Unfair Dismissals In Ireland-a Financial Landmine for Employers?

Unfair dismissal in Ireland is governed by the Unfair Dismissals Acts 1977-2007 and two points/fundamental principles need to be made clear about this legislation at the outset-

1. an employer must have substantial grounds for dismissing an employee
2. in doing so the employer must apply fair procedures to the process.

The Unfair Dismissals Act covers people who have been in employment for at least 52 weeks continuous service and who have not reached the normal retirement age for the employment in question.

However if there is no retirement age provided for in the contract then the employee can continue working and any dismissal will give rise to a claim for unfair dismissal.

However employees in the following categories do not have to show 52 weeks continuous service:

  •  employees who have been dismissed for trade union membership, pregnancy, maternity, ante-natal, post natal related matters, employees dismissed for exercising rights to parental leave or carer’s leave.

Employees who are not covered by the legislation include FAS trainees, members of the Defence Forces, Gardai and civil servants.

It may seem blindingly obvious but only employees may use the legislation in respect of a termination of employment-sub contractors for example would not be covered.

Fixed Term and Specified Purpose Contracts

Unfair dismissal legislation does not apply to fixed term and specified purpose contracts provided

  1. The contract was in writing
  2. The contract specifically excluded the legislation
  3. The contract was signed by both parties.

Many employers use fixed term and specific purpose contracts in the belief that they are under no obligation to renew once the term has expired.

However, non-renewal can amount to  a dismissal.

The employer must be able to show that it was a genuine fixed term contract in the first place and that there was a commercial justification for it.

Read more about fixed term contracts here.

Employees’ Remedies for Unfair Dismissal

An employee who has been dismissed has two avenues of remedy open:

  1. A claim to a Rights Commissioner or Employment Appeals Tribunal within 6 months (12 months in exceptional circumstances) or
  2. The Courts where he/she can bring an action for breach of contract or breach of constitutional rights. Because the cause of action  is a breach of contract the time limit is six years.

To bring a claim for unfair dismissal under the Unfair Dismissal Acts 1977-2007 the employee must show

  1. He was dismissed
  2. He had a contract (oral or written)
  3. He had 1 year’s continuous service
  4. He must be over 16 years of age.

Constructive Dismissal

An employee may succeed in a claim for constructive dismissal in circumstances where the employee resigns the employment as a result of the employer’s conduct towards the employee.

Circumstances giving rise to this situation include a reduction in pay, a deterioration in the working environment, change of job roles, unwarranted warnings, change of location of the job and many others.

Not all of these situations will always give rise to a successful claim for constructive dismissal but these are the kinds of things that employers must be very careful about if they don’t want to end up in the Employment Appeals Tribunal.

However employees on probation up to a period of one year are excluded from the protection of the legislation.

Unfair Dismissals

Once a dismissal has taken place the burden is on the employer to show that it was not an unfair dismissal.

There are a number of categories of dismissals which the Unfair Dismissals Act 1977 and 1993 deem to be automatically unfair. They are on the grounds of
1. trade union membership
2. the colour, race or sexual orientation of the employee
3. the employee’s religious or political opinions
4. where the employee is involved in legal action against the employer
5. the employee’s age
6. the fact that the employee is a member of the traveling community
7. the employee becoming pregnant
8. the employee taking part in industrial action.

These are the main grounds which the legislation deems to give rise to an unfair dismissal claim and are deemed by the law to be automatically unfair.

In addition if you can show that you qualify to bring a claim under the Unfair Dismissals legislation and your employer accepts that there was a dismissal, it will be for your employer to show that there were fair grounds for the dismissal as the burden of proof shifts from you to the employer.

Fair Dismissals

There are a number of limited grounds on which a dismissal can be justified by the employer as fair dismissals. They are on the grounds of

  • competence, capability or qualification
  • redundancy
  • misconduct
  • fixed term contracts or specific purpose contracts coming to a natural end
  • other substantial grounds.

