The Employment (Collective Redundancies and Miscellaneous Provisions) and Companies (Amendment) Act 2024 (the Act) provides enhanced protections for employees in insolvency situations.
Responsible Person
The Act introduces a new concept of "responsible person" which includes liquidators, provisional liquidators, receivers or any other person where that person has assumed full responsibility for the management of a business following appointment by a court.
Consultation
Once appointed the responsible person is required to engage in consultation with elected employee representatives at the earliest opportunity and in any event at least 30 days before notice of dismissal is served on any employee. If consultation has already commenced prior to the appointment of the responsible person then the responsible person can continue those consultations.
Before this Act there was an express exemption to the 30- day consultation period which existed in collective redundancies arising due to an employer's insolvency. This exemption is now removed, and section 9 of the Act provides that the statutory obligations in collective redundancies also apply where those redundancies are due to the business termination on an employer's insolvency.
Information
The responsible person will be required to furnish employee's representatives with all relevant information relating to the proposed redundancies. The Protection of Employment Acts provides a non-exhaustive list of the information that should be provided in writing to the employees' representatives. Copies of this information should be provided to the Minister for Enterprise, Trade and Employment as soon as possible.
Notification
The responsible person must also notify the Minster for Enterprise, Trade and Employment of a proposed collective redundancy in writing at the earliest opportunity and at least 30 days before the first dismissal takes effect. The Act also amends the Protection of Employment Acts so the Minister can be notified by electronic means and not just registered post which is the current position.
Defence
It is a defence for a responsible person to show that, having exercised all reasonable professional skill and care, they had reasonable grounds for believing the employer had complied with the consultation and information obligations and notification requirement to the Minister.
Offence
The responsible person Is guilty of an offence if they fail to initiate consultations with employee representatives, provide information or comply with their obligation to notify the Minister as outlined above. The penalties on summary conviction can be up to €5,000 and on indictment up to €250,000.
New avenues of redress
The Act expands the avenues of redress available to all employees in a collective redundancy scenario. An employee will be entitled to bring a claim to the Workplace Relations Commission (the WRC) where they are dismissed prior to the expiry of the 30-day period following the notification to the Minister. An employee may be awarded up to four weeks' remuneration in the event of a breach of this provision.
Amendment to Companies Act 2014
The Act also makes several amendments to the Companies Act 2014 which will also impact on insolvency proceedings. These amendments are:
- The directors of a company that presents a winding up petition by the company are required to notify each employee and employees' representative (a relevant person) of the petition at the time of presentation or as soon as reasonably practicable.
- The court is required to have regard to whether the directors have complied with the notification requirement when deciding whether to make a winding up order on the petition by the company.
- The provisional liquidator appointed by the court in a winding up by the court is required to inform each relevant person of his or her appointment and the winding up process under the Companies Act 2014 in so far as it relates to the employees, and to invite them to provide information about matters they consider to be relevant.
- The liquidator or provisional liquidator of a company that is being wound up by the court is required to notify each relevant person that he or she has been served with a statement of affairs by a director or contributory of the company, and to deliver a copy of the statement to them on request.
- In determining whether a related company shall be required to contribute to the debts of the company in liquidation, the court shall have regard to the extent to which the circumstances that gave rise to the winding up of the company are attributable to the acts or omission of the related company.
- The Companies Act 2014 provided that unfair payments to creditors which took place within 6 months of the winding up (or 2 years when the unfair payment was in favour of a connected person) were void. The Act provides that the court now has a discretion to look back for 'such longer period as the court considers just and equitable having regard to the circumstances'.
- The power of the court to order return of assets which have been improperly transferred shall no longer apply to any payment made in the ordinary course of business.
Employers should be aware of the expanded scope of the information and consultation obligations and the sanctions for not complying with them.
For employment advice, please contact Paul Gough or for insolvency advice, please contact Barry Cahir or your usual contact in either team in Beauchamps.