single night? Each case must be considered on its individual merits.

As a former member of a local authority, I worked on local development plans, which are, in the main, balanced and fair. It appears, however, that the National Roads Authority now rules the roost in terms of council decision-making on national secondary routes. I accept that the road works planned on some of these routes need to be taken into account. Given her responsibility for preserving, developing and defending rural areas, the Minister of State must speak to representatives of the National Roads Authority and local authorities to ensure decisions are fair and balanced. We must not have a blanket policy emanating from Waterloo Road or the Department. Each local authority, through its highly qualified road engineers, planners and directors of services, must be in a position to use its discretion with wisdom and caution.

If the Minister of State wants to succeed in regenerating and rebuilding rural Ireland, she knows as well as I do that, at a minimum, we must ensure strong farm families and farming communities are maintained. If one is fortunate or unfortunate enough to live adjoining a national secondary route, one's options from a planning perspective are very limited. I seek the Minister of State's assistance in this matter by taking a hands-on approach with the National Roads Authority and local authorities to ensure they show a degree of common sense.

I stress again my unwavering view that road safety must never be compromised. Nevertheless, it is possible to have regard to road safety and ensure families are accommodated from a planning perspective.

Minister of State at the Department of Transport, Tourism and Sport (Deputy Ann Phelan)

I thank the Senator for raising this important matter. I assure him that I understand the pressures faced by those in rural Ireland regarding this issue. I thank him for acknowledging that road safety is paramount.

The decision as to whether to grant planning permission in any particular case is a matter for the relevant planning authority, to which the Senator has referred, in the first instance, and for An Bord Pleanála in the event of an appeal. In making decisions on planning applications, planning authorities and the board must consider the proper planning and sustainable development of the area, having regard to the provisions of their development plan, any submissions or observations received and relevant ministerial or Government policies, including current guidelines issued by my Department under section 28 of the Planning and Development Act 2000, as amended.

My Department's guidelines for planning authorities on spatial planning and national roads 2012 are aimed at ensuring that roads planning and policy and development planning and management processes are appropriately and effectively aligned and encouraging a collaborative approach and early engagement between planning authorities and the National Roads Authority in order that transport and land use planning considerations are taken into account at the early stages of development plan and development management processes. This is to ensure future development at locations on, or in the vicinity of, national roads is guided to the most suitable location and that work on Ireland's national roads network is planned for and managed in a complementary and integrated manner.

Section 2.6 of the guidelines outlines that, in exceptional circumstances with regard to the normal limitations on the provision of access for new developments to national routes, planning authorities may identify stretches of national roads where a less restrictive approach may be applied but only as part of the process of reviewing or varying the relevant development plan and having consulted and had regard to the advice of the NRA in line with the approach set out in the guidelines. The guidelines were issued under section 28 of the Planning and Development Act 2000, as amended, and planning authorities and An Bord Pleanála are required to have regard to them in the performance of their functions. It is, therefore, a matter for planning authorities to consider the implementation of section 2.6 of the guidelines in respect of sections of relevant national roads and in the context of its statutory development plan. I continue to keep the implementation of the guidelines under review.

Senator Paul Bradford

I am glad to learn from the Minister of State that the guidelines for planning authorities on spatial planning and national roads 2012 appear to be at the centre of this debate. She has said she is keeping the guidelines under review. Will she generate or open a new national debate on the guidelines or is it simply a matter of people contacting her directly to make suggestions? Will it be possible to amend the guidelines to try to deal with situations like those I have mentioned?

I note that the Minister of State has said planning authorities may identify stretches of national roads. However, the cases brought to me would not require a policy on a mile, a mile and a half or a two mile stretch of national road; rather, they are very individual issues and problems. Is there a capacity to bring individual cases to the attention of the Minister of State in terms of the guidelines? I know that it is not her job and we have moved a long way from a time when the Minister for the Environment, Community and Local Government was responsible for making the final decisions on planning. It is now a matter for An Bord Pleanála.

If we have views or concerns about individual cases, how the guidelines impact on them and how a particular case should impact on the guidelines from an amendment perspective, can the Minister of State be informed? Can she make recommendations on such cases?

Deputy Ann Phelan

I remind the Senator that I have to be mindful of individual planning applications and the legal process around them. To try to be helpful to him, perhaps if he was able to document the individual cases to which he referred and tabled a Commencement matter for the Minister for Transport, Tourism and Sport with the same questions he asked me, we could pool the information to determine whether we could develop some kind of review or something we could put to individual local authorities. Such an approach could bring to our attention how many such cases exist and whether the issue arises in other parts of the country or is an issue across the board. I would be very willing to work with the Senator on this matter if he felt it might be helpful.

Sitting suspended at 11.05 a.m. and resumed at 11.30 a.m.