Redundancy Defence

The employer has a defence in the form of redundancy but he must be able to show that the employee has been fairly selected for redundancy. However if the employer seeks to employ the redundancy defence he can expect that if an unfair claim is made against him he will find that his redundancy defence is put under a fair degree of scrutiny.

For example, it is not enough that the employer can show that his workforce numbers requirement is expected to decline some time in the future-he must be able to show that is requirements will lower in the very near future to the redundancy that he has just carried out.

Fair Procedure

The Employment Appeals Tribunal is very strong on fair procedure in relation to the termination of an employee’s job; they have held many times in the past that if they find that fair procedure was not followed then they will deem the dismissal to be unfair, regardless of the circumstances.

Adopting and implementing this Code of Practice on Grievances and Disciplinary procedures, while not mandatory, is an important factor in the employer successfully defending a claim of unfair dismissal.

Read about the essential elements of a good Grievance And Disciplinary procedure. The basic principles are

  1. The procedure is fair and rational
  2. The basis for the disciplinary procedure is clear ie the employee knows what he has done wrong
  3. The penalties are clear
  4. An internal appeals mechanism is in place.

The range of disciplinary sanctions provided for include an oral warning, a written warning, suspension with/without pay, transfer etc.

Generally the employer is required to set out the employee’s shortcomings, point out the required improvements, and give sufficient time to make the improvements.

The acid test tends to be what would a reasonable employer do and this will depend on the particular circumstances as the conduct may be of such serious nature as to warrant immediate dismissal. These circumstances are limited though an d the employer should take legal advice before dismissing without notice.

Remedies for unfair dismissal

The employee can bring a case for unfair dismissal under the Unfair Dismissals Acts 1977-2007 to a Rights Commissioner or the Employment Appeals Tribunal within 6 months.

The awards against the employer can include

  • reinstatement
  • re-engagement
  • compensation from a minimum of four weeks remuneration up to a maximum of 2 years remuneration.
Remuneration in this context includes salary, bonuses, benefits.
The Rights Commissioner and Employment Appeals Tribunal will consider what the employee has done to mitigate his loss and whether he has been able to find work since the dismissal.

Assessment of Loss

While the EAT can award up to 104 weeks compensation, the employee has a duty to mitigate his/her loss be seeking alternative employment.

The employee’s loss is financial loss (not injury to feelings etc.) up to a maximum of 104 weeks but this was amended by section 6 of the Unfair Dismissals (Amendment) Act 1993 which has the following effect:

1. if an employee has a nil financial loss (eg he immediately gets employment or is unfit to work due to sickness) the maximum he can be awarded is 4 weeks’ remuneration.

2. social welfare benefits should not be regarded in calculating financial loss.

The EAT can also reduce the award for any contributory conduct by the employee.

Please note the WRC (Workplace Relations Commission) replaced the Employment Appeals Tribunal from 2015 but the law concerning unfair dismissal has not changed and he principal act is the Unfair Dismissals Act 1977.

Employers-How to Avoid Costly Employment Claims

7 Steps to a Good Small Business Plan

The longest journey begins with a single step.

A good small business plan is critical to the success of any enterprise.

Whether it is a formal document or written on the back of a cigarette packet it is an essential first step on the road to building your small business.

Even though we in Ireland are in the midst of the worst economic situation that has ever prevailed many people are still intent on setting up their own small business.

And the first critical step in that process is to start with a small business plan.

This can take many forms but most people are agreed that there are a few critical areas which must be addressed .

1. Overall tone of your small business plan

You need to be clear and concise with your plan with clear objectives/goals and a clear strategy. It should be factual, not aspirational, and easy on the eye with plenty of white space.

2. Summary

The summary should be able to convey in a few sentences your strategy and goals and highlights the positive parts of your plan. You need to think of the elevator pitch ie can you describe your plan succinctly to a stranger if you met him/her in a lift and were travelling from the 5th floor to the 1st.

