Written answers

Tuesday, 8 October 2013

Department of Social Protection

Insolvency Payments Scheme Eligibility

Photo of Paul ConnaughtonPaul Connaughton (Galway East, Fine Gael)
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323. To ask the Minister for Social Protection if an insolvency payment may be capped at €600 per week when the payment arose out of an Employment Appeal where a person was deemed to be unfairly dismissed as opposed to a statutory redundancy situation; and if she will make a statement on the matter. [42103/13]

Photo of Joan BurtonJoan Burton (Dublin West, Labour)
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The purpose of the insolvency payments scheme 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 & Terms of Employment Acts, 1973-2001, and certain pension contributions. Various other statutory awards made by the Employment Appeals Tribunal (EAT), Rights Commissioners, etc., are also covered by the scheme.

The scheme covers employees aged 16 or over who are in employment which is insurable for all benefits under the Social Welfare Acts, or in employment that would be insurable for all benefits but for the fact that the person has reached age 66.

Some limitations and conditions apply to payments made under the scheme. In most cases, the scheme covers entitlements relating to the period of eighteen months prior to the date of the insolvency of the employer or the termination of employment. Arrears of pension contributions are restricted to a 12 month period immediately prior to the date of insolvency.

There is a limit of eight weeks for arrears of pay, sick pay, holiday pay and pay in lieu of statutory notice. In addition, payments calculated by reference to an employee’s wages, including awards under the Unfair Dismissals Acts, are subject to a limit of €600 per week.

Payments under the insolvency payments scheme are made from the Social Insurance Fund. The Minister becomes a preferential creditor against the assets of an employer in respect of most amounts paid under the scheme. EAT and Rights Commissioner awards are made against the employer. Where the amount covered by the insolvency payments scheme is less than the amount of the award the employee may also become a creditor in the liquidation in respect of the balance.

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