The Employment (Collective Redundancies and Miscellaneous Provisions) and Companies (Amendment) Act 2023 (Act) came into effect on 1 July 2024.
In this three-part series, we examine the changes to the Companies Act 2014 (access here), together with the changes to the collective redundancy landscape and employees' rights on an employer's insolvency under the Act. This part considers the changes introduced by Part 4 of the Act to the Irish insolvency regime, with a particular focus on its impact on employees of companies in liquidation. The final part looks at the protections for employees in a collective redundancy, bolstered through amendments to the Protection of Employment Act 1977 to 2014.
Obligation to notify employees when presenting a petition to wind up a company
Where a company presents a petition for a winding up order under Section 571 of the Companies Act 2014 (Companies Act), Part 4 of the Act has introduced a new section 571(1A), which obliges the company's directors to notify the employees and, where applicable, the employees' representative of the presentation of the petition.
Such notification must take place at the time of the petition's presentation or as soon as reasonably practicable thereafter. A court must consider whether the directors have complied with this obligation when hearing the petition.
Obligation on provisional liquidators to inform employees of appointment
Under the new section 573(2) of the Companies Act, a provisional liquidator must inform employees and their representatives of their appointment and provide details of the liquidation process in so far as it relates to the employees. The obligation must be complied with as soon as practicable following appointment or within such period as the court may direct.
Additional entitlements of employees to information on the appointment of a liquidator
Following the court appointment of a liquidator, the company's directors are ordered to file with the court and serve on the liquidator a copy of a statement of affairs within 21 days, showing the company's assets, liabilities and particulars of creditors (Statement).
The Act amends the Companies Act so that it now requires the liquidator to notify employees and (where applicable) employees' representatives of their receipt of the Statement and, where requested, to provide a copy to employees within seven days.
Conclusion
While directors and insolvency practitioners will recognise the additional administrative burden arising from these legislative changes, the amendments form part of a wider commitment on the part of the Irish government to provide transparency and enhanced protection to employees facing an insolvency scenario.
These are important changes from an employee perspective, particularly when considered together with the amendments to the collective redundancy provisions, as discussed in our article here.
Contributed by Gail Nohilly and Joanne Cooney.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.