3. Description of the business

This part of your small business plan should set out clearly the industry, type of business, any company history, the legal structure to be employed, any trading history and your vision for the future.
You will need to describe the USP(unique selling proposition of your business) and how you will grow your product/service with realistic achievable goals.

4. Marketing and Sales

You will need to set out how you will market your business and obtain sales, your target market and how you will handle competition if and when the squeeze is put on your business. You will need to show some solid market research in this section and demonstrate that you know the industry that you will be competing in.

5. Your People

This part of your small business plan will deal with your people, your key personnel and will include your professional advisors such as solicitor and accountant. You will also outline any recruitment plans you have and set out your salary structure which will show also that you are planning for growth.

6. Your operations

This section will essentially set out how you operate your business and include the location of your business, any production facilities if appropriate and information technology systems which should be robust enough to accommodate your future growth plans.

7. The Financials

This section will include your realistic achievable forecasts, both of cash flow and profitability. It will also be critical to outline any capital requirements you will have into the future and demonstrate that you have actually planned for the growth that you forecast elsewhere in your small business plan.

These are the essential parts of a decent small business plan and can obviously be adapted easily depending on your particular circumstances and individual requirements. A good small business plan should be an asset to you when you walk into any meeting with a financier/investor/bank and should reflect your professionalism and overall business approach.

Make sure that it reflects well on you and your company or fledgling enterprise.

Learn more about small business in Ireland here.

Bankruptcy in Ireland-The Facts You Should Know

Bankruptcy is a commercial reality facing many people in Ireland today.

bankruptcy  in ireland
Have you insurmountable debts?

And the number of bankruptcies is increasing dramatically.

Because going bankrupt has the wonderful advantages of simplicity and finality-your debts are wiped and set at 0 and you get to start again, once you have been discharged.

What is bankruptcy?

Bankruptcy is a process where the property or assets of an individual, who is unable or unwilling to pay their debts (called a debtor), is transferred to a person given charge of the property by the High Court (called a trustee) to be sold.

NOTE: the early part of this article was written in 2009 before the new Personal Insolvency Act, 2012 which changed considerably the procedure surrounding bankruptcy in Ireland. You will find an update at the end of this page to reflect the law surrounding bankruptcy after the Personal Insolvency Act, 2012. But the consequences of bankruptcy, what happens your property, the family home, employment, operation of bank accounts, etc. remained broadly unchanged. The biggest change was the reduction in time in order to become discharged from bankruptcy from 12 years to 3 years.

When the property or assets are sold, the costs, expenses, court fees and certain priority debts are paid. After this, the net proceeds are distributed to those owed money (the creditors).

In nearly all bankruptcy cases, the Official Assignee in Bankruptcy, an officer of the Courts Service, is the trustee to whom this property is transferred. This is the person who administers the estate of bankrupt persons.

Bankruptcy proceedings are brought in the High Court. The application for a bankruptcy order (as well as any other application for the Bankruptcy list of the High Court) is filed in the Office of the Examiner of the High Court. Following this, the proceedings are dealt with by the High Court.

Declaring bankruptcy

The High Court makes a debtor bankrupt either at the request of a creditor or at his own request. In either case, this request is made in a document called a bankruptcy petition. This must be filed in the Office of the Examiner of the High Court.

When the petition is filed, the petitioning creditor or debtor undertakes to the court to advertise notice of the bankruptcy in various newspapers. The advertisement must also contain details of the place, date and time of the next time this is before the court (called the statutory court sitting).

The petitioner must also lodge €650.00 towards the costs and outlays of the bankruptcy in the Official Assignee’s Office and give an undertaking to the Official Assignee as to the further costs and outlays which may be incurred.

Bankruptcy Petition by a debtor:

A debtor may bring a petition for his/her own bankruptcy where he/she is unable to pay debts to creditors and where his/her available estate (for example assets and property) is sufficient to produce at least €1,900.00.

