Dáil Éireann Debate, Wednesday - 31 January 2007
128 Mr. M. Brady asked the Minister for Enterprise, Trade and Employment the reason Irish Ferries received the €4.3 million rebate; the further reason that under the Redundancy Payments Act 2003, the staff were deemed to be made redundant; the amount of the total redundancy package; the average amount each worker received; and if he will make a statement on the matter. [2574/07]
Amharc ar fhreagra141 Mr. Eamon Ryan asked the Minister for Enterprise, Trade and Employment the cost to the State of the redundancy rebate to Irish Ferries; and the reason that informed the decision, with specific reference to the Redundancy Payments Act 1967. [2718/07]
Amharc ar fhreagra159 Mr. Ferris asked the Minister for Enterprise, Trade and Employment the contacts, written or verbal, his office has had with Irish Ferries in the past three months; and if he will make a statement on the matter. [2616/07]
Amharc ar fhreagra196 Caoimhghín Ó Caoláin asked the Minister for Enterprise, Trade and Employment the cost to the State of contributing to the cost of making redundant 500 Irish seafarers employed by Irish Ferries. [2610/07]
Amharc ar fhreagraI propose to take Questions Nos. 128, 141, 159 and 196 together.
In December 2005, agreement was reached between SIPTU, the Seamen's Union of Ireland and Irish Ferries on the number of redundancies to be effected, voluntary severance packages to those workers taking redundancy, the terms and conditions of those workers opting to remain with Irish Ferries, the terms and conditions of agency workers for a specified period and the maintenance of existing arrangements. Following this agreement, 447 employees were made redundant. Irish Ferries applied for a rebate under the statutory redundancy scheme on 17 February 2006.
The first point to note is that the Redundancy Payments Acts 1967-2003 provide for entitlements for workers whose jobs are lost in certain circumstances and corresponding obligations on employers to pay statutory redundancy to the workers. When employers pay statutory redundancy to their workers in accordance with the Acts, they are entitled to rebates from the social insurance fund. All decisions to pay a redundancy rebate must be based on the facts of the case and the Acts. There is no room for the exercise of ministerial preference or the consideration of matters extraneous to the redundancy legislation.
When the rebate application was received in my Department it was, as is the usual practice, examined thoroughly. This gave rise to doubts as to the eligibility of the application under section 7 of the Acts. The issue of eligibility was referred to the Office of the Attorney General for legal advice. A number of complex legal issues requiring further information from Irish Ferries arose at several stages during consideration of the matter.
The issue was considered in detail on the basis of the legal advice received and the facts of the case and it was determined that Irish Ferries was legally entitled to receive a rebate in accordance with the Acts. As yet, no payments have been made, but extensive work on checking all claims has commenced. It is anticipated that a rebate in the order of €4.3 million will be paid to Irish Ferries by the end of February.
It is not possible at this stage to provide average statutory redundancy amounts received by the employees, as all claims have not been checked in my Department. Payment of statutory redundancy is a matter for the employer in the first instance, under which each employee is entitled to two weeks' pay per year of service up to a maximum of €600 plus a bonus week. Ex gratia payments are a matter for the employer and employee and my Department has no involvement in such arrangements.
There has been no written or verbal contact between Irish Ferries and my office or that of my colleague the Minister of State with special responsibility for trade and commerce, Deputy Michael Ahern. Searches of my diary and the representations tracking system in my office have not revealed any record of contacts between the Minister's office and Irish Ferries in the past three months.
I thank the Minister for his reply. Did the Minister have any discretion in respect of declaring the redundancy a voluntary severance scheme? If the Attorney General had not declared the matter a collective redundancy, we could have avoided paying the rebate to Irish Ferries. If the matter had not been declared a redundancy, could the former employees have received their compensation tax-free? How much was the average redundancy worth?
Does the Minister have information on how many Irish Ferries workers have found employment elsewhere and is he aware that the replacement crews are mainly non-nationals whose working conditions are unacceptable? Do we intend to take action or investigate this matter?
We do not have discretion and must follow the law. We received legal advice in this regard. We have published the heads of new legislation to address such situations and will publish the Bill, which will deal with collective redundancies, to prevent a repeat of the Irish Ferries case on land shortly. It was a major part of the social partnership talks.
On taxation status, if they were not declared to be redundancies under the Acts or the rebate was unpaid, I understand the workers would have been liable for tax on the payments they received. It would have been a different tax arrangement.
Is that an explanation for the mystery?
No. I am responding to a question asked of me and putting the information on the record. I am not entirely happy with the conditions that pertain in the maritime world because they are a cause for considerable concern. Given our labour laws and conditions, what pertains in the maritime world seems to be a retreat from what we would accept in developed economies.
The Government facilitated the retreat.
No. The matter must be resolved internationally because it leads to competitive pressures if people——
Extend land labour laws to European seas.
I recall that when the Cork-Swansea ferry service was set up ten or 15 years ago with council involvement, the rates earned by crews were not similar to those of traditional B&I crews. It has been a trend in the international maritime sector that we do not want applied to Irish domestic conditions. In the context of the proposed domestic legislation that has emanated from our discussion with the social partners, we are trying to close off opportunities for this type of——
It should be European-wide.
——undermining of basic pay standards and conditions. Everyone in the House would aspire to such.
Is the Minister satisfied that every legitimate obstacle was put in the way of the deal made by Irish Ferries when it ripped off taxpayers and hoodwinked its workers? If not preventable, could the deal have been slowed, thereby discouraging others from following suit?
A more robust interpretation of the law would have established the answer.
If the Deputy can recollect, we managed to involve the Labour Relations Commission contrary to the initial wishes of some of the parties, particularly the employers. The commission played a significant role in trying to resolve the issues at the time. A variety of sources pressured the commission and some pressed for a resolution.
The scale of the redundancy payment created its own momentum towards resolving the issue. Deputy Quinn used other language to describe the situation, but the reality is that the payment was probably higher than the scale of normal redundancies. This led to pressure on representative bodies to accept the deal. We managed to keep events inside the labour relations process and to have both parties engage with the labour relations machinery of the State, which we were anxious to achieve. It was the best we could do in the context of the law that applies, outside of which the Government cannot go.
Most people would understand that the job is made redundant, not the worker, so it is hard to get one's head around the fact that the workers were replaced in exactly the same jobs. That is why it is difficult to reconcile the redundancy payments. The Minister said complex legal questions arose and that he has his own views on the matter but it is hard to reconcile the payments in the absence of an understanding of those legal questions. It would be in all our interests if we could see the legal advice because otherwise we are speaking in a vacuum and there is a deficit of information.
Does the Minister expect the legislation to address this matter to be passed before the general election?
It is our intention that the legislation will be passed before the election; we will publish the Bill shortly. It is not normal procedure, however, to publish the advice of the Attorney General. We were conscious of this and that is why we want to introduce the legislation. We have consulted social partners on it and we will now move ahead. We want to close off any other potential opportunities. We do not want to see this replicated on land in Ireland.
Will the Minister explain again the taxation treatment of this redundancy payment? Why is it tax free?
It is called redundancy.
Deputy Martin Brady asked whether, if it was not declared to be redundancy in conformity with the Act, people would be liable to taxation, and I understand that they would be. I can get the details for the Deputy but that is the implication for the workers. If a decision was taken that the payment was not in accordance with the Redundancy Payment Acts, that would be the position. It is understood by all concerned.
Can I take it from the Minister's replies to Deputies Martin Brady and Catherine Murphy that extra, unusual representations were made by representative bodies in the context of this redundancy package because of the numbers involved? Could one deduce from that reply that a certain interpretation of the law, and the opinion given on it, which the Attorney General took 12 months to deliver and which remains secret, was such that the most benign interpretation of the legal advice was taken in respect of this package because of pressure of an exceptional nature being brought to bear?
That is not what I said.
It sounded like that to me.
Deputy Morgan asked if, at the time of the controversy, when Irish Ferries announced its decision, obstacles could have been put in the way then. In response I said that at the time, when the Labour Relations Commission was overseeing the negotiations between the two trade unions and the employer, there were different pressures on the participating parties. It would be wrong to take from that that representations were made to us in the context of the decision. This decision was based on the legal advice we received. We did not have any representations from the unions. The unions would not be happy with the determination made and they have articulated that. IBEC was anxious that the process would be speeded up one way or another.
Am I wrong in saying that a redundancy was described as not a redundancy to ensure the payments made by the company, Irish Ferries, to the 447 workers who agreed reluctantly to sell their jobs for a sum of money were not liable for income tax? Am I off the wall in saying that?
The Deputy is wrong. We should not read this and spin it out the wrong way.
That was the outcome.
Deputy Martin Brady asked a question seeking clarity on the tax status of a lump sum paid to workers which would not be in conformity with the Acts and I gave him a simple, straight answer to that.
If it was not a redundancy, it would be taxed.
Nothing can be deduced from that in the context of the motivation or rationale behind the decision that was taken. As I said, it is not a matter for personal preference. We must look at the law as it is, take the advice we are given and make a decision.
