Move widens access to insolvency payments
Minister for Enterprise, Tourism and Employment Peter Burke has commenced a measure aimed at strengthening protection for workers whose employers cease trading.
The measure expands access to the Insolvency Payments Scheme, which protects employees’ pay-related entitlements if their employer becomes insolvent.
Part of the Protection of Employees (Employers’ Insolvency) (Amendment) Act 2026, the 'Deemed Insolvent Process' is designed to support employees who are owed money by their former employer, where the employer ceased trading without formally entering liquidation, receivership, or bankruptcy.
It applies where such debts fell due on or after 8 December 2024.
‘Clear pathway’
Previously, access to the Insolvency Payments Scheme was contingent on the employer being legally insolvent.
Under the Deemed Insolvent Process, employees will first have to seek payment from their former employer. If the employer does not pay after eight weeks, the worker can then apply under the Insolvency Payments Scheme.
“Although not a common occurrence, affected employees now have a clear pathway to ensure they are paid their statutory entitlements including outstanding wages, holiday pay, and sick pay,” said Minister Burke.
Legal status not affected
Minister of State Alan Dillon pointed out that employers would have an opportunity to respond to claims, adding that “robust safeguards” were also in place to protect public funds.
"Importantly, a determination of ‘deemed insolvency’ applies only for the purposes of accessing the Insolvency Payments Scheme and does not affect an employer’s legal status under company or bankruptcy law,” he added.
The Insolvency Payments Scheme is administered by the Department of Social Protection, and payments are made from the Social Insurance Fund.
Under an EU directive, states are required to provide for a scenario where an employer has ceased trading but has not formally wound up their business.
In 2018, the Supreme Court’s Glegola decision found that Ireland had not properly transposed the directive.