Clerys situations should be made illegal, report says

Transactions such as those preceding the sudden closure of Dublin department store Clerys last year should be made illegal, a new report to Government states.

"While the transaction that produced this result may have been lawful, it is difficult to avoid the conclusion that it would be preferable if it were not," the report by Labour Court chairman Kevin Duffy and company law lawyer Nessa Cahill says.

The authors recommend that major new protections be introduced for workers, including increased compensation to as much as two years’ pay.

Commissioned by Minister for Small Business Ged Nash, the report says the principal disquiet around the closure of Clerys, leading to the loss of 460 jobs, stemmed from a preceding restructuring that separated the O'Connell Street building from the business operations.

When the operating company became insolvent and went into liquidation, the workers lost their jobs without “warning or notice” and money owed to them was not paid as “an apparent result of the transfer of this asset”.

Proposals

A number of proposals are put forward. One is that employees would have the opportunity for consultation of at least 30 days before collective redundancies took place, whether the company was insolvent or not.

At present, such a period does not apply in a business that is being wound up.

In a situation where the right to a 30-day consultation is not respected, compensation for workers should be increased from four weeks’ pay to two years’ pay.

The 30-day period would also be triggered if a company or person was “contemplating a significant decision in relation to an asset that will lead to collective redundancies”.

The report also recommends that where “an employer transfers assets out of the business with the effect of perpetrating a fraud on the employees, there should be a mechanism for recovering the asset or the proceeds of its sale”.

A spokesman for Mr Nash, who is seeking election to the Seanad after losing his Dáil seat, said he intended to bring the report to Cabinet shortly.

“His priority is to ensure that another situation like Clerys cannot happen again and he once again pays tribute to the Clerys’ workers on the dignified stand they have taken, in stark contrast to the owners of the company,” the spokesman said.