21 May 2024
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Significant changes to Irish collective redundancy law impacting management of insolvency proceedings

To The Point
(7 min read)

Long-standing challenges with Irish collective redundancy legislation, particularly where businesses are in financial distress, have been highlighted in recent years. Those challenges in the Irish regime were highlighted in some prominent insolvency cases in the retail sector where stores were closed (with relevant employees made redundant) and where it has been asserted that there was limited or no engagement with employee representatives.

Irish law maintains, in most situations, the principle of voluntary engagement with unions and employee representatives, but where redundancies are envisaged on a collective basis then, based on EU and domestic law, there is an obligation to collectively consult with employee representatives over a prescribed 30-day period.

The issue highlighted in recent prominent cases (including in one case relating to the insolvent liquidation of Debenhams in Ireland resulting in protracted industrial action), was the question as to whether Insolvency Practitioners ("IPs") once appointed to an insolvent business were subject to the same obligations to inform and consult with employee representatives in a collective redundancy scenario as would have applied to employers.   

The Employment (Collective Redundancies and Miscellaneous Provisions) and Companies (Amendment) Act 2024 (the "Act"), now enacted, seeks to clarify some of these issues and enhance employee protections in collective redundancy situations where issues of company solvency arise. 

Of most significance is that the Act extends to IPs, as a "responsible person", the obligation to engage collectively with employee representatives over a prescribed minimum 30-day period. It also restricts the time period within which redundancies may be effected and exposes IPs to potential personal sanctions (civil and criminal) for breaches of the collective redundancy regime. 

Purpose of the Act and the key changes to current regime

The Act amends certain provisions of the Protection of Employment Act 1977 (the "1977 Act") and the Companies Act 2014.  

New concept of the "responsible person"

Section 4 of the Act provides for the newly defined term of "responsible person". The Act places on a legislative footing the obligations and responsibilities to which a "responsible person(s)" who assumes full control of an affected business is required to adhere. 

The definition of responsible person includes a liquidator, a provisional liquidator, a receiver (who assumes management of the business) or any other person appointed by the Court where they assume full responsibility for the management of the business concerned.

What responsibilities does a "responsible person" have?

(i) Consultation

A responsible person is required to engage in a consultation with the elected employee representatives where it is proposed that collective redundancies will occur.

Such a consultation is required to take place at the "earliest opportunity and in any event at least 30 days before the first notice of dismissal is given".  

Prior to the introduction of the Act, an express exemption to the 30-day consultation period existed in cases of collective redundancy arising due to an employer's insolvency. Section 11 of the Act amends section 14 (3) of the 1977 Act to remove this exemption and Section 9 of the Act now provides that the statutory obligations in collective redundancies also apply where those redundancies are due to the business termination on an employer's insolvency.

Where a consultation process has already been commenced by an employer, a responsible person is entitled to continue that consultation. 

(ii) Information

The Act provides that a responsible person is required to provide information to the employee representatives during the consultation period. 

(iii) Notification

A responsible person is responsible for notifying the Minister Enterprise, Trade and Employment (the "Minister") of a proposed collective redundancy in writing at the earliest opportunity and at least 30 days before the first dismissal takes effect. 

Non-compliance with the consultation, information and notification requirements

Under the Act, it is now an offence for a responsible person to fail to comply with the consultation, information and notification requirements set out above. On summary conviction this can result in a responsible person being liable to a class A fine of up to €5,000. 

Non-compliance with the requirement not to effect redundancies prior to the expiry of the 30-day period following notification to the Minister is also an offence and a responsible person is liable on conviction on indictment to a fine not exceeding €250,000.   

Defence in respect of consultation, information and notification obligations

The Act provides that a responsible person may rely on a defence that, having exercised all reasonable professional care and skill, he or she had reasonable grounds for believing that the employer had complied with its obligation to consult and inform with employees and to notify the Minister.  

Redress expanded

The Act expands the grounds on which an employee can make a complaint to the Workplace Relations Commission. This now includes circumstances where an employee is dismissed prior to the expiry of the 30-day period following notification to the Minister. 

Amendments to the Companies Act 2014

In addition to the above, the Act also amends certain provisions of the Companies Act 2014, which will impact on insolvency proceedings and requires: 

  1. Company directors to notify employees and where applicable, employees' representatives of the presentation of a winding up petition at the time it is presented to the High Court or as soon as possible thereafter; and
  2. The High Court to direct the appointed provisional liquidator "as soon as reasonably practicable" to inform employees and employees' representatives:
  • of their appointment including the date they were appointed;
  • of the winding up process in so far as it relates to the employees;
  • that a relevant person may provide information about matters they consider to be relevant to a provisional liquidator; and
  • of any other matters the provisional liquidator considers relevant.

Key takeaways

Going forward employers should continue to be conscious of their obligations and responsibilities to meaningfully inform and consult with employee representatives in a collective redundancy scenario. 

Furthermore, IP's should now be alert to the change in the law introduced by the Act given that they, as a "responsible person" now face an obligation to:

  • engage collectively with employee representatives over a prescribed minimum 30-day period and;
  • ensure that collective redundancies are not effected until 30 days from the date of notification to the Minister. 

The consequences for failing to comply with these obligations under the collective redundancy regime now also exposes responsible persons (including IP's) to potential personal sanctions, both civil and criminal.  


To the Point 

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