Bankruptcy Petition by a creditor:

A creditor may petition for bankruptcy against a debtor where the debtor has committed an act of bankruptcy within the previous three months. The most common acts of bankruptcy relied upon by a creditor are:

(a) failure by the debtor to comply with a bankruptcy summons requesting payment of a specific sum due, within fourteen days from service of the summons on the debtor, and

(b) the making of a return of no goods in respect of the debtor, by the sheriff or county registrar.

For a creditor to be entitled to petition the court to make a debtor bankrupt, a number of conditions must be met. These include :

  • the petition must be presented within three months of the act of bankruptcy,
  • the amount of debt owed must be set out in an affidavit,
  • the debt owed must be at least €1,900.00,
  • the debtor must be either resident in the State or within a year prior to presentation of the petition, have ordinarily resided, had a dwelling house or place of business, or carried on business within the State.

The creditor’s petition for bankruptcy must state whether any security (for example, a mortgage or a charge) is held by them in respect of the debt. If so, the creditor must indicate whether he/she intends to give up the security for the benefit of other creditors or put a value on their security.

The consequences of bankruptcy

Bankruptcy impacts not only on the person made bankrupt, but also on their creditors, as well as others, including their family members or people who have a commercial relationship with the bankrupt.

The bankrupt
Following adjudication (the court order making you bankrupt) a notice of this is published by the petitioning creditor or you (if you have made yourself bankrupt) in one national and one local newspaper.

This notice will also contain information about the next statutory court sitting. A local newspaper is one which is published in the area where you live or carry on business.

Creditors may appear at the statutory court sitting and may make a claim under the bankruptcy. Other notices are also published at various stages of the bankruptcy, such as advertising for creditors and notice of discharge of bankruptcy.

A bankruptcy register is maintained in the Office of the Examiner of the High Court and searches can be made against this register.

Can I stop the bankruptcy?

You may apply to the High Court within 3 days of the service of the bankruptcy order on you, giving reasons why you should not have been made bankrupt. This is called a show cause application.

What am I required to do when I am made bankrupt?

You must co-operate fully with the Official Assignee’s office in all matters relating to your bankruptcy. You must inform the Official Assignee if you change address.

Initially you must attend for interview with the Official Assignee. You must also file a Statement of Affairs in the Office of the Examiner of the High Court.

This document sets out all of your financial details including assets held and all amounts owed by you. The statutory court sitting will only be passed in the High Court when your Statement of Affairs has been filed.

You also have other legal obligations in connection with the administration of your estate and assets. This includes:

  • the delivery of your accounts or papers to the Official Assignee when requested,
  • the delivery of your title deeds to property and any other possessions to the Official Assignee,
  • assisting the Official Assignee in the administration of your estate, and
  • disclosing any property acquired by you since the date of your bankruptcy order to the Official Assignee.

Where you fail to co-operate with the Official Assignee, the High Court may summon you to examine you under oath.

What happens to my property when I am made bankrupt?

All property held by you when you are made bankrupt vests in the Official Assignee for the benefit of your creditors.

The role of the Official Assignee is to sell or otherwise dispose of this property (called realisation) and distribute the proceeds to your creditors. A vesting certificate is lodged in the Office of the Examiner of the High Court and with the Property Registration Authority.

This document records the interest of the Official Assignee in any property held by you at the date of adjudication. It means that you cannot sell or use this interest in the property as security to take out a loan.

The only property that does not vest in the Official Assignee is essentials up to a value of €3,100.00, or more if the High Court allows. Any property you acquire after you are made bankrupt, transfers to the Official Assignee, if and when the Official Assignee claims it.

What about property I own abroad?

Under EU legislation, (EU Insolvency Regulations 2002) bankruptcy proceedings in Ireland may be recognised as proceedings in most other EU member states. In most cases, this should allow the Official Assignee to realise such property for the benefit of your creditors.

Does bankruptcy have implications for my salary and pension?

