Ireland has introduced a major new safeguard for employees left unpaid when a business shuts its doors without entering formal insolvency. Announced on gov.ie, the new Deemed Insolvent Process gives eligible workers a clearer route to claim unpaid statutory entitlements through the State-backed Insolvency Payments Scheme.
The measure was commenced by the Department of Enterprise, Tourism and Employment and works alongside the Department of Social Protection. It follows the Protection of Employees (Employers’ Insolvency) (Amendment) Act 2026 and is aimed at workers whose employers ceased trading without entering liquidation, receivership or bankruptcy.
gov.ie explains the new Deemed Insolvent Process
The new pathway applies where an employee’s job has ended, money is still owed by the employer, and the debt became due on or after 8 December 2024. It is specifically designed for cases where the employer stopped trading but did not trigger a formal insolvency process.
Through gov.ie/deemedinsolvency, employees can access guidance, forms and practical steps to make a claim. The reform strengthens how Ireland implements worker protection rules under EU law and responds to legal issues identified by the Supreme Court in the Glegola case.
- Outstanding wages
- Holiday pay
- Sick pay
- Payment in lieu of minimum notice
- Certain pension contributions
- Some awards made by the Workplace Relations Commission (WRC) and Labour Court
The Insolvency Payments Scheme is administered by Social Protection and paid from the Social Insurance Fund, while the policy change sits within the wider remit of Enterprise, Trade and Employment.
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How workers can access the scheme
The new system is intended to be structured but accessible. Before applying, the employee must first try to recover the money directly from their former employer. If the employer does not pay within 8 weeks, the worker may then apply under the scheme.
Key steps in the process
- The employee’s employment must have been terminated by the employer.
- The employer must owe pay-related sums due on or after 8 December 2024.
- The business must have ceased trading without formal insolvency proceedings.
- The employment must have been fully insurable under the Social Welfare Acts, generally Class A PRSI.
- The employer will be notified of the claim and given 4 weeks to respond.
This structure is intended to balance employee access with procedural fairness and safeguards for public funds. Importantly, a finding of deemed insolvency only applies for access to the scheme. It does not alter an employer’s legal standing under bankruptcy or company law.
Why this matters for workers and employers
This change closes an important gap in Irish worker protection. While not expected to affect a large number of cases, it is highly significant for employees who might otherwise have no practical route to recover unpaid entitlements. It also reinforces the role of State bodies and public service systems, including gov.ie, Social Protection and the Workplace Relations Commission (WRC), in supporting lawful employment standards.
A separate Historical Deemed Insolvent Process is also planned for workers affected between 22 October 1983 and 7 June 2026, with applications expected to open in Q1 2027.
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What to do next
Anyone who believes they may qualify should review the official guidance on gov.ie and gather records such as payslips, contracts and proof that payment was sought from the employer. The launch of this process means gov.ie now provides a formal route for workers caught in a difficult legal grey area to pursue money they are owed. For affected employees, the key takeaway is simple: the new gov.ie Deemed Insolvent Process could unlock access to the Insolvency Payments Scheme where no clear remedy existed before.
Article/Image Courtesy: gov.ie
