The Employment (Collective Redundancies and Miscellaneous Provisions) and Companies (Amendment) Act 2024 was commenced on 1st July 2024. The Act seeks to increase the protection of employees in insolvency situations and imposes additional requirements on company directors to ensure that they act responsibly particularly when a company is facing insolvency.
Some of the main provisions of the Act include:
- Provides for the establishment of a statutory Employment Law Review Group (ELRG) which will advise the Minister on all aspects of employment and redundancy law;
- provides for the newly defined term of “responsible person” as individuals like liquidators, receivers, or other court-appointed managers who assume control of a business. The Act provides for the obligations and responsibilities to which a “responsible person(s)” who assumes full control of an affected business is required to adhere;
- enhances the protection of employees’ rights and interests in the event of a company’s liquidation including:-
- Improving the quality and circulation of information to workers as creditors such as ensuring they have access, within a reasonable period, to the company’s Statement of Affairs
- ensuring the provisional liquidator informs them of his/her appointment, explains the liquidation process and invites them to provide relevant information
- expands the time period for scrutiny when transferring assets in the period prior to insolvency;
- enhances the powers of the courts to order a related company to contribute to the debts of the company being wound up;
- Ability to hold directors liable for reckless trading unless they actively take action to minimise loss to creditors.
The new legislation increases the responsibility of directors to ensure that they act honestly and responsibly and in the best interests of the company, its employees and creditors and in particular when a company is facing financial difficulties.
NB: The content of this article is provided for information purposes only and does not constitute legal or other advice.
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