Ann Phelan (Carlow-Kilkenny, Labour) | Oireachtas source

I thank Deputy Penrose for raising this matter. It is a very difficult situation for any person to be in.

The purpose of the insolvency payments scheme, which operates under the Protection of Employees (Employers' Insolvency) Act 1984, which, in turn, derives from EU Council Directive 987-80, is to protect certain outstanding pay-related entitlements due to employees in the event of the insolvency of their employer. These entitlements include wages, holiday pay, sick pay, payment in lieu of minimum notice due under the Minimum Notice and Terms of Employment Acts 1973-2001, and certain pension contributions. Various other statutory awards made by the Employment Appeals Tribunal, Rights Commissioners, etc., are also covered by the scheme.

Section 1(3) and Section 4 of the Protection of Employees (Employers' Insolvency) Act 1984, as amended, sets out the circumstances in which an employer is deemed to be insolvent for the purposes of the Act. In summary, section 1(3) provides that for the purposes of the Act, an employer shall be taken to be insolvent only in the following circumstances: liquidation or receivership, where the employer is a company and a winding-up order is made or a resolution for voluntary winding up is passed, or a receiver has been appointed by or for the holder of a debenture secured by a floating charge, or possession taken by or for the debenture holder of company property comprised in or subject to the charge; death of employer, where the employer has died, and the estate is insolvent and being administered in accordance with the rules of Part 1 of the First Schedule to the Succession Act 1965; bankruptcy, where the employer has been adjudicated bankrupt or has filed a petition for or executed a deed of arrangement within section 4 of the Deeds of Arrangement Act 1887; or insolvency of the employer under the legislation of another EU member state and where the employees concerned are habitually employed in insurable employment in Ireland.

To summarise, therefore, where a person's former employer was a limited company, the company must be in liquidation or receivership in order for the person to be eligible to claim under the insolvency payments scheme. In such circumstances, the liquidator or receiver becomes the relevant officer for submitting claims as he or she has access to the company records and can certify that the amounts claimed are in order. I am aware that there are cases where companies have ceased trading without engaging in a formal winding-up process and that in some such cases those employers owe moneys to their employees. Such employees are not eligible for payments under the insolvency payments scheme.

My Department is reviewing the position to establish what, if anything, can be done to progress payments to individuals in these situations. In progressing this review the Department must have regard to the integrity of the social insurance fund, from which insolvency payments are made. Any policy development to deal with this issue must have measures which would contain potential abuse by employers. After all, directors of companies who avail of limited liability have responsibilities under company law to ensure that proper books of accounts are kept and that the appropriate returns are made in a timely manner to relevant authorities. The Department will consult with a range of interested parties in this review including the Office of the Director of Corporate Enforcement, ODCE, the Department of Jobs, Enterprise and Innovation and the Revenue Commissioners. The Department has received submissions from the ICTU on the issue. In its review the Department will also have to have regard to legal issues arising in the general area of insolvency law and the potential impacts that any proposed policy development will have on that area of law.

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