New law to protect workers if employer becomes insolvent

A new law is being drafted to better protect workers when their employer becomes insolvent.

The Protection of Employees (Employers’ Insolvency) Bill will make changes to the Insolvency Payments Scheme, which protects employees’ pay-related entitlements if their employer becomes insolvent.

The Bill will expand access to the Insolvency Payments Scheme to protect employees of employers who cease trading without entering into liquidation, receivership or bankruptcy.

It will provide access to the scheme to employees with historical claims which arose in the period from October 1983 up to the commencement of the Bill.

The new law will expand access to the Insolvency Payments Scheme to include employees of sole trader employers who enter into personal insolvency arrangements other than bankruptcy.

It will amend the Employment Equality Act to ensure Circuit Court awards for gender discrimination are covered by the Insolvency Payments Scheme.

It will provide a legislative basis to apply the statutory salary ceiling, currently €600 per week, to all payments from the Insolvency Payments Scheme.

Minister for Enterprise, Trade and Employment, Peter Burke said a strong safety net already exists for workers to ensure they are protected if their employer becomes insolvent.

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

“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,” he added.

Minister of State for Business, Employment and Retail, Emer Higgins highlighted the fact that historical claims can now be made.

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

The general scheme of the new legislation will now be referred to the Office of the Attorney General for drafting of the Bill.