Yes, the High Court may appropriate your salary or pension for the benefit of your creditors. However this is subject to any provision the High Court may make to meet your family responsibilities and your personal situation.

Can I operate a bank account while I am bankrupt?

Yes, you can operate a bank account. However if you obtain credit of €650.00 or more without disclosing your bankruptcy, you are guilty of an offence.

Can I still trade while I am bankrupt?

Yes, as long as you trade in your own name. If you trade in a name other than that in which you were made bankrupt without disclosing this name, you are guilty of an offence. You must notify the Official Assignee of any business or trade in which you engage.

Can I manage a company or become a director of a company?

No, under the Companies Acts it is an offence for a bankrupt to act in various capacities in relation to a company. These include director, auditor, manager, liquidator or receiver of a company.

Can I seek employment while bankrupt?

Yes, and you can continue in current employment or seek employment.

Can I travel outside the jurisdiction?

There is no outright prohibition on you travelling abroad but you should inform the Official Assignee if you intend to do so. You may be arrested if it appears to the High Court that you may be leaving the State in order to avoid the consequences of your bankruptcy.

Are there other consequences of bankruptcy?

Yes, bankrupt persons are not entitled to hold elected representative office, in local authorities, in the Dáil or the Seanad.

Are there alternatives to being made a bankrupt?

Yes, a debtor may enter a voluntary arrangement with their creditors to settle debts due to them and to avoid bankruptcy or other proceedings against them. Arrangements made outside of the control of the High Court tend to be less costly in the long run.

Alternatively, a debtor can apply for an arrangement under the protection of the High Court. This is where a debtor asks the High Court for protection against proceedings to give them time to present a proposal to their creditors.

This proposal could be to pay a dividend (normally a percentage of the amount owed) on their debts or to transfer property to the Official Assignee to be sold and the proceeds distributed among their creditors. The proposal must receive the support of at least sixty per cent in number and value of the unsecured creditors voting on it to succeed. The costs, court fees, expenses and preferential debts must also be paid in full.

I have been discharged from bankruptcy; will my name be removed from the register?

No, the Register is a record of all bankruptcies, including those that have been discharged. A person searching the Register is told the status of the bankruptcy (discharged) and the date it was discharged. No information is given about the address of the former bankrupt.

Family of bankrupt

Can the family home be sold?

The bankrupt’s interest in the family home vests in the Official Assignee as with all other property.

However the Official Assignee may not sell the family home without obtaining permission from the High Court. Where the Official Assignee seeks this permission, the High Court may postpone the sale of the family home having regard to the interests of the creditors and of any spouse and dependants of the bankrupt.

We already have a mortgage or have borrowed against this home

Then this is a secured loan against the property and the Official Assignee’s interest only relates to the equity remaining in the property.

I jointly own the family home with the bankrupt, what about my interest?

Where the bankrupt owns property jointly with a spouse or partner, the bankruptcy causes the joint ownership to be split. The Official Assignee and the non-bankrupt co-owner then hold separate interests in the property.

As a bankrupt can still earn a living, what about our income?

The Official Assignee may apply to court for the appropriation of part of the bankrupt’s salary, income or pension. If the High Court directs any deduction to be made, it may have regard to the bankrupt’s family responsibilities and personal situation.

Social welfare and unemployment payments are not liable to appropriation.

Commercial relationship with a bankrupt

The following are some common examples of third parties dealing with a bankrupt.

Property owned jointly with a bankrupt

Where a person owns property jointly with a bankrupt, the bankruptcy splits the joint ownership. The non-bankrupt co-owner and the Official Assignee then hold separate interests in the property.

Property transferred by the bankrupt

Bankruptcy has legal implications for property transfers and possibly sales where the bankrupt entered into such transactions within certain time limits prior to the bankruptcy.


A partnership where the bankrupt is a partner is dissolved by the bankruptcy. This is unless the terms of the partnership provide for it to continue.

What can I do if a bankrupt owes me money?

