Employment law

I read recent media reports about an insolvent business which closed, leaving its employees short on wages. I fear that I may be in a similar situation shortly as my employer’s business is very weak at present. My colleagues and I are owed several weeks wages and I am concerned that my employer will simply be unable to pay my colleagues and I what we are owed. Is it true that a Government-backed fund exists which would come to my aid if my employer closes leaving me short on wages?

The Department of Social Protection offers an Insolvency Payments Scheme designed to protect pay-related entitlements of employees whose employer has become legally insolvent.

For the purpose of the Scheme an employer will be deemed insolvent if his business is in liquidation or receivership, if he has been declared legally bankrupt or if he has died and his estate is insolvent. If the employer’s business simply shuts down without becoming legally insolvent then employees may not seek redress from the Scheme and the employer remains responsible.

The Scheme covers a wide range of entitlements including arrears of pay, holiday pay, pay in lieu of statutory notice, awards made to employees under employment rights legislation covering such issues as unfair dismissal, discrimination, working time, and minimum wage. Certain unpaid pension scheme contributions are also covered.

Under the Scheme, employees may claim through the employer’s representative (eg the liquidator or receiver ), who will certify the claims and submit them to the Department of Social Protection. The Department of Social Protection will pay the employer’s representatives fees in respect of each claim processed.

Some limitations and conditions apply eg payments for arrears of pay, sick pay, holiday pay and pay in lieu of statutory notice is limited to eight weeks.

The Scheme covers entitlements relating to the 18-month period prior to the date of the insolvency of the employer or the termination of employment. In the case of an award made to an employee, eg an unfair dismissal award, the 18-month period applies to the date of the award.

This column is prepared by Dolores Gacquin, solicitor. Byrne Carolan Cunningham have offices in Athlone, Moate, and Lanesborough.

A person should always contact their solicitor to obtain legal advice specific to their own situation. The above column contains general information and cannot be relied upon as legal advice.

Dolores Gacquin


Tel: (090 ) 6478433 [email protected]


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