Supreme Court upholds damages award of €16,000 to woman over redundancy law failure by State
The Supreme Court has upheld a €16,818 damages award to a woman made redundant by a Dublin spa company because of the State's failure to correctly transpose into Irish law an EU directive protecting employees of businesses which have become insolvent.
Last year, the Court of Appeal reversed a High Court decision against Magdalena Glegola who was employed by the Metro Spa Ltd, Clarendon Street, until she was dismissed by reason of redundancy in November 2011.
She was informed the company was going into liquidation.
However, she believed it continued to trade and she made a complaint to a Rights Commissioner who awarded her €16,818.
The company did not contest the hearing before the Rights Commissioner but its solicitor wrote saying it had ceased trading in November 2011.
The solicitor also stated the only reason the firm had not entered into liquidation was because of the cost of it and lack of resources to pay for it.
Metro Spa was later struck off the companies' register for failing to file accounts.
Ms Glegola's lawyers applied to the High Court to have it restored to the register so that a formal winding up order could be applied to it.
This would mean that she would be able to seek her €16,818 award from the State's Social Insurance Fund (SIF).
The High Court ordered its restoration to the register in 2014 and also declared that as it was unable to pay its debts it was not being wound up due to insufficiency of assets.
Armed with this order, she applied to the Department of Social Protection for payment of her award under the SIF.
When she got no response, she brought High Court judicial review proceedings against the Minister for Social Protection and the State claiming she was entitled to the award under an EU directive (2008/94/EC).
She also claimed there had been a failure by the State to transpose that directive into Irish law, specifically under the Protection of Employees (Employers' Insolvency) Act 1984.
The State parties opposed her case. The High Court found in the Department's favour and she appealed.
The appeal court found there had been a breach of the directive because there should be an alternative, for an employee seeking payment of a debt from their insolvent employer, to the requirement that the company had to be wound up first.
The breach was sufficiently serious where it leaves an employee intended to benefit from the provisions of the directive unable to recover monies due to her.
This was in circumstances where the directive provides that such monies should be recoverable from the SIF.
The State was granted a further appeal in the Supreme Court claiming the appeal court had erred in its decision. The State argued, among other things, the appeal court was wrong to have interpreted the directive as it did and in deeming it to be mandatory. Ms Glegola opposed the appeal.
Mr Justice Donal O'Donnell, on behalf of a five-judge Supreme Court, said the directive must be interpreted as requiring EU member states to have a mechanism allowing the court to determine that a state of insolvency arises permitting employee claims to be met from the SIF without making a winding up order.
He also agreed with the appeal court that Irish legislation does not provide for the necessary procedure where this occurs.
