A report commissioned in the wake of the sacking of Clerys workers following some dubious corporate restructuring recommends several changes to employment law to ensure such an event cannot happen again.

The report, published today, makes a number of proposals for reform of the law, primarily concerned with amendments to employment law. The suggested amendments to employment law aim 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, and specifies 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 report, drawn up by Kevin Duffy, chair of the Labour Court, and Nessa Cahill BL, a company law specialist, proposes 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.

'Substantial Weaponry'

The report does not recommend any changes to the Companies Act, but states that the 'substantial weaponry' contained in the Act should be employed, and makes proposals designed to facilitate and support the use of those provisions in future cases.

Ministers Richard Bruton and Ged Nash, who appointed the experts, welcomed the report. “With the appalling events at Clerys, wesaw 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," said Bruton.

In Association with

“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.”

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."

Ethel Buckley, Services Division Organiser with trade union SIPTU, commented: “The closure of Clerys and the appalling treatment of its loyal workforce must mark a watershed in Irish industrial relations and business practice. The positive recommendations of this report can begin the process of ensuring that no-one will ever profit again by treating workers in the shameful and underhand manner which the Clerys workers had to endure.

“The proposed measures would make it mandatory for employers proposing collective redundancies to engage in an information and consultation process with employees' representatives for a minimum 30-day period before such a measure can be implemented, whether the employer is insolvent or not. They also propose increasing the compensation afforded to workers, who cannot avail of such a consultation period.

“Another key recommendation in the report is the introduction of a mechanism for recovering an asset, or the proceeds of its sale, in circumstances where an employer transfers it out of the business with the effect of perpetrating a fraud on the employees.”

Relentless Pressure

She added: “A new government, when it is formed, must not hesitate in enacting legislation based on this report if it wishes to be seen as an administration that is more concerned with the interests of workers than immoral speculators. Politicians from all parties condemned the treatment of the Clerys workers by Gordon Brothers and Natrium at the time of the store’s closure. These same politicians must now legislate without delay to ensure such a scenario can never happen again.

“However, it must be remembered that this report and its proposals have only come about due to the relentless pressure for change resulting from the activity of the Justice for the Clerys Workers campaign. The resolve of these SIPTU members to highlight the injustice done to them and ensure it cannot be repeated will have a fitting legacy when the changes proposed in the Duffy Cahill report become effective, and laws are introduced that can provide better protection for workers.”