You cannot use normal remedies (for example, execution, instalment orders and registration of judgment mortgages) to secure payment of your debt if the money is owed at the date of bankruptcy.

You must make a claim in the bankruptcy for payment.

Will I automatically be paid the amount owed to me?

Only when funds are available to the Official Assignee to distribute. In addition, all creditors must prove their debt. This means they must provide evidence of their debt to the Official Assignee, for example, invoices, bank statements, judgment orders or affidavit of debt.

An advertisement for creditors will be placed in newspapers during the bankruptcy process. This asks creditors to submit proof of their debt to the Official Assignee.

But creditors do not have to wait until the advertisement – they can send their proof to the Official Assignee before that date if they wish. Dividends to creditors will only be paid after this advertisement appears and a proof of debt sitting is held by the Official Assignee. This is where the Official Assignee decides if a debt (or the amount of a debt) is admitted.

All creditors are entitled to examine the proofs of other creditors.

Only debts owed on the date of adjudication are admitted under the bankruptcy. The High Court decides on disputed debts. This is where the bankrupt and the creditor do not agree on the amount owed or the amount admitted by the Official Assignee.

Once my debt is admitted will I be paid in full?

Not necessarily, this depends on a number of factors:

  • the amount of funds available for distribution
  • status of your debt,
  • value of the bankrupt’s estate,
  • method of discharge.

Do all creditors have the same standing in the bankruptcy?

No – there are different categories of creditors and their standing in a bankruptcy depends on whether they hold security for their debt or not. Once a debtor is made bankrupt, the petitioning creditor ranks equally along with all the other unsecured creditors. However the costs of the petitioning creditor must be paid before a bankruptcy is discharged.

What is a secured creditor?

A secured creditor holds security such as a mortgage or judgment against a property owned by the bankrupt.

The secured creditor can rely upon this security and sell the asset comprising the security. They must account to the Official Assignee in respect of the sale and may claim for any amount (if any) still owed following the sale.

After this and payment of any other secured claims, the secured creditor must pay any surplus to the Official Assignee and/or others having an equity in the property. There can be a number of creditors holding security against a single property.

Alternatively, the secured creditor may abandon their security and make a claim as an unsecured creditor for the entire debt.

What is a preferential creditor?

A preferential creditor is a creditor whose debts have priority for payment before other creditors. These include taxes, rates and certain kinds of employee claims and benefits. These must be paid in full before a bankruptcy is discharged.
What is an unsecured creditor?

An unsecured creditor does not hold any security, for example, trade creditors and other business debts. They rank equally with other unsecured creditors.

Discharge from bankruptcy

How long does bankruptcy last?
Anyone who is made a bankrupt remains a bankrupt, even after death, unless or until they are discharged by the High Court. There is no right to automatic discharge.

How is a person discharged from bankruptcy?

A bankrupt may be discharged from bankruptcy in a number of ways. No bankrupt can be discharged unless there are enough funds to pay:

  • The costs of the Official Assignee,
  • High Court fees,
  • The costs of the petitioning creditor,
  • The preferential debts of the bankrupt.

When someone is discharged from bankruptcy, any funds or properties remaining with the Official Assignee are returned to the former bankrupt.

(i) Discharge after payment of debts in full:

This is where the bankrupt’s creditors are paid in full. If the High Court so allows, interest may also be payable. Normally, interest is only paid where surplus funds are available.

(ii) Discharge with the creditors’ consent:

This is where all of the bankrupt’s unsecured creditors consent to the discharge.

(iii) Discharge after making composition with the creditors:

This is where unsecured creditors agree to accept payment of a certain percentage of their debt in settlement of the full amount. This must be supported by at least sixty per cent in number and value of those creditors who vote at a sitting of the High Court for this to be accepted. The bankrupt must provide the Official Assignee with sufficient funds to make this settlement and pay his/her unsecured creditors. This is called an Offer of Composition.

