Twin Track Review of Protections in Law for Employees and Unsecured Creditors Announced

It has recently been announced by the Minister for Jobs Enterprise and Innovation, Richard Bruton TD and the Minister for Business and Employment, Ged Nash TD that the existing legal protections for employees and unsecured creditors are to be examined.

This review arises as a result of several notable cases in recent years and in particular the Clerys case, which Minister Bruton said “have shown up the potential consequences that can flow – to workers, to taxpayers, to suppliers and other creditors – from the exploitation of the interface between company law and employment law in such a way as to create consequences that were never intended by these carefully constructed systems of law”

The review envisages to ensure that limited liability or restructuring are not used to avoid a company’s obligations to its employees and unsecured creditors. In such cases, employees can be left without redundancy packages from their employers and instead have to rely on the State’s Social Insurance Fund.

The ministers have appointed Kevin Duffy, chairperson of the Labour Court and Nessa Cahill BL to examine the legal protections for workers, in situations where assets are separated from operations and to also consider new solutions on how to best protect the interests of workers in such cases.

They are to specifically consider:

• Could more effective use be made of current legislation to safeguard employees’ interests?
• At what point in time could any new measures to protect employees’ interests be triggered?
• Are there changes to employment rights legislation that could be considered, or changes at the interface of employment law and company law, including powers to set aside transfers of assets and time periods for same?
• What solution/framework of measures is required?

The experts will report by the 11th March 2016.

As part of the process, the Company Law Review Group have been asked to examine legislation with a view to recommending ways company law could be amended to better safeguard employees and creditors.

They are asked to explore:

• Instances where the corporate veil should be lifted
• The strengthening of Directors’ Duties to employees
• Checks and balances to strengthen obligations to employees for better protection in company restructuring
• Circumstances in a liquidation of an insolvent company where company liabilities can be met from solvent companies in the same group or in related companies.

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