From Department of Enterprise, Trade and Employment
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Minister of State for Business, Employment and Retail, Emer Higgins, and Minister of State for Trade Promotion, Digital and Company Regulation, Dara Calleary, have welcomed the Employment (Collective Redundancies and Miscellaneous Provisions) and Companies (Amendment) Act 2024 which will come into effect on Monday next, 1 July.
The legislation further enhances the protection of employees in a collective redundancy situation following their employer’s insolvency and also provides for the establishment of a new statutory Employment Law Review Group which will advise the Minister on all aspects of employment and redundancy law.
Minister Emer Higgins said:
"I welcome this legislation which strengthens the already robust legislative protections and safeguards afforded to employees involved in redundancy situations. Being made redundant can be a difficult experience for workers. This Act improves transparency and communication for workers facing collective redundancies caused by their employer’s insolvency. It also gives all workers the right to take a case to the Workplace Relations Commission if they are made redundant during the 30-day notification period.
"This Act builds upon the significant progress by this government in delivering on the important commitments of the Plan of Action. It makes targeted and balanced changes to the State’s collective redundancy rules, which enhances our employment legislation and ensures that workers’ rights are upheld.
"I also welcome the establishment of the Employment Law Review Group which will be a valuable resource, allowing for ongoing assessment of employment and redundancy law to ensure that these laws continue to be fit for purpose and are updated to reflect emerging trends and international developments."
Minister Dara Calleary said:
"While Irish businesses have shown a high degree of resilience in the face of successive challenges in recent times, we can anticipate an increase in levels of company restructuring.
"The Companies Act 2014 sets down a framework within which directors and companies are expected to operate. While the vast majority of businesses act fairly and responsibly, this Act will ensure the measures that exist to protect assets from being moved beyond the reach of creditors prior to the opening of insolvency proceedings are more accessible to creditors. It will also further improve the quality and circulation of information to workers as creditors in a liquidation.
"This Act reflects the results of extensive engagement with representatives of employer organisations and trade unions and represents a balanced approach to the need to tackle problems arising from collective redundancies in company insolvencies."
The legislation delivers on important Programme for Government commitments and serves to implement the remaining commitments in the Plan of Action on Collective Redundancies following Insolvency which was published in 2021 following extensive engagement with the social partners.
The Programme for Government, ‘Our Shared Future’ commits to “review whether the legal provisions surrounding collective redundancies and the liquidation of companies effectively protect the rights of workers.”
Following extensive engagement with the social partners, the ‘Plan of Action on Collective Redundancies following Insolvency’ was published in June 2021. The plan addresses matters relating to employment rights and company law and seeks to further supplement the already robust legislative protections afforded under law by way of:
Significant progress has been achieved in delivering on the various actions under the Plan of Action. Improvements were made to the quality and circulation of information to workers as creditors through the Companies (Rescue Process for Small and Micro Companies) Act 2021, and through increased obligations on directors to consider the interests of creditors in the period leading up to insolvency through the European Communities (Preventative Restructuring) Regulations 2022.
The Act implements key outstanding employment law and company law legislative commitments which were set out in the Plan of Action.
The Protection of Employment Act 1977, which governs collective redundancy rules, has been amended to:
1. Remove the exemption from notification requirements in respect of collective redundancies caused by the employer’s insolvency. This means all collective redundancies are subject to a 30-day notification period before they take effect, including where the employer is insolvent.
2. Provide that employees may seek redress from the Workplace Relations Commission (WRC) where their employer makes them redundant before the 30-day notification period finishes. This change applies to all collective redundancies, not just those precipitated by insolvency. This is in addition to employees’ existing right to make a complaint to the WRC should their employer fail to consult with or provide information to their representatives.
3. Align the 1977 Act with case law of the Court of Justice of the European Union (CJEU), by explicitly providing that the employer’s obligations must also be complied with by a liquidator or similar appointee, where they are managing the collective redundancy process in an insolvency situation.
4. Provide that, where a liquidator or similar appointee is managing the collective redundancy process in an insolvency situation and they fail to comply with their duties under the Act, the WRC may prosecute them, with a maximum fine on conviction of €5,000.
5. Update the methods by which employers can notify the Minister of proposed collective redundancies.
The Act also provides for the establishment of a statutory Employment Law Review Group (ELRG) which will advise the Minister all aspects of employment and redundancy law.
The ELRG will be an expert and technical advisory group, and this will be reflected in the membership of the Group, which should include members of the legal and insolvency professions, practitioners, academics and Ministerial nominees.
It is intended that bodies including those representing workers and employers, will be invited to nominate a member for inclusion in the Group. Ministerial nominees will be appointed following a call for expressions of interest. It is intended that this will be open to all interested parties with qualifications and/or professional experience in areas including employment law and/or redundancy and insolvency law. Once the Chairperson and members are appointed an inaugural meeting will be held.
The Companies Act 2014, which underpins Ireland’s modern and flexible corporate recovery and insolvency framework, has been amended to:
1. Improve the quality and circulation of information to workers as creditors such as ensuring they have access, within a reasonable period, to the company’s Statement of Affairs which is filed with the court and ensuring the provisional liquidator informs them of his/her appointment, explains the liquidation process and invites them to provide relevant information.
2. Ensure remedies for transactional avoidance are more accessible to creditors.
These amendments emanate from recommendations made by the Company Law Review Group (CLRG) in two reports in 2021. The CLRG is a statutory advisory body charged with advising the Minister on all matters pertaining to company law in the public interest. Membership of the CLRG is representative of the broad range of company law stakeholders making it uniquely well positioned to provide advice on the issue of corporate insolvency.