(iv) Discharge after paying fifty cent in the Euro:

This is where all of the bankrupt’s property has been fully sold or disposed of and his/her creditors have received fifty cent in the Euro on their debts.

(v) Discharge after twelve years:(NOTE: this has changed now with the new Personal Insolvency legislation, 2012)

This is where the bankruptcy has lasted for twelve years and all of the bankrupt’s property has been fully sold or disposed of. The court must be satisfied that the bankrupt has disclosed any property acquired since his/her bankruptcy and that it would be reasonable and proper to discharge the debtor from bankruptcy.

Bankruptcy Register

The register is a record of all bankruptcies, including those that have been discharged.

However a person conducting a search against the register is told only the status of the bankrupt ‘discharged’ and the date it was discharged. No information is given about the former bankrupt.

Bankruptcy law

The main provisions of bankruptcy law are contained in the Bankruptcy Act, 1988, the Bankruptcy rules and forms, Order 76 and Appendix O of the Rules of the Superior Courts, the Deeds of Arrangement Act, 1887 and the decisions of the courts.

The court fees payable in bankruptcy and arrangement matters are contained in the Supreme Court and High Court Fees Order.

Bankruptcy searches

At present searches of the Bankruptcy and Arranging Debtor Registers can only be conducted by attending in person at the Examiners Office, 2nd Floor Phoenix House, Phoenix Street North, Smithfield, Dublin 7. The fee per search is available in the Rules & Fees section. Please note this fee is also applicable when the search returns a negative result – that is, there is no entry matching the search criteria on the registers.

Bankruptcy information

If you have any enquiries about a particular bankruptcy or arrangement matter, you should contact the Office of the Official Assignee or the Office of the Examiner of the High Court.

All enquiries about court orders or applications for the bankruptcy list of the High Court should be directed to the Office of the Examiner of the High Court.

To Avoid Bankruptcy

1. Reduce your expenditures.
Analyze what are your needs and wants and segregate the two. Cut off expenses for things that you can live without.

2. Negotiate with creditors.
If it is possible, take your way out of the deadline and ask for a deadline that would work better for both of you. You can also ask them to limit your liability to a certain amount in return for prompt payment.

3. Resort to Debt Restructuring.
This may be obtained through court order or out-of-court.

4. See if any of the new personal insolvency arrangements are suitable for your situation.

Going Bankrupt in Ireland-The New Situation Post Personal Insolvency Act, 2012

The law surrounding going bankrupt has changed significantly in 2013 with the passing of the Personal Insolvency Act, 2012.

The new rules for choosing to go bankrupt yourself or being made bankrupt are set out in Statutory Instrument 120 of 2012.

There is also a guide on the Court Service website here.

While the new arrangement and earlier discharge period is much more attractive than the old and antiquated bankruptcy laws in Ireland, it is still not ideal and you will need to have at least €650 in cash to give the Official Assignee and assets of €1,904.61.

How to Go Bankrupt

Choosing to go bankrupt will involve petitioning the High Court, lodging €650 with the Official Assignee, and filing a statement of affairs once you have been adjudicated bankrupt.

The rules for a bankruptcy petition by a debtor are:

26. (1) A debtor’s petition shall be in the Form No. 13 and shall:

(a) contain an undertaking by the debtor to attend in person at the statutory sitting;

(b) contain an undertaking by the debtor to advertise notice of the adjudication and statutory sitting in the manner directed by the Court and to bear the expenses of such advertisement;

(c) contain an undertaking by the debtor to lodge such sums, if any, as the Court may from time to time direct to cover the costs, fees and expenses incurred or to be incurred by the Official Assignee;

(d) contain:
(i) statements that the Insolvency Regulation applies to the proceedings and that the debtor’s centre of main interests is situated in the State and the facts and grounds supporting each statement; or

(ii) statements that the Insolvency Regulation applies to the proceedings, that the debtor’s centre of main interests is situated in another specified Member State and that the debtor has an establishment within the State and the facts and grounds supporting each statement; or

