Government to enhance rights of workers facing redundancy after insolvency

The Government is to introduce new legislative reforms over the medium term to enhance the rights of employees facing collective redundancies following insolvency.

In a new action plan, the Department of Enterprise and Employment says that in future workers affected by collective redundancy will in all cases have to receive 30 days’ notice.

The plan, provided by Ministers to the Irish Congress of Trade Unions (Ictu)earlier this week states: "As matters stand, collective redundancies cannot take effect until after a statutory 30-day period of notification to employees. By virtue of an exemption contained in section 14(3) of the Protection of Employment Act 1977, this provision does not apply to collective redundancies precipitated by insolvency. It has been decided that this exemption will be removed to ensure that all collective redundancies will be subject to the 30-day notification period. This will require an amendment to section 14 of the Protection of Employment Act 1977 with a view to providing greater clarification to employees and resulting in enhanced transparency.

“Where a redundancy arises due to company insolvency, it has been decided that an employee may be placed on temporary layoff by the liquidator for the duration of the 30-day notification period (with the employment termination date to coincide with the expiry of the statutory 30-day period). An employee in these circumstances would be eligible to ‘sign on’ and claim a jobseeker’s payment during this period in the usual way as a consequence of being placed on temporary layoff. “

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The department also says on that on foot of a recent report by the Company Law Review Group and a minority report submitted as part of this process by Ictu it would be recommending "nine actions to improve the quality and circulation of information to employees as creditors".

It says that under proposed changes to company law it would seek to clarify that the liquidator has power to bring/defend proceedings before the Workplace Relations Commission and Labour Court. It would also oblige the liquidator/director to ensure creditors are made aware they have the right to form and participate in a committee of inspection.

In addition, it would provide that where a committee of inspection is appointed it shall include at least one employee creditor member (a recommendation which emerged from the Ictu minority report).

In an accompanying letter to Ictu, Ministers of State with responsibility for Employment Law and Company Law Damien English and Robert Troy also said that in recognition of the evolving workplace and the complex nature of the area of employment law, the Government was "moving to establish on a statutory basis a new employment law review group to provide a forum for experts and shareholders to ensure that our legal framework remains fit for purpose in the contemporary environment".

Clerys and Debenhams

The trade union movement had proposed in the wake of the closure of department stores Clerys and Debenhams in recent years that a levy system on employers could be introduced to pay for enhanced redundancy terms provided in collective agreements in cases involving companies that went into liquidation.

In the letter the two Ministers of State said their department had examined such initiatives in place in other jurisdictions.

“While a workable model was not realised during this examination, the department maintains current awareness in relation to emerging trends from other member states that might assist in the formulation of innovative employment law solutions, and these may be considered in the future. It should, however, be noted that Ireland’s current regime for statutory redundancy entitlement compares very favourably with our EU counterparts.

“Notwithstanding the above, it is of course open to employers and unions to work together to establish a separate fund with a view to providing enhanced redundancy benefits on a voluntary basis.”