Forewarned is Forearmed

Yes, this is another article related to the pandemic. But no, it is not going to talk about how to save your business or make sure your finances remain as solid as can be. This time, we will be addressing the essential considerations which must be taken when your company is at the ultimate point of no return – insolvency and liquidation.

HR should take the opportunity to commence preparations for this untimely event from very early on. Initial signs may consist in cost or job cutting exercises due to a heavy slowdown in business, or the application of the ‘Article 42’ provision, permitting weakened (for lack of a better word) conditions for employees in the hope of avoiding redundancies and saving the company and its finances. The final stages of a company’s liquid life may take you by surprise, and may come in various forms: winding up, acquisition or mergers, to name a few.

In the case of a continuation of business post-insolvency, HR should still ensure that updated employee records are maintained for the purposes of either redundancy planning or to ensure adherence with transfer of business regulations.

Where job cuts are in order, compliance with redundancy law is crucial. There are various provisions which must be strictly adhered to, such as the last-in first-out rule together with ensuring that all termination payments are in order, most especially where the employer offers a form of a voluntary termination scheme in such cases.

In a situation of a new transferor coming into the picture, HR will become an essential point of contact for the purposes of providing updates on such employee records and any outstanding related debts. Transfer of business regulations are strict, particularly in terms of the necessary communications which must be made between the transferee and the transferor along with any approvals required by the DIER.

Lastly, HR should always be prepared for any consultations which may be necessary in such cases. Employees will find the HR Department as their main point of contact in the case of any queries which they need answered. Furthermore, keep in mind that in any case (whether during redundancies or transfer of business) the EIRA strictly provides that employee wages constitute privileged debts, meaning that they are the first debts which are to be paid out above all others by an employer, albeit with certain exceptions and limitations.