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Plan to beef up workers’ insolvency protection

Proposals contained in draft legislation would strengthen protections for workers whose employer becomes insolvent.

The Government has published the general scheme of the Protection of Employees (Employers’ Insolvency) (Amendment) Bill 2024.

The bill will make changes to the Insolvency Payments Scheme, which protects employees’ pay-related entitlements if their employer becomes insolvent.

Access expanded

Access to the scheme is currently contingent on the employer being legally insolvent.

The proposals will:

• Expand access to the Insolvency Payments Scheme to protect employees of employers who cease trading without entering liquidation, receivership or bankruptcy,
• Provide access to the scheme to employees with historical claims that arose in the period from October 1983 up to the commencement of the bill,
• Expand access to the scheme to include employees of sole-trader employers who enter personal-insolvency arrangements other than bankruptcy,
• Amend the Employment Equality Act 1998 to ensure that the scheme covers Circuit Court awards for gender discrimination, and
• Provide a legislative basis to apply the statutory salary ceiling, currently €600 a week, to all payments from the Insolvency Payments Scheme.

Peter Burke (Minister for Enterprise, Trade and Employment) said that there was already a “strong safety net” in place for workers whose employer becomes insolvent.

“For the first time, we are expanding this protection to include workers whose employers have ceased trading without formally winding up.

“While these situations are not common, affected employees will now have a clear process to have their former employer deemed insolvent for the purpose of claiming their outstanding entitlements from the scheme,” Minister Burke concluded.

Supreme Court decision

Minister of State Emer Higgins said that the department was planning an information campaign to make sure that the process was as simple as possible.

“If your employer walked away without formally winding up their business and you were left owed money, whether this happened five or 25 ago, we are giving you an opportunity to apply to reclaim this money from the State, via the Historical Employer Deemed Insolvent Application,”: she said.

This aspect of the legislation deals with the 2018 Supreme Court Glegola decision, which ruled that Ireland had not properly transposed an EU directive that requires member states to provide for a scenario where an employer has ceased trading, but has not formally wound up the business, because the available assets are insufficient to warrant the opening of proceedings.