(iii) a statement that the Insolvency Regulation does not apply to the proceedings, and in such case, shall contain a statement that the debtor is domiciled in the State or that, within a year before the date of the presentation of the petition, he has ordinarily resided or had a dwellinghouse or place of business in the State, or that he has carried on business in the State personally or by means of an agent or manager, or that he is or within the said period has been a member of a partnership which has carried on business in the State by means of a partner, agent or manager and the facts and grounds supporting that statement, and

(e) where the Insolvency Regulation applies to the proceedings, contain a statement that, to the debtor’s knowledge, no insolvency proceedings have been opened in respect of the debtor in any Member State or Member States (other than the State), or that such insolvency proceedings have been opened and if so, whether those insolvency proceedings are main proceedings, secondary proceedings or territorial proceedings.

(2) Where insolvency proceedings have been opened in another Member State, the affidavit verifying the petition shall exhibit a certified copy of the original decision appointing the liquidator or any other certificate of the court having jurisdiction (as referred to in Article 19 of the Insolvency Regulation) and if such decision or certificate is not in one of the official languages of the State, a translation of that decision or certificate into the Irish or the English language certified by a person competent and qualified for the purpose.

(3) The petition shall be supported by an affidavit, which may be endorsed on the petition, which shall verify the petition and shall verify the facts supporting every statement made for the purposes of sub-rule (1)(d).

26A. (1) This rule applies only where the centre of the debtor’s main interests is situated within the territory of a Member State other than the State.

(2) In a case to which this rule applies, the petition shall also:

(i) identify the place within the State where the debtor has an establishment and the facts and grounds supporting that statement;

(ii) where main proceedings have not been opened in another Member State, contain a statement as to which of the conditions referred to in Article 3(4)(a) or Article 3(4)(b) of the Insolvency Regulation is met and the facts and grounds supporting that statement.

(3) The affidavit verifying the petition shall verify the facts supporting every statement made for the purposes of sub-rule (2).

27. A petition of bankruptcy by a debtor shall be supported by the affidavit of the debtor setting forth the particulars of his assets and where the same are and the estimated value thereof, in order that it shall be made to appear to the satisfaction of the Court that his available estate is sufficient to produce the sum of €1,904.61 at the least, and if required he shall produce satisfactory evidence of the value of such assets.

Source: Courts Service, Order 76

Before choosing to go bankrupt, you should seek the best advice you can get because bankruptcy is not for everyone so you should speak to any or all of the following:

  • MABS (Money advice budgeting service)
  • a PIP (professional insolvency practitioner)
  • a solicitor.

Despite the claims of the head of the Insolvency Service of Ireland, Lorcan O’Connor, that going bankrupt in Ireland can be achieved for less than €750, it is likely that it will cost you considerably more.

How to Register a Business Name in Ireland

Are you confused by the difference between a limited company and merely using a business name in your business.

Hopefully this piece will clarify how and why you might register and use a business name.

Elsewhere on the site you can read about the advantages and disadvantages of setting up a limited company.

The registration of a business name is obligatory if any individual or partnership (whether individual or bodies corporate) or any body corporate carries on business under a name other than their own true names.

Specifically it is required if an individual uses a business name which differs in any way from his/her true surname.

It makes no difference whether the individual’s first name or initials are added. So the registration of a business name would be required if, for example, Mr. John Smith traded as “Smith Builders” but not if he traded as “Smith” or “John Smith”).

The registration of a business name would also be required if a firm uses a business name which differs in any way from the true names of all partners who are individuals and the corporate names of all partners which are bodies corporate.

The registration of a business name would also be required if a company uses a business name which differs in any way from its full corporate name; or

a person having a place of business in the State carries on the business of publishing a newspaper.

Registration of a business name requirements

The particulars for registration must be furnished within one month of the date of the adoption of the business name.

The forms of application for registration are:

Form RBN1: for an individual;

Form RBN1A: for