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Insolvency Service of Ireland

Dáil Éireann Debate, Wednesday - 21 April 2021

Wednesday, 21 April 2021

Questions (1200)

Paul McAuliffe

Question:

1200. Deputy Paul McAuliffe asked the Minister for Social Protection if a review of the case of a person (details supplied) will be carried out following the provision of new information; and if she will make a statement on the matter. [20692/21]

View answer

Written answers

The Insolvency Payments Scheme operates under the Protection of Employees (Employers’ Insolvency) Act 1984, which derives from EU Directive 80/987 and associated amending Directives (Directives 87/164, 2002/74 and 2008/94).

Responsibility for this legislation transferred to the Minister for Enterprise Trade & Employment on 14 October 2020.

As provided for within legislation, the Insolvency Payment Scheme confines compensation from the scheme to employees of companies that are in a formal wind-up procedure. This includes companies in liquidation or receivership, in situations where the employer has died and the estate is insolvent, or where an employer has been declared bankrupt.

However, the legislation does not provide for situations where an employer ceases to trade without engaging in any formal wind-up process. In such cases, referred to as ‘informal insolvency’, former employees may claim to have monies owed to them paid from the Insolvency Payments Scheme, without being covered under a legal mechanism.

In December 2018, followed the Glegola Supreme Court judgment it was ruled that the Irish law did not transpose Directive 2008/94 correctly into Irish law. The Supreme Court found that the Directive requires Member States to have a mechanism allowing a competent authority to determine that a state of insolvency arises. This would permit an employee's claim to be met from the Social Insurance Fund without a winding up order, such as in this case being raised.

As a consequence, it became clear that this legislation needs to be reviewed and revised so that situations of informal insolvency can be accommodated. My Department and more recently the Department of Enterprise, Trade and Employment has been working with relevant stakeholders to evaluate the implications of the judgement and the broader implications for company law. It is clear that there are a number of legal complexities to be addressed involved in providing access to coverage under the insolvency payments scheme to employees who are in this situation. The issue is being currently examined by the Minister for Enterprise Trade and Employment.

My Department continues to have responsibility for processing insolvency application within the legal provisions as appropriate. My officials have reviewed the additional information supplied; it does not indicate any change in the position as previously outlined to the person concerned.

Any application in the future will fall to be considered under any new legislation brought forward by the Minister for Enterprise , Trade and Employment. The position can be reviewed at that stage.

I trust this information clarifies matters.

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