Protection of Employees (Employers' Insolvency) (Amendment) Bill 2025: Second Stage
Seanad Éireann — 2026-03-04
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Neale Richmond (FG), Dublin Rathdown

I am pleased to present the Protection of Employees (Employers’ Insolvency) (Amendment) Bill 2025 for consideration on Second Stage. I do so on behalf of the Minister of State, Deputy Dillon, who unfortunately has had a family bereavement but this not unfamiliar legislation as I was the Minister of State responsible when the general order of the scheme was presented. This Bill makes changes to the insolvency payments scheme. This scheme fulfils the vital function of protecting workers if their employer becomes insolvent. It covers certain pay and pension-related entitlements an employee may be owed by their insolvent employer. Payments under the scheme are made from the Social Insurance Fund. This scheme is governed by the Protection of Employees (Employers’ Insolvency) Act 1984, as amended. This protection stems from European law, currently Directive 2008/94/EC. Access to the protections of the insolvency payments scheme is contingent on the employer being insolvent. Insolvency is currently defined in the Act as where the employer is in liquidation, receivership, bankruptcy, has died and their estate is insolvent or is insolvent under the laws of another EU member state or the United Kingdom. There are gaps in the legislation that this Bill will address. In rare cases, a business may cease trading but fail to fully wind up, sometimes referred to colloquially as informal insolvency. When this happens, former employees are unable to recover moneys owed to them under the insolvency payments scheme. The Supreme Court found in the case of Glegola that this does not meet the directive’s requirements. To address this gap, the Bill provides for a new deemed insolvent process. Using this new process, an employee can apply to have their employer deemed insolvent for the sole purpose of enabling the employee to access the insolvency payments scheme.
The Bill has four main policy objectives. The first is to address the Glegola Supreme Court decision and ensure Directive 2008/94/EC is fully transposed into Irish law. The second is to align the scheme with broader Government policy on personal insolvency. The third is to provide policy certainty in how the salary ceiling applies to payments under the scheme. Finally, the Bill was also amended on Committee Stage to clarify how certain pension contributions are protected under the scheme. I will outline the main provisions of the Bill. The Bill consists of 13 sections divided into three Parts. Part 1 contains three sections and deals with preliminary and general matters. Part 2 contains nine sections. It amends the Protection of Employees (Employers’ Insolvency) Act 1984. Part 3 contains one section, which amends the Employment Equality Act 1998. This change ensures awards of the Circuit Court for gender discrimination are covered by the scheme. This corrects a 2015 amendment that inadvertently omitted such awards from the scheme’s scope.
The Bill’s first policy objective is to deliver a new deemed insolvent process. This is primarily set out in section 6 of the Bill with consequent changes arising in the remaining sections of Part 2. I have explained why the new deemed insolvent process is required. I will now outline how it will work in practice. The employee will first have to serve notice on their employer and give them the opportunity to repay any moneys owed. If the employer fails to pay, the employee can activate the deemed insolvent process. Officials will examine whether the employer has ceased trading, drawing on the employee’s application, existing State data and any input from the employer. If the evidence shows an employer has ceased trading, the employer will be deemed insolvent solely for the purpose of that application. The employee will then be able to obtain moneys owed to them under the insolvency payments scheme. The new deemed insolvent process has been designed to be as straightforward as possible for employees. This will include straightforward application forms using plain English and clear step-by-step instructions. A representative such as a trade union or trusted family member can also apply on the employee’s behalf. We have put safeguards into this process both for employers continuing to trade and for taxpayers’ money. I am also providing for a separate historical deemed insolvent process. This is to ensure any employees in this situation before this Bill is enacted and commenced are not disadvantaged by the previously incomplete transposition of the directive. It will cover historical cases where an employee was owed money by an employer who failed to formally wind up their business. This covers claims spanning from the original directive transposition date of October 1983 up to the commencement of this Bill. The historical deemed insolvent process will be open for two years following the Bill’s commencement. A further extension of two years is possible in exceptional circumstances outside the employee’s control. The Department of Enterprise, Tourism and Employment will run a comprehensive communications campaign to ensure affected employees are aware of this process before the Minister commences this historical deemed insolvent process.
The Bill’s second policy objective is to align the scheme with broader personal insolvency policy. Several new types of insolvency arrangements were introduced in 2013 as an alternative to bankruptcy. The Minister is expanding access to the scheme to cover employees of sole trader employers who avail of these arrangements. I expect the number of employees and employers affected by this change to be very low. However, it is important that the State’s broader policy on insolvency is in alignment. The change is set out in sections 4, 5, 7 and 8 of the Bill. A salary ceiling of €600 per week applies to most payments under the insolvency payments scheme.
The Bill’s third objective is to standardise the application of this salary limit to all payments. This change gives a statutory basis for the previous long-standing practice governing scheme payments which was found to be ultra vires in the Court of Appeal judgment in the Brady case. This change will ensure all applicants are treated consistently. It will ensure minor differences in the wording of adjudications for employees receiving similar awards in comparable situations will not give rise to significant differences in their entitlements under the scheme. This change is set out in section 7 of the Bill.
The Bill's fourth policy objective relates to how pension contributions are covered under the scheme. This was introduced on Committee Stage. This section ensures that contributions to My Future Fund, the new auto-enrolment retirement savings scheme, are covered under the scheme in the event of the employer’s insolvency. This removes any doubt about whether such contributions are covered. This section also changes how employer contributions to defined benefit pension schemes are protected under the scheme. The Bill sets out limits to the amount that may be paid in respect of employer contributions to a defined benefit scheme. This change puts in place reasonable limits to ensure the Social Insurance Fund is not liable for excessive defined benefit pension debts or the entire deficit of defined benefit schemes. It ensures the amount the taxpayer is required to pay via the Social Insurance Fund is not determined by an individual pension scheme’s rules. These changes do not affect other types of pension schemes such as defined contribution pension schemes or PRSAs. This is set out in section 8 of the Bill.
To conclude, while the Bill itself is quite complex and technical, its objectives are clear. The Bill will further enhance the protection of employees when their employer becomes or is deemed insolvent. Most importantly, it will expand the protections of the insolvency payments scheme to employees of employers who cease trading without formally winding up their business. It will deliver a time-limited historical deemed insolvent process allowing people to claim entitlements which arose prior to this Bill. It will ensure the salary limit applies to all payments under the insolvency payments scheme in the same way, ensuring certainty of outcome and consistency of treatment for all applicants. It will ensure that there are reasonable limits on taxpayers’ liability to cover pension contributions and that My Future Fund contributions are protected under the scheme in the same manner as any other pension. I look forward to debating the merits of this important Bill and to working with Senators from all parties and none to ensure its swift enactment. I commend this Bill to the House.

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Retrieved: 2026-08-14T04:54:43+00:00
Sitting date: 2026-03-04