Insolvency Payments Scheme Ireland 2026 — When Your Employer Goes Bust

What is the Insolvency Payments Scheme?

The Insolvency Payments Scheme (IPS) is a statutory safety net for employees whose employer becomes insolvent. It is administered by the Department of Enterprise, Trade and Employment and funded from the Social Insurance Fund — the same fund that pays Jobseeker's Benefit and other social welfare payments. When a company collapses, there may not be enough assets to pay all outstanding employee debts from the insolvent estate. The IPS steps in to guarantee specific categories of payment up to defined limits, regardless of what is left in the company.

The scheme does not cover everything you may be owed. It has a weekly earnings ceiling of €600 gross and caps on the number of weeks that can be claimed for each payment type. Understanding exactly what is and is not covered is critical so you can also pursue any uncovered amounts through the liquidation process as an unsecured creditor.

What Triggers the Insolvency Payments Scheme?

The scheme is activated when an employer enters one of the following formal insolvency processes:

• Court liquidation: a court orders the company to be wound up
• Voluntary liquidation: the company's shareholders resolve to wind it up voluntarily
• Receivership: a secured creditor (usually a bank) appoints a receiver to recover assets securing a debt
• Examinership: the company enters court protection while attempting to restructure; employees may be owed arrears at that point
• Bankruptcy: applies where the employer is a sole trader rather than a limited company

Since 8 June 2026, a separate Deemed Insolvent Process is also available for employees whose employer ceased trading without entering any formal insolvency process — see the dedicated section below.

The Deemed Insolvent Process — Employers Who Closed Without Formal Insolvency

Under the standard IPS route, a liquidator or receiver manages the application on behalf of all employees. Where an employer simply stopped trading and disappeared without any formal insolvency appointment, there is no liquidator to do this. The Deemed Insolvent Process creates a route for affected employees to apply directly to DETE.

Formal Insolvency vs Deemed Insolvent Process — Comparison

Feature	Formal Insolvency Route	Deemed Insolvent Process
Trigger event	Court liquidation, voluntary liquidation, receivership, examinership, or bankruptcy	Employer ceased trading without entering any formal insolvency process
Available since	Long-established	8 June 2026
Who applies	Liquidator or receiver applies on behalf of employees	Employee applies directly to DETE
Automatic eligibility	No — depends on provable debts within scheme limits	No — assessed case by case on evidence provided
Evidence required	Employment records provided to the insolvency practitioner	Employee must provide evidence of cessation of trading and outstanding debts (see below)
Payments available	Wages, holiday pay, sick pay, notice pay, statutory redundancy (all within scheme limits)	Same scheme payments and limits apply — subject to DETE assessment

Is the Deemed Insolvent Process Right for Your Situation?

Use this checklist to assess whether the Deemed Insolvent Process may apply to you. Meeting these criteria does not guarantee eligibility — DETE assesses each application on its facts.

• Your employer has stopped trading and is no longer operating
• No formal insolvency process has been initiated (no liquidator, receiver, examiner, or bankruptcy trustee has been appointed)
• You are owed wages, holiday pay, notice pay, or statutory redundancy that has not been paid
• You were employed under a contract of employment and insurable under PRSI Class A
• The outstanding debt falls within the scheme's payment types and limits
• You have documentary evidence of your employment and the amounts owed
• You have attempted to contact your employer about the outstanding amounts without success

Documents to Gather for the Deemed Insolvent Process

• Payslips or wage records showing the amounts owed and the periods involved
• Your contract of employment confirming your start date, role, and agreed pay
• P60 or statement of earnings for all years of employment
• Evidence that your employer has ceased trading — for example: a written notice of closure from the employer, confirmation that the business premises have closed, correspondence from DETE or another government body, or evidence that the employer is uncontactable
• Records of any communication with your employer about outstanding amounts (emails, letters, messages)
• Evidence that you have attempted to contact your employer without success
• Any employment tribunal or WRC determination relating to your employment (if applicable)

Who is Covered?

The scheme covers employees who are insurable for PRSI under Class A. This includes:

• Full-time employees
• Part-time employees (provided they are on Class A PRSI)
• Company directors who hold less than 50% of the company's shares

What You Can Claim — Payment by Payment

1. Arrears of Wages

If your employer stopped paying your wages before the insolvency event, you can claim up to 8 weeks of wage arrears, capped at €600 gross per week. The maximum recoverable in this category is €4,800. Wages owed beyond 8 weeks are treated as an unsecured debt in the liquidation and may not be recovered in full depending on what assets the company holds.

2. Holiday Pay Owed

Accrued annual leave that was not taken and not paid out can be claimed up to a maximum of 8 weeks of holiday pay, again at the €600 weekly ceiling. Only leave accrued but not taken or paid is covered — leave that was taken but not paid falls within the arrears of wages category.

