international employment law firm alliance L&E Global

Ireland: Recent Legislative Update Enhances Protection of Employees in Insolvency Situations

The Act introduces the new concept of a “responsible person” (“RP”) and provides that the primary manner in which protection of employees is achieved is the requirement that, in their capacity as a responsible person, an RP must engage collectively with employee representatives in a collective redundancy scenario over a prescribed minimum 30-day period.

The definition of responsible person includes a liquidator, a provisional liquidator, a receiver (who assumes management of the business), or any other person appointed by the Court, where they assume full responsibility for the management of the business concerned. This definition is inserted by the Act into the Protection of Employment Acts 1977-2014.

The primary responsibilities centre around consultation, information and notification.

The Act provides that consultation must be initiated with employee representatives in the event of collective redundancies at the earliest possible opportunity and at least 30 days before the first notice of dismissal is given. Once the consultation period has commenced, it is the duty of the RP to furnish the employee representatives with all of the relevant information pertaining to the proposed redundancies. A non-exhaustive list of information, which should be provided in writing to the employee representatives, is set out in the Protection of Employees Acts 1977-2014.

Finally, the RP must notify the Minister for Enterprise, Trade and Employment (the Minister) in writing of their proposal to create collective redundancies at the earliest opportunity and no less than 30 days before the first dismissal takes effect.

In the event that an RP does not comply with the consultation, information and notification requirements, the Act provides that upon summary conviction, an RP may be liable to a Class A fine not exceeding €5,000. Should an RP seek to affect redundancies prior to the 30-day period following notification to the Minister, they may also be subject to a fine of up to €250,000.

In addition, the Bill amends the Insolvency Payments Scheme, which protects the pay-related entitlements of employees in the event that their employer becomes insolvent. At the moment, access to the scheme depends on whether or not the employer is legally insolvent.