4th May 2023
The Bill will further enhance the protection of employees in a collective redundancy situation following their employer’s insolvency by amending the Protection of Employment Act 1977, which governs collective redundancy rules, and the Companies Act 2014.
The Bill will also provide for the establishment of a new statutory Employment Law Review Group which will advise the Minister for Enterprise, Trade and Employment on all aspects of employment and redundancy law.
The Bill will strengthen the already robust legislative protections and safeguards afforded to the employees involved.
Minister of State for Trade Promotion, Digital and Company Regulation, Dara Calleary TD, and Minister of State for Employment Affairs and Retail Business, Neale Richmond TD today announced they have secured government approval for the priority drafting of the Plan of Action on Collective Redundancies following Insolvency Bill 2023.
The Bill will deliver on important Programme for Government commitments and serves to implement the remaining commitments in the Plan of Action on Collective Redundancies following Insolvency.
The Plan of Action on Collective Redundancies following Insolvency was published in June 2021, following extensive engagement with the social partners. The policy objective of this Plan is to further enhance the protection of employees facing collective redundancy in a way that does not impede enterprises conducting their business. Significant progress has already been achieved in delivering on various actions in the Plan.
This Bill will further progress the Plan by addressing a range of amendments to company and employment law, dealing with matters related to collective redundancies following company insolvency. It will also establish a new Employment Law Review Group which will advise the Minister on all aspects of employment and redundancy law.
Announcing the General Scheme, Minister Dara Calleary TD said:
“I am very pleased that the government has agreed to the priority drafting of this important legislation. The Bill will further bolster the significant progress that has been achieved by the government in delivering on the important commitments made under the Plan of Action. Importantly, legislation will further enhance the protection of employees in a collective redundancy in a way that will not unduly impact business.
“I am conscious that despite successive challenges in recent times, Irish businesses have shown a high degree of resilience. However, the cumulative impacts of Brexit, COVID-19 and supply chain disruptions, pose significant risk and it can be expected that Ireland will experience increasing levels of company restructuring in the future.
“This Bill amends the Companies Act 2014 to improve the quality and circulation of information to workers as creditors in a liquidation. The large majority of businesses in these situations act fairly and responsibly, and the incidence of abusive practices in corporate restructuring is low. Nonetheless this Bill will ensure the measures, that exist to protect the assets from being moved beyond the reach of creditors prior to the opening of insolvency proceedings, are more accessible to creditors.
“The government is committed to providing support to these Irish businesses and their employees and this Bill reflects the results of extensive engagement with representatives of employer organisations and trade unions. It represents a balanced approach to the need to tackle problems arising from collective redundancies in company insolvencies.”
Minister Neale Richmond TD, said:
“I am delighted to receive government approval for the drafting of this important Bill.
“The establishment of the Employment Law Review Group will be a hugely valuable resource; allowing for an ongoing assessment of employment and redundancy law to ensure it is fit for purpose.
“The Group will comprise of members with expertise and an interest in the development of employment and redundancy law. This will include members from the legal, accountancy and insolvency professions; representatives from business, unions and regulators; as well as Ministerial nominees.
“To ensure that our employment law framework adapts to the changing workplace, emerging trends will also be examined. The Group’s focus will be expert, technical, and legally led.
“The Bill will initially place the Group on a statutory footing. However, in anticipation of this, I will set up the Group on a non-statutory basis as soon as is possible. The Bill will also amend the Protection of Employment Act 1977 to further protect employees affected by collective redundancies.
“Minister Calleary and I look forward to engaging with all parties in the Oireachtas in pre-legislative scrutiny of these proposals.”
Notes to Editors
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:
- a range of amendments to employment law and company law,
- the setting up on a statutory basis of an Employment Law Review Group, and
- the provision of an accessible guidance document to help workers and their representatives navigate the existing legal framework.
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, known as ‘SCARP’, 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 General Scheme is the next step in implementing key outstanding employment law and company law legislative commitments which were set out in the Plan of Action.
Amendments to the Protection of Employment Act 1977
The Protection of Employment Act 1977, which governs collective redundancy rules, will be amended to:
- Remove the exemption from notification requirements in respect of collective redundancies caused by the employer’s insolvency. This means all collective redundancies will be subject to a 30-day notification period before they take effect, including where the employer is insolvent.
- 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 will apply 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.
- 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.
- 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.
- Update the methods by which employers can notify the Minister of proposed collective redundancies.
The General Scheme will also provide for the establishment of a statutory Employment Law Review Group (ELRG) which will advise the Minister all aspects of employment and redundancy law.
Amendments to the Companies Act 2014
The Companies Act 2014, which underpins Ireland’s modern and flexible corporate recovery and insolvency framework, will be amended to:
- 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.
- 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.
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