Outcome of engagement by Kevin Foley, Chairman of the Labour Court, on matters associated with the liquidation of Debenhams Ireland
15th December 2020
Issued to MANDATE, SIPTU, Joint Liquidators, Department of An Taoiseach, Department of Enterprise, Trade and Employment.
Outcome of engagement by Kevin Foley, Chairman of the Labour Court, on matters associated with the liquidation of Debenhams Ireland
At the request of An Taoiseach and An Tánaiste I have engaged extensively with all parties who have a potential capacity to support a resolution of the dispute arising from the liquidation of Debenhams Ireland. The closure of that business has resulted in the loss of their employment by approximately 1,200 people in circumstances where the employer was not in a position to make payment of even the statutory entitlements of the workers concerned.
Many of the former workers of Debenhams Ireland had very long careers in retail in Ireland including with predecessor companies of Debenhams Ireland. Their employment with Debenhams Ireland was brought to an end in a manner which is not reflective of the contribution these workers have made to the retailers to whom they have given such long service.
In the event, the State, in accordance with the laws governing insolvency, has taken up the cost of ensuring that all of the workers concerned received their legal entitlements upon cessation of their employment. I understand that almost all of the workers have received those entitlements at this stage and that the process of completing payments of all eligible person continues. The cost to the exchequer of providing this support amounted to more than €13m.
Whereas many, though by no means all, employees who experience redundancy receive an ex-gratia payment from their former employer at the point of termination of their employment, the very minimum payment received by such workers is payment of their statutory entitlement. The cost of payment of statutory entitlements to a worker are a cost to the employer in all normal circumstances. In this case the employer has made no contribution to the cost of ensuring that the former workers receive their entitlements.
I am aware that the workers in this situation have worked very hard over many months to pursue an ex-gratia payment of two weeks pay per year of service on top of their statutory entitlements to redundancy and other payments.
I have been made aware that a collective agreement was made in 2016 which provided that the former employer would make payments, including ex-gratia amounts, to workers made redundant in 2016. I have not been able to establish that the terms of that collective agreement were intended to be applicable to redundancies occurring in 2020. In any event, it is clear that the agreement has no legal application in 2020.
The nature of the events surrounding the loss of their employment by these workers is entirely regrettable and understandably very difficult to accept. The Trade Unions representing the former workers have made the strong views of the workers known since the date of closure. The workers, through their Trade Unions, have demonstrated the strength of their resolve by maintaining a protest against the situation for in excess of 240 days.
It has been my role to explore comprehensively all aspects of this matter with representatives of the workers, with the joint liquidators and with representatives of Government so that I might be able to identify the maximum possible set of measures which could be put in place as a response to this situation which has been made exceptional by the longevity of the dispute and the incapacity of the liquidator to complete the liquidation over a long period.
I am satisfied that all of these parties have approached the process undertaken by me in good faith and with good will and with respect for the history of this matter as it has affected the former workers of Debenhams Ireland.
I am satisfied that the final position reached in the process of engagement overseen by me is the optimum achievable set of measures which can be put in place to achieve a resolution of this dispute.
I have established that the main preferential creditors of the liquidation of Debenhams are the Department of Social Protection and the Revenue Commissioners and that the debt owed to these creditors is approximately €18m. Available resources are far outweighed by the debt owed to these preferential creditors.
The liquidators have outlined clearly to me the cash position of the liquidation. In particular, expenditure incurred to date in the very extended liquidation process, including expenditure on security, payments to landlords etc but not including fees to liquidators or other such professionals, has resulted in the depletion of practically all cash resources in the business which at the outset exceeded €4m.
I am aware that a significant amount of Debenhams stock remains both in stores and elsewhere. There is no clarity that any sale of such stock has the capacity to exceed its cost.
I have engaged extensively to establish, within relevant legal frameworks surrounding the liquidation process, the degree to which the joint liquidators could be given confidence, with the support of the preferential creditors, that value could be extracted from stock held in the liquidation such that it could benefit the former workers. I am now clear however that, despite extensive engagement and full consideration, the principal preferential creditors will not find it possible to mandate the liquidators to do other than meet the requirements of the relevant law. The result of that conclusion is that the liquidation process cannot, within the framework of relevant law, make any financial contribution to the resolution of this dispute.
Notwithstanding the fundamental outcome of this process of engagement, the Government is willing to respond meaningfully to the situation in the following ways.
I understand that the Department of Enterprise, Trade and Employment is reviewing whether the current legal provisions surrounding collective redundancies and the liquidation of companies protect the rights of workers effectively. The Department is looking at both company law and employment law, in consultation with union and employer representatives, with a view to establishing what legislative, or other, changes would make a real difference to employees who find themselves in a redundancy situation due to company insolvency. Careful consideration of these matters will continue over the coming period of time. It is of course the case that developments in relation to such matters will have application in the future rather than currently.
The State has already met the €13m cost of ensuring that the former workers of Debenhams received all of their statutory entitlements on termination of their employment.
The former workers of Debenhams now face a different future to that which they had anticipated. They are faced with the challenge of exploring new and different employment opportunities following a career spent in retail in many cases.
Meeting that challenge will require the development of new skills and in many cases a commitment to innovation to create the next stage in their career.
In recognition of the exceptional circumstances of this matter, the Government has agreed to provide a fund of €3m million to support career guidance / training / education / business start-ups by the former Debenham workers.
This Fund will be administered by SOLAS on behalf of the Government, with an advisory committee including representative of Mandate and SIPTU on behalf of the former employees.
The initiative will be partly modelled on, but not in any way funded by, the previous European Globalisation Adjustment Fund programmes which provided assistance in cases of large scale redundancies.
Detailed criteria for draw-down from the Fund will be adopted by SOLAS, with input from the advisory committee, including qualification criteria and details of relevant activities eligible for funding. The Fund will run for a maximum of 2 years or until fully expended.
In view of the exceptional situation the Government will provide necessary additional resources, via Dept of FHERIS, to SOLAS for this Fund.
Next steps
I understand that the property of some former Debenhams staff may remain on the premises in a number of stores. These staff should be facilitated with an opportunity to retrieve their personal property as soon as possible.
I have been assured by MANDATE and SIPTU that all of the membership of the Trade Unions in the former employment will, as is normal, be given the opportunity to make a decision in a secret ballot vote as to whether the set of arrangements set out above can be accepted as a basis to bring this dispute to an end.
It is my full expectation that the Joint liquidators and the Trade Unions will, during the expeditious conduct of the Trade Unions’ ballot processes, continue to observe the arrangements which have applied throughout my engagement on this matter as regards stock removal and picketing.
In setting out the above arrangements, I am conscious that they fall short of the ambitions of the former workers. I am however satisfied, having engaged extensively on the matter with the parties involved and with Government, that they represent the maximum achievable in a very difficult situation.
Kevin Foley
Chairman
