Ireland: New Bill Published that Will Enhance Protections of Employees of Insolvent Firms if Enacted

The Protection of Employees (Employers’ Insolvency) (Amendment) Bill 2025 (the “Bill”), if enacted, will provide greater protection to employees in circumstances where their employer becomes insolvent.

The purpose of the recently published Bill is to expand access to the Insolvency Payments Scheme to protect employees of employers who cease trading without formally winding up.

The Supreme Court found in 2018 (in the case of Glegola v Minister for Social Protection [2018] IEHC 65) that Article 2(1)(b) of EU Directive 80/987 was not properly transposed into Irish law, meaning there was a scenario in Ireland whereby certain employees could not access the Social Insurance Fund to obtain reimbursement of pay-related entitlements.

The new Bill seeks to rectify this 40-year long error by building a claims process into the current legislation, the Protection of Employees (Employers’ Insolvency) Acts 1984-2020 (the “Act”). The Bill intends to allow eligible employees a period of time to recover historic entitlements accrued over a period. The claims process will cover various employee entitlements, including:

• Arrears of wages and sick pay – capped at 8 weeks
• Outstanding holiday pay – capped at 8 weeks
• Unpaid statutory minimum notice
• Certain arrears of pension contributions
• Various statutory awards made by the Workplace Relations Commission and Labour Court

The Bill envisages a process whereby an employee serves a prescribed notice on their employer setting out all amounts they believe they are owed. If the employer fails to pay the amounts within 8 weeks, the employee may apply to the Minister for Enterprise, Trade and Employment (the “Minister”) to deem the employer insolvent under the legislation. If this occurs, the employee will be notified of the date of the employer’s insolvency, which will enable the employee to claim under the Social Insurance Fund.

The employee’s application, confirmed by statutory declaration, should include a copy of the notice served on the employer, information regarding the employment relationship, the employer’s trading status and the extent to which the employer has ceased acting as an employer. If the employee’s application complies with the Act, the Minister will serve a notice on the employer within the following 21 days. The employer will have 28 days to submit any information they consider relevant in response to the application. The Minister will deem an employer insolvent if there is no evidence that the employer is continuing to trade and is satisfied that the amounts are due to the employee.

It is envisaged that a liquidator could bring an application to access the Social Protection Fund on the employee’s behalf.

The Bill, if enacted, will provide welcome additional protections to employees.