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The legal rights of Clerys’ staff


Monday, June 22, 2015

As published in The Sunday Business Post on Sunday 21 June, 2015

 

With the store liquidated, their employer for all intents and purposes, no longer exists – but there is hope for those staff not directly employed by Clerys.

 

The announcement on 12 June 2015 that Clerys had gone into liquidation took many people by surprise, none more so than the department store’s staff.

 

As the company has gone into liquidation, the employment relationship simply no longer exists.  Those workers directly employed by Clerys are unlikely to have any options.

 

However, one point worth noting is that media coverage suggests that a number of the affected employees were not in the direct employment of the Clerys Group.  They may have been employed by independent concession holders operating physically within the store premises.

 

Those employees are not necessarily out of work – their employer may continue to exist – but much turns upon the ability of the individual commission holders to continue to employ them.

 

If, for example, those commission holders depended upon the Clerys to fuel their businesses, they may have no option but to immediately make employees redundant if there are no other income streams (or if there are insufficent income streams).

 

The Transfer of Undertakings Regulations 2003 provide that – where a business is transferred as an operating economic entity from one party to another – the employees move to the new employer with their terms and conditions of employment preserved.

 

Some reports have suggested that these Regulations might assist the Clerys employees.  Unfortunately, there are two factors that make it unlikely that the Regulations will apply here.

 

First of all, the Regulations will only apply if the business being operated by the new owners is substantially the same as the previous owners.  If the new owners, for example, opt to reopen Clerys as a department store, there is a possibility that the Regulations might apply.

 

However, there is also one fundamental point which probably renders that possibility unlikely.  The Regulations have a clear exception in the cases of financial insolvency – the Regulations simply don’t apply in the case of insolvencies.  Unfortunately, even if the new owners subsequently reopen Clerys as a department store, the employees are unlikely to benefit from the provisions of the Regulations.

 

An employee with the requisite two years’ will be entitled to statutory redundancy payments.  These work out at two week’s pay for each year of service plus one further week’s pay.   That is subject to a maximum earnings limit of €600 per week.

 

Some of the employees, according to reports, have very long service with Clerys.  One employee is said to have been working there for over 40 years, so they are theoretically in line for a decent severance package.

 

Also helpful is the fact that if the employer can’t pay the severance package, it is possible to claim from the Social Insurance Fund on an employee’s insolvency.  This gives some hope to the affected employees in this case.

 

Unions can’t really do much.  The company appears to have been liquidated entirely in accordance with law and the liquidation regime clicks in.  The simple fact is that on insolvency, an employer’s obligations towards an employee, effectively ends.

 

There is very little that the trade unions can do, other than present the employees’ plight to the government.  The employer, for all intents and purposes, no longer exists.   There is nobody to negotiate with and, if the reports are true, no money to negotiate over.


Author

Patrick Walshe

PARTNER


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