26th April, 2016
The Minister for Jobs, Enterprise, and Innovation, Richard Bruton TD and the Minister for Business and Employment, Ged Nash today published the report of the two experts appointed to examine and review employee protection legislation in the context of ensuring that limited liability or restructuring are not used to avoid a company’s obligations to its employees. Earlier today, the Ministers briefed cabinet colleagues on the report.
Today’s publication follows the announcement by the Ministers in January of a twin-track approach to this issue. This approach involved the appointment of two experts to examine the legal protections for workers and the interface between company and employment law. This examination was to specifically look at situations where valuable assets in a company are separated from the operating entity, and how the position of employees can be better protected in such situations. In addition, Minister Bruton requested the Company Law Review Group to review company law with a view to recommending ways company law could be potentially amended to ensure better safeguards for employees and unsecured creditors.
Mr. Kevin Duffy, Chairperson of the Labour Court, and Ms. Nessa Cahill BL, a company law specialist, were given 8 weeks to examine existing legislation and to also consider new solutions on how to best protect the interests of workers in such cases. Both Ministers today thanked the two experts involved for their report and also wish to acknowledge the efficiency and quality of the experts’ work, which focused on seeking balanced and pragmatic solutions to the issues in question.
Minister Bruton said: “We saw with the appalling events at Clerys what can happen when the interface between company law and employment law is exploited in such a way as to create consequences never intended by these carefully constructed systems of law. There have also been other recent cases where similar things have happened. That is why we decided to ask experts to take a look at these issues and provide recommendations on what could be done to prevent similar situations happening again. I wish to thank Kevin and Nessa for their detailed and prompt work on these issues”.
Minister Nash said: “This is an important piece of work and complements the suite of actions that we have taken since the overnight closure of Clerys in June last year, leaving 460 workers without jobs and without due recognition for years of dedicated service. My priority has always been to do everything possible to ensure a similar situation cannot occur in another company here. I want to thank Kevin Duffy and Nessa Cahill for their work and once again pay tribute to the Clerys workers who, despite their appalling treatment by the owners, have behaved with dignity and resolve throughout.”
The Ministers welcome any responses from stakeholders including business and employer bodies, trade unions and other interested parties to the detailed proposals made in the report in advance of a response to the report being formulated.
For further information contact: Press Office, D/Jobs, Enterprise and Innovation ph. 6312200 or firstname.lastname@example.org
NOTES FOR EDITORS
The Expert Examination and Review of Laws on the protection of employee interests when assets are separated from the operating entity is available at www.djei.ie/Djei/en/Publications/Publication-files/Duffy-Cahill-Report.pdf
The report provides a comprehensive analysis of the relevant provisions of employment law and company law. It makes a number of proposals for reform of the law, which are primarily concerned with amendments to employment law.
Suggested changes to law
The focus of the suggested amendments to employment law is to ensure that employees will have the opportunity to consult with their employer for a period of not less than 30 days before any collective redundancy takes effect, including in the following circumstances
- whether the employer is insolvent or not,
- where decisions are being made in relation to an asset of significant value by a person related to the employer, which will lead to collective redundancies.
The experts also propose increased sanctions for failure to respect the 30 day consultation period.
The experts go on to propose a number of other reforms to employment law designed to
- facilitate the recovery of an asset or proceeds of an asset in circumstances where the transfer of the asset had the effect of perpetuating a fraud on the employees,
- prevent the reduction of a company’s assets below the level necessary to discharge accrued liabilities to employees,
- provide a mechanism by which employees could negotiate enhanced redundancy terms in circumstances where the employer entity is separating assets from the operations entity.
The report does not propose any amendments to existing provisions of the Companies Act 2014. However, it does state in clear terms that existing company law provisions provide “substantial weaponry that could be used against directors and related companies to redress the effects of, and deter, harmful transactions” but these provisions are only of weight “if they are employed and seen to be employed”. The report makes proposals designed to facilitate and support the use of those provisions in future cases.