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‘Lawful but preferably not’: Debenhams, Clery’s and the future of collective redundancies

Workers want the government to implement the findings of 2016 report.

THERE IS SOME hope that over 1,000 sacked Irish Debenhams workers will receive good news this weekend following 100 days on the picket line.

A protest march scheduled for today was called off earlier this week to facilitate talks between the government and workers over their treatment at the hands of the company’s UK parent, which collapsed into administration in April.

After its demise, liquidators were appointed to the retailer’s Irish arm, which had been weighed down by trading losses and restructuring costs in recent years.

So dire were the company’s financial straits in the end that its liquidators say there is no money left to pay workers. Their redundancies are set to be covered by the national Social Insurance Fund at the statutory rate of two weeks’ pay per year of service.

In Dublin, Limerick and Cork, Debenhams workers have blocked the removal of stock from the company’s stores and warehouses, which they say is being repatriated to the UK parent when it should be put into the pot of the Irish liquidation.

But even if the talks are successful this weekend and some money is set aside from liquidation to improve the payments, unions and opposition politicians say there are still structural issues around collective redundancies that have to be dealt with.

One of the more potentially far-reaching demands made by the workers, represented by the union Mandate, is for the government to implement the findings of the 2016 Duffy Cahill Report.

Criminal charges

Commissioned early that year by the then-minister for jobs, enterprise and innovation Richard Bruton and business minister Ged Nash, the objective was to look at the existing protections for Irish workers facing redundancy and make recommendations for their improvement.

It was spurred on by the controversial closure and 2015 sale of Clery’s department store in Dublin in which over 450 people lost their jobs.

That followed on from a complex business deal in which the landmark store was bought out of receivership in 2012 by a US vulture fund, Gordon Brothers.

The fund split Clery’s into two separate entities, a loss-making operating company and a property company containing the firm’s valuable O’Connell Street real estate.

With debts of over €4.5 million at the end of 2014, the operating company quickly collapsed into liquidation the following year, while the property company was bought by an Irish-registered entity, Natrium Ltd, for €29 million.

Backed by a London-based investment outfit and 20% owned by Dublin businesswoman Deirdre Foley, Natrium went on to secure planning permission for a €150 million redevelopment and then flipped it to a consortium of investors for €63 million in 2018.

Meanwhile, with little or no money in the operating company to pay the sacked workers, the state ended up footing the bill for their basic statutory redundancy payments out of the national Social Insurance Fund.

Criminal charges — brought by the Workplace Relations Commission against an assortment of people involved in the deal including Foley for allegedly failing to initiate consultations with employee representatives — were dropped in 2018.

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Statutory mechanism

In their final report, barrister Nessa Duffy and then-Labour Court chairman Kevin Duffy said that “while the [Clery’s] 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.”

It recommended a statutory mechanism be put in place to allow for the recovery of transferred assets “where the effect of such disposal was to perpetrate a fraud on the company’s employees”.

Basically, it would allow the department of social protection demand the return of the asset in a situation where the state has had to cover the costs of statutory redundancies.

Crucially for Debenhams workers, the report also recommended that where agreements for ‘enhanced’ redundancies have been negotiated with workers, these should be honoured as preferential creditors in any subsequent liquidation process.

This is central to the current situation. 

The former Debenhams employees are fighting for better redundancy payments of four weeks’ pay per year served, which they say is in line with packages agreed by their employer with workers who lost their jobs in previous rounds of redundancies. 

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