New Bill to Strengthen Protections for Employees of Insolvent Firms

The Protection of Employees (Employers’ Insolvency) (Amendment) Bill 2025 aims to provide greater protection to employees where their employer becomes insolvent. The Bill will allow greater access to a Social Insurance Fund to protect employee pay-related entitlements and claims for historic entitlements over the previous 40 years. The devil is in the detail, however, with very specific caps and limitations. Our Commercial Disputes team explores the implications of the Bill for employers and employees if enacted.

What you need to know

• The Bill will amend the Protection of Employees (Employers’ Insolvency) Acts 1984-2020.
• The Bill will allow an employee to apply to the Minister for Enterprise, Trade and Employment to deem their employer insolvent and open access to the Social Protection Fund to seek reimbursement of pay-related entitlements.
• The Bill proposes to rectify Ireland’s 40-year failure to properly enact EU Directive 80/987 by allowing eligible employees a limited period to claim for certain accrued entitlements over that period.

The Supreme Court found in 2018 that Article 2(1)(b) of EU Directive 80/987 was not properly transposed into Irish law [1]. This created a situation whereby employees of employers who ceased trading without formally winding up could not access the Social Insurance Fund to obtain reimbursement of pay-related entitlements.

The Protection of Employees (Employer’s Insolvency) (Amendment) Bill 2025 seeks to rectify this error by building a claims process into the Protection of Employees (Employers’ Insolvency) Acts 1984-2020. It is intended that this will allow eligible employees a limited period of time to recover pay-related entitlements over the previous 40 years. 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 current statutory salary ceiling of €600 per week will be recoverable by an employee.

Here are the key proposed processes:

Application by an employee for the employer to be deemed insolvent

The Bill proposes a process where an employee serves a prescribed form of notice on their employer setting out all amounts the employee believes they are owed by the employer.

If the employer fails to pay the amounts within 8 weeks from service, the employee may apply to the Minister for Enterprise, Trade and Employment to deem the employer insolvent under the Act. This application, confirmed by statutory declaration, should include:

1. A copy of the notice served on the employer
2. Information regarding the employment relationship
3. Information regarding the employer’s trading status
4. The extent to which the employer has ceased acting as an employer

If the employer or employee is not captured by the definition of the Act, no further action will be taken by the Minister.

Notice to the employer

If the employee 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. This information should include:

1. Details of any payment made by the employer to the employee
2. Any detail disputing the amount claimed by the employee

Deeming the employer insolvent

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.

Importantly, a finding of insolvency under the Act applies solely for its purposes and does not affect the employer’s insolvency status in any other context. If the employer is deemed insolvent for the purposes of the Act, the employee will be notified of the date of the employer’s insolvency which will, in turn, enable the employee to claim under the Social Protection Fund. If the employee has received reduced entitlements through another insolvency process, it is envisaged that the Social Protection Fund can be used to bridge the shortfall. It is also envisaged that a liquidator can bring an application to access the Social Protection Fund on the employee’s behalf.

Comment

The Bill, if enacted, will provide welcome additional protections to employees. While there will be no additional debt burden on employers who are subject to employee applications, some degree of resources will be required to engage with the application. The current salary ceiling of €600 per week appears somewhat outdated, especially in the context of employees on higher pay; however, broader reform outside of the scope of the Bill will be required to amend that limit.

For more information, please get in touch with a member of our Commercial Disputes team.

The content of this article is provided for information purposes only and does not constitute legal or other advice.

[1] Glegola -v- Minister for Social Protection [2018] IESC 65