No ‘master plan’ to cut jobs at Debenhams before credit line ‘cut off’

A barrister acting for the liquidators of Debenhams in Ireland says its directors were “taken by surprise” when its UK parent cut off its credit line and had no “master plan” for job cuts.

The claim was made during legal argument on the main test case for between 750 and 800 former staff represented by the trade union Mandate, who have referred complaints en masse under the Protection of Employment Act, as amended by European Communities (Protection of Employment) Regulations, 2000 to the Workplace Relations Commission (WRC).

They allege that both the management of Debenhams Retail Ireland Ltd and the liquidators appointed to the firm by the High Court in 2020 – Andrew O’Leary and Kieran Wallace of KPMG – failed to provide “all relevant information” on the planned redundancies to their trade union or to carry out a meaningful consultation process.

The trade union’s general secretary, Gerry Light, told the WRC last year that the redundancies had been “preordained and predetermined” prior to a meeting of the Irish subsidiary’s board of directors on April 8th 2020 – before staff were formally notified of a risk to their jobs.

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The liquidators deny the claims.

Witness testimony was heard in full at a hearing last October, with today’s hearing limited to legal argument on European case law.

Brendan Kirwan SC, counsel for Mandate, said the Court of Justice of the European Union had held that there was an onus on an employer to consult “in good time if he is contemplating collective redundancies” – and that this obligation arose when “an intention on the part of the employer” came into existence.

He said that this obligation was “triggered” as early as an April 8th meeting of the Irish board of directors, but “certainly” the following day – when company director John Bebbington wrote to staff.

‘In good time’

Citing a judgment given by the CJEU in 2009 in the case of a group of workers made redundant by the Finnish firm Fujitsu Siemens Computers Oy, Mr Kirwan said the tribunal ought to give weight to the finding that: “A consultation which began when a decision making such collective redundancies necessary had already been taken could not usefully involve any examination of conceivable alternatives with the aim of avoiding them.”

Kelley Smyth SC, appearing for the company, said the Fujitsu Siemens decision referred to a consultation starting “in good time” and that no firm timelines had been set out in the European directive on collective redundancies.

She said this was to allow for different approaches in different scenarios and that it could be treated as a subjective matter.

Ms Smyth said the firm faced both an internal and an external crisis in the form of its parent company going into examinership and cutting off its credit, along with the impact of the Covid-19-related closures of non-essential retail.

She said the Irish directors were told on April 8th, 2020: “That money is now being turned off” – and that because of the retail closures there was no prospect of taking out a bank loan.

Submitting the minutes of a board meeting the following day – and pointing out that it happened to be Holy Thursday – she said it was decided that morning that legal advice was “to be provided”.

“You can clearly see the directors are taken by surprise. This is not a plan they have ... they don’t have a master plan,” she said.

She said that board meeting on April 9th was Holy Thursday, with the liquidators appointed “the next working day” – the Tuesday after Easter.

Two plus two

Another key matter in dispute in the case is whether the workers can pursue two sets of claims each – one set alleging breaches of the Act on two counts against Debenhams Retail Ireland Ltd; the other set against the company as it existed after the appointment of the joint liquidators.

Mr Kirwan, for Mandate, said there had been two separate consultation processes started with the trade union – one started by the company’s former HR director, Sinéad O’Connor, prior to the liquidation, and a second one started on April 17th 2020 by joint liquidator Andrew O’Leary after his provisional appointment.

He said the HR director, Ms O’Connor, had continued to act in a management capacity “rightly or wrongly” in corresponding with the trade union after the appointment of liquidators.

“This is why we say there could be two sets of breaches leading to four sets of claims,” Mr Kirwan said.

Ms Smyth said it was all the same consultation process.

“[Mr O’Leary] is talking about a different process. He must be because he is stating it’s a new process,” Mr Kirwan said.

“I don’t see the word ‘new’ in Mr O’Leary’s letter,” Ms Smyth said.

“Initiated,” Mr Kirwan replied.

The employer maintained the position that in a liquidation, the liquidators or provisional liquidators assumed all the duties of management and that Ms O’Connell’s work had been at their direction.

At a hearing last year, the trade union argued letters sent by its then-divisional organiser Gerry Light to the firm outlining the requirement for consultation “fell on deaf ears” and that the liquidator, Andrew O’Leary of KPMG, “asserted [that] his primary duty was to liquidate the assets to the maximum benefit of the shareholders”.

“We strongly argue the respondent only provided rudimentary information and not substantive information as required,” union official Michael Meegan told the tribunal.

“There were four meetings. All meetings were open to questions. [Mr O’Leary] answered all questions and where he didn’t have information he provided written answers,” Ms Smyth said.

Today’s hearing was attended by the firm’s joint liquidator Kieran Wallace on the respondent side and by Mandate trade union officials on the other, including its general secretary Gerry Light, both men having given evidence on the previous day.

The test case complainant herself, Debenhams Henry Street shop steward Jane Crowe, emerged as a leader as blockades as the staff mounted pickets on the stores, delaying the removal of stock by the liquidators for over a year until they were broken up by gardaí in April 2021.

Ms Crowe was excused from attending due to family commitments.

A decision is to be issued to the parties in writing in due course and published by the WRC thereafter.