The Scheme applies to employees employed in Ireland in employment that is fully insurable for social insurance purposes (this covers most employees) and whose employer is insolvent as defined in the legislation under which the Scheme operates.The Scheme also covers employees who would be fully insurable but for the fact that they have reached 66 years of age.Generally employees are not given any statutory notice. In the short term the liquidator may retain some employees in certain parts of the business.This could be where the business requires manpower to help wind down part of the company such as a manufacturing plant.For an employee to come within the Scheme, an employer must be legally insolvent under the legislation under which the Scheme operates.If a business shuts down without becoming legally insolvent the employer remains responsible for the payment of employees' pay and other entitlements.The affect on employees of Company Liquidation is often redundancy.
Liquidation may either be compulsory (sometimes referred to as a creditors' liquidation) or voluntary (sometimes referred to as a shareholders' liquidation, although some voluntary liquidations are controlled by the creditors, see below).
After a company is liquidated any employees who lose their jobs are entitled to redundancy pay.
However if the company is insolvent there may not be enough funds to pay full redundancy entitlements.
Claims are made through the person legally appointed to wind up the business (normally the Liquidator or Receiver), who will certify the claims from the records available, and submit them to the Insolvency Payments Section of the Department of Social Protection to be processed.
When the claims have been processed, payments are made to the Liquidator, Receiver, etc., who will pay the employees concerned, having made any statutory tax or other deductions.