I move amendment No. 86 :
To delete subsections (3) and (4).
The reason for this amendment is given in the brief circulated to the members of the Committee.
SECTION 285.
Will the deletion of subsection (3) have the effect of restoring the priority which the State enjoyed under the 1924 Act? In other words, has the Minister had second thoughts?
No. What will happen is that it will restore it in part; it was to be removed in part only. We are restoring it in part in contemplation of the whole being taken out before long. That was explained in the brief which was circulated. It is probably a cleaner job to take it out in its entirety.
Perhaps there might be an amendment to the Finance Bill?
It would be, I take it, in the next Finance Bill.
In the meantime, in respect of winding up in the next year after this Act comes into force the State preference in the Finance Act, 1924 will continue to prevail.
I would say this Act probably will not be in operation by the time of the next Finance Bill.
Is the Minister able to give an assurance that there will be changes in the next Finance Bill?
That is one question that evokes evasive answers at this time of the year. I can only say that the Minister for Finance has indicated his willingness to introduce an amendment.
Amendment agreed to.
I move amendment No. 87 :
To delete subsection (14).
The reason for this was circulated in the brief. It has now been ascertained that this subsection has no meaning in relation to the Holidays (Employees) Act, 1961. Section 10 (3) of that Act provides that an employee, whose employment is terminated, shall be entitled to holiday remuneration calculated on the basis of the period which he has already worked in the employment year. By section 287 (2) (d) an employee will in future be entitled to preference in respect of the full amount of any accrued holiday remuneration due to him as determined by the Holidays (Employees) Act, 1961. In so far as employees of the type covered by the Holidays (Employees) Act, 1961, are concerned, there is, therefore, no need to go any further.
Is it clear that in the circumstances against which this amendment is set there will be a priority for accrued holiday remuneration in respect of bankruptcy in the 1961 Act?
It is not necessary to provide it in the Holidays (Employees) Act, because it is specifically provided for here in subsection (2) (d). To find out the amount due you go to Section 10 of the Holidays (Employees) Act, 1961.
I was wondering why it was repeated. Are these priorities the same as at present?
There is quite a number of changes in the priorities. The priority for wages and all sort of things have been increased substantially and there have been alterations in the law relating to priority for Workmen's Compensation. There is an entirely new provision for the amount due in respect of accidents otherwise than under the Workmen's Compensation Acts. The reference to holiday pay is also new.
Amendment agreed to.
Question proposed : " That Section 285, as amended stand part of the Bill."
Is there any good reason why arrears of income tax should get priority over arrears of wages and salaries or other arrears under the Social Welfare Act? Apart from the fact that the State wants to get its pound of flesh, is there any reason why such insurance under the Social Welfare Act which the weaker section of the community get should not be included?
There is not any preference for State debt. Subsection (9) says : "T he foregoing debts shall rank equally among themselves . . ."
These are prior to all other debts and State taxation.
In this section, the Minister is not going on the recommendations of the Company Law Reform Committee. Would the Minister like to justify his departure from the Committee's recommendation?
In Page 23 of the Explanatory Memorandum which has been published the second last paragraph sets out the extent to which the recommendations of the committee are being accepted.
Of course, in actual fact as a result of the deletion of subsection (3) until such time as the law is amended, we are doing nothing at all about these recommendations.
But the repeal of the 1924 provision will make a substantial difference in future.
The workers and salary earners are given four months preference. The Company Law Reform Committee expressed very strong views on this matter. They strongly urged that the State should be put on a par with their creditors. The State is a very large shareholder. It surely cannot be intended that small traders or small creditors are in a better position to bear losses in insolvency than the State? I would urge the Minister to have second thoughts on the matter and to implement the recommendation to the full.
I will accept the suggestion of having second thoughts on the matter.
Perhaps we could resume on this section next week?
Can we not clear it up now?
There is another matter the Minister might like to think over. The point was raised on the Second Stage. Certain State institutions are in a position to blackmail a liquidator or executor into giving preference, in particular the ESB and the Department of Posts and Telegraphs. The Department of Posts and Telegraphs had a provision to arrogate to themselves a certain preference. They took the line with the liquidator or executor that they would cut off his connection. Any person in that position trying to carry on business obviously needs a telephone connection and a supply of electricity. To my mind, it is a most improper action by these two bodies to blackmail liquidators or executors into giving them preference or not.
In that case, there is provision for the courts to restrain those bodies. It is not in this section.
I do not think it applies to this section, nor even to company law as a whole.
Workmen's Compensation in the case of bankruptcy has turned out to be a difficult matter to cover. A workmen's compensation payment may be a payment in respect of loss of a limb or the infliction of some permanent infirmity and the workers whole means of subsistence depends on whatever rates he gets under the Workmen's Compensation Act. It may be a long continuous payment. Some have gone on for years and years. If you bracket an injured workman with other claimants and there is a limited sum available for distribution, some of the claimants who have only just a single account with the bankrupt firm may not then find it so difficult to get their needs satisfied; but if you think of trying to provide for the injured workman for a period of 10 to 15 years, you may find there is difficulty in finding the necessary cash to cover him over a long period. There have been complaints from time to time in the case of an injured workman trying to get his regular weekly payment. We should do whatever we can for the workman.
There is a useful provision about this in the Civil Liability Act. If there is a contract of insurance the funds received under it must be put into a separate compartment and are available only for paying claims relating to the risk insured. The other creditors have no right to a share of that fund. This applies in the winding up of companies and in the case of bankruptcy.
Are you sure it provides for workmen's compensation?
Under the Civil Liability Act, either in winding up or in bankruptcy, there is what might be called a separate fund which is not available to other creditors and is reserved to meet the claims of the injured parties only.
Have you the reference in the Civil Liability Act?
I think it is Section 62, but I am not sure. It is towards the end of the Act.
You did not promise anything about my question in regard to the ESB.
I thought it was not relevant to the section or to company law as a whole. The powers given to the Post Office and the ESB are given under other Acts of Parliament and any amendment to these would be appropriate to those particular Acts.
Perhaps we could give the Minister an opportunity of coming back to an amendment at a later stage to override this provision in Section 285 having the effect that these preferences shall not be departed from.
We agreed initially that members of the Committee will have a right to submit amendments on recommittal.
Question put and agreed to.
The Committee adjourned at 9.40 p.m. until 4 p.m. on Tuesday, 9th April, 1963