Background information

In the event of employer insolvency, affected employees are paid statutory minimum payments - statutory redundancy (if applicable), unpaid wages - through the government's Social Insurance Fund (SIF), which is administered by the Department of Social Protection.

Access to the SIF is only guaranteed when the insolvency is formal, namely when the company has been formally wound up at the courts. An employer is considered insolvent if the company went bankrupt, has been put under administration/liquidated, filed for insolvency (either in Ireland or in another EU Member State) or is legally administered because of the death of the entrepreneur. Examinership and winding up of partnerships are excluded.

If an employer is informally insolvent (no court-approved wind up), affected employees cannot get access to the SIF. However, the minister can apply for a company to be wound up to enable affected employees get access to minimum payments through the SIF.

Content of measure

All those who are employed in an employment relationship underlying full social security protection, irrespective of the duration of the employment contract. Part-time and fixed-term contracts are covered. For temporary agency workers, the party which pays the wage/salary is considered the employer; if the hiring company pays wage/salary and becomes insolvent/liquidated, the temporary agency worker comes under the criteria for access to the SIF.

To apply for support, employees have to complete the relevant forms and submit them to the insolvency administrator who checks them and confirms them at the guarantee fund. The SIF pays the claims to the insolvency administrator who forwards them to the employees after deducting taxes and similar. The insolvency administrator is also responsible to answer employees’ questions regarding the extent of the claims. For other questions, employees are referred to the insolvency income department of the ministry.

Guaranteed are non-paid wages, holiday remuneration as well as other claims the employee has against the employer, such as severance payments, maternity payments or similar. Non-paid wages, sickness payments, holiday remuneration and income for non-worked hours are paid for a maximum of eight weeks. In most of the cases claims that arose during the 18 months prior to the insolvency/being made redundant are considered. There is a weekly cap on payments from the SIF that is subject to change (€600 as of 2021). The same cap applies to statutory redundancy payments (which, as of 2021, is two weeks' pay per year of service, plus one week's pay).

The fund is financed by employers' and employees' contributions as well as through taxes. The guarantee of the fund is independent of the employer paying the contributions. The regulation provides that the fund should satisfy the employee within 60 days of the request. The Minister for Enterprise, Jobs and Innovation can also use the fund to make payments into the assets of an occupational pension scheme so as to cover contributions that could not be paid by the employer due to insolvency.

Use of measure

In 2016, the SIF paid out a total of €30,990,000 to employees made redundant and whose employers defaulted. This is a slight reduction from the previous year, for which the same payment type came to €32,761,000. This is a reflection of the diminishing occurence of redundancies where employers cannot pay statutory entitlements. 

Due to the COVID-19 crisis, the SIF will likely be utilised to a much greater degree from mid-2020 onwards, due to company insolvencies and redundancies that will follow. According to the latest available data, the total amount by SIF has risen to €37,100,000 in 2020. 

The fund supports the payment for the following benefits: jobseeker's benefit; illness benefit; maternity benefit; adoptive benefit; health and safety benefit; invalidity pension; widow's, widower's or surviving civil partner's (contributory) pension; guardian's payment (contributory); state pension (contributory); treatment benefit; oicupational Injuries benefit; carer's benefit.

The KPMG actuarial review (2015) states that 'social insurance benefits offer excellent value for money for those on the lower part of the income distribution or shorter contribution histories, and the self-employed.'

Employees working for a company that went through informal insolvency (a company that has stopped trading but not subject to a formal wind-up) cannot access the SIF for payments owed to them arising from their redundancy. However, the Minister or Revenue can move to have the relevant operator formally wound up in the High Court.

Due to the increasing expenditure from the SIF, mainly due to increasing costs associated with state pension payments, the fund will run out of its surplus (as of 2018). The KPMG actuarial review (2015) indicates that 'the excess of expenditure over income of the Fund will increase significantly over the medium to long term. The modest 2020 projected shortfall of €0.2 billion is expected to increase to €3.3 billion by 2030 and to €22.2 billion by 2071.'

Target groups

Workers	Businesses	Citizens
Employees in standard employment Workers in non-standard forms of employment	Does not apply to businesses	Does not apply to citizens

Actors and funding

Actors	Funding
National government Company / Companies	Companies Employees Employer

Social partners

Social partners' role in designing the measure and form of involvement:

	Trade unions	Employers' organisations
Role	Unknown	Unknown
Form	Not applicable	Not applicable

Social partners' role in the implementation, monitoring and assessment phase:

• Unknown
• Main level of involvement: N/A

Involvement

Unknown

Views and reactions

Unknown

Sources

• 01 January 1984: Protection of Employees (Employers' Insolvency) Acts 1984 - 2006 (www.irishstatutebook.ie)
• 28 September 2017: KPMG (2017), Actuarial Review of The Social Insurance Fund (assets.gov.ie)