Workers owed money by employers who have ceased trading will be allowed to access the Insolvency Payments Scheme under new legislative provisions activated on Monday by Minister for Enterprise, Peter Burke.
The “deemed insolvent” measure opens the door for workers to recover money they are owed by employers who do not go through a formal insolvency process, such as liquidation, receivership or bankruptcy, when they closed their businesses.
Until now, such workers could find themselves left in a limbo, unable to recover wages or holiday pay that they were owed. The Protection of Employees (Employers’ Insolvency) (Amendment) Act 2026 will allow workers who have found themselves in that position after December 8th, 2024
“The Deemed Insolvent Process is an important new protection for workers who find themselves in a very difficult position when their employer ceases trading without going through formal insolvency,” Burke said on Monday.
READ MORE
“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.”
The announcement gave no details on how many employers might have stopped trading in recent years without using a formal insolvency process.
Ireland was found in a 2018 Supreme Court case not to have properly transposed an EU directive on state protections for employees where their employers become insolvent, dating from 2008. The new legislation is designed to address the shortfall.
To access the scheme, workers must have had their employment terminated by the employer with the employer owing them money, such as wages or holiday pay, that feel due after the December 2024 date. The employer must have, at that time or since, stopped trading without going through a formal insolvency process and the original employment must have been subject to PRSI.
While employees will still have to first approach their employer for payment, they can apply personally to the Insolvency Payments Scheme if no payment has been forthcoming after eight weeks.
Employers will have four weeks to respond to any claims before payment is made.
Claims through the Insolvency Payments Scheme are limited to eight weeks for arrears of wages, holiday pay, contractual sick pay and minimum notice payment with a cap on relevant gross weekly wages of €600.
If the employer has gone through normal insolvency structures, workers will not be able to claim under the new legislation but will have to contact whatever insolvency practitioner is managing the process as a creditor.
Where a former employer is still in business but simply refusing to pay you, you are also not eligible for the new scheme and will need to go through the Workplace Relations Commission instead.
Minister for Social Protection, Dara Calleary said that a separate scheme for employees who found themselves in a similar position between October 22nd, 1983 and Sunday last is also provided for in the legislation. He said it was anticipated this Historical Deemed Insolvent Process will open applications in the early part of next year
