The Protection of Employees (Employer Insolvency) Act 1984 provides for a range of payments to employees of insolvent companies from the Insolvency Fund. See government sites for information here and here. The limitation of the legislation was that you generally needed to show the employer went into liquidation or receivership to claim. However, most insolvent companies don’t go into liquidation, particularly where there are no assets to pay a liquidator.
In Glegola v. Minister for Social Protection 2017 IECA 37 the Court of Appeal held the plaintiff could claim against the State for sums awarded against a company that went into informal insolvency. The plaintiff had been awarded just under €17,000 by the Rights Commissioner under various pieces of employment legislation. The employer company was later struck off the register. No liquidator was appointed and the plaintiff did not apply to appoint a liquidator as it would have meant indemnifying the liquidator and there was no assets in the company so the indemnity could easily be called in. The plaintiff got an order under s.251 Company Act 1990 which made certain provisions of the insolvency sections of the Company Act applicable, even though no formal liquidator would be appointed. The court held the s.251 order was not an insolvency event for the purpose of the 1984 Act and therefore no right to claim from the insolvency fund arose. The court held that Article 2.1.b of the Directive 2008/94/EC was not adequately implemented by the 1984 Act. That section provided the fund should pay if the employer “has been definitively closed down and that the available assets are insufficient to warrant the opening of the proceedings”. The court ruled the State was liable for the sum claimed on the basis of Francovich Case C-6/90 and C-9/90.
The upshot is, if you get an order for payment under a piece of employment legislation which remains unpaid and if you can show the company has closed down and assets are insufficient to do a formal liquidation, you could claim directly from the State. It is likely the State will amend the Company Act and/or the 1984 Act to bring it in line with the Court of Appeal decision.
The content of this article is intended to provide a general guide to the subject matter and is not intended to be a substitute for legal advice. Specialist advice should be sought about your specific circumstances.