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Company Liquidations

Dáil Éireann Debate, Tuesday - 22 September 2020

Tuesday, 22 September 2020

Ceisteanna (129)

Cian O'Callaghan

Ceist:

129. Deputy Cian O'Callaghan asked the Tánaiste and Minister for Enterprise, Trade and Employment the steps he will take to ensure that workers with enhanced redundancy payments are provided for by way of collective agreement will be treated as a preferential creditor in cases of insolvency; and if he will make a statement on the matter. [25335/20]

Amharc ar fhreagra

Freagraí scríofa

The law governing preferential treatment of creditors in circumstances where a company is unable to pay its debts is contained in section 621 of the Companies Act 2014, as amended. A preferential creditor is one whose debts are deemed to be more important than the debts of another creditor. The current law is a result of careful balancing of the various rights of creditors, including employees. In terms of wage arrears, outstanding holiday pay, and pension scheme contributions, employees are always considered preferred creditors. If the company’s insolvency is such that the assets are not enough, the State guarantees the employees’ statutory entitlements.

Collective bargaining is a voluntary process involving employees and employers in a given context. Such agreements are often frustrated in the event of an insolvency i.e. because the company is unable to pay its debts. The question as to whether such third-party contracts can be given preferential treatment, potentially affecting the property rights of other creditors, will require careful consideration and an understanding of different regulatory frameworks.

There is a Programme for Government commitment to review whether the current legal provisions surrounding collective redundancies and the liquidation of companies protect the rights of workers effectively. I have asked the Company Law Review Group to undertake an expedited review of this commitment as it relates to company law, to be completed before the end of the year.

Additionally, ICTU has made proposals concerning the treatment of collective agreements when companies are undergoing liquidation. Minister English responded to ICTU on 10th September welcoming the submission and confirming that the Government is committed to ensuring the proposals are considered including a meaningful engagement with stakeholders.

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