3. Sick Pay Owed

If your employer owed you contractual sick pay that was never paid, this is claimable up to 8 weeks at the €600 ceiling. This refers to employer sick pay obligations — it does not include the State's Statutory Sick Pay (SSP) scheme, which is a separate entitlement.

4. Pay in Lieu of Minimum Notice

If you did not receive notice of termination or were not paid in lieu, the scheme covers the statutory notice period based on your length of service:

Length of Service	Statutory Notice Entitlement
13 weeks to 2 years	1 week
2 to 5 years	2 weeks
5 to 10 years	4 weeks
10 to 15 years	6 weeks
15 or more years	8 weeks

Each week of notice pay is capped at €600 gross.

5. Statutory Redundancy Pay

Statutory redundancy is paid in full through the scheme — it is not subject to a week-limit in the same way wages and holiday pay are. The statutory formula is:

• 2 weeks of pay × number of completed years of service
• Plus 1 bonus week
• Weekly pay capped at €600 gross for the calculation

An employee with 10 years of service earning above the cap would receive: (10 × 2 × €600) + €600 = €12,600 in statutory redundancy from the scheme.

Worked Example — Elena and the Liquidated Company

Elena has worked for a technology services company for 6 years. Her gross weekly wage is €750. Her employer enters voluntary liquidation. At the time of liquidation she is owed 12 weeks of unpaid wages and 4 weeks of untaken annual leave. She was given no notice.

Under the Insolvency Payments Scheme, Elena's position is as follows (all calculations use the €600 cap, not her actual €750 wage):

• Wage arrears: 8 weeks × €600 = €4,800 (the remaining 4 weeks of unpaid wages become unsecured debt in the liquidation)
• Holiday pay: 4 weeks × €600 = €2,400 (all 4 weeks covered as she is within the 8-week maximum)
• Minimum notice (5–10 years service): 4 weeks × €600 = €2,400
• Statutory redundancy: (6 × 2 × €600) + €600 = €7,800

Elena receives a total of €17,400 through the scheme. The 4 weeks of unpaid wages above the 8-week cap are a claim she can lodge as an unsecured creditor in the liquidation, though recovery will depend on what assets the company holds after preferential and secured creditors are paid.

Time Limits and Claim Deadline

The deadline to submit a claim under the Insolvency Payments Scheme is 18 months from the date of the insolvency event or the date your employment ended, whichever is the later of the two. Do not delay — once this deadline passes, your claim will be refused regardless of how legitimate it is.

If you also want to bring a claim to the Workplace Relations Commission — for example, if you believe you were unfairly dismissed in the lead-up to insolvency — the standard WRC time limit of six months from the date of dismissal still applies separately.

Evidence to Keep

• All payslips covering the period during which wages were not paid
• P60 forms for all years of employment
• Your contract of employment (shows entitlements, start date, agreed salary)
• Records of annual leave taken and untaken (timesheets, email approval records)
• All written communications from your employer before and during the insolvency
• Documentation received from the liquidator or receiver (appointment notice, creditor meeting notices)
• Any WRC or court determination against your employer that pre-dates the insolvency

What About Enhanced Redundancy and WRC Claims?

If your contract of employment provided for redundancy above the statutory formula — for example, three weeks per year of service — the additional amount above the statutory entitlement is not paid by the scheme. It becomes an unsecured debt in the liquidation. You can lodge a proof of debt with the liquidator for the enhanced element, but recovery depends entirely on what assets are available after secured and preferential creditors are paid. In most insolvencies, unsecured creditors receive little or nothing.

If you had an outstanding WRC claim against your employer before the insolvency (for example, for unfair dismissal or a payment shortfall), that WRC determination becomes a preferential debt in the liquidation, which means it is ranked above ordinary unsecured creditors. You can still continue a WRC claim against an insolvent employer; any award can be lodged in the liquidation as a preferential claim.

Common Mistakes to Avoid

• Thinking you can recover all unpaid wages: only 8 weeks of wage arrears are covered by the scheme — beyond that it is an unsecured debt
• Applying directly to DETE when a liquidator is in place: the liquidator or receiver manages the application; contact them first and provide all required documentation promptly
• Missing the 18-month deadline: set a reminder immediately on learning of the insolvency; the deadline is absolute
• Confusing statutory and enhanced redundancy: only the statutory formula is guaranteed by the scheme; enhanced amounts are unsecured debts
• Assuming the Deemed Insolvent Process guarantees full recovery: eligibility and amounts are assessed case by case — contact DETE for guidance specific to your situation
• Not lodging a proof of debt with the liquidator: even for amounts not covered by the scheme, lodge a proof of debt for unsecured amounts to preserve your position as a creditor in the liquidation
• Assuming the scheme will be slow and not worth pursuing: DETE processes straightforward claims within 6–8 weeks; the amounts involved are often significant and worth claiming

Official Sources

• Gov.ie — Insolvency Payments Scheme
• Citizens Information — Insolvency Payments Scheme
• Workplace Relations Commission (WRC)
• Department of Enterprise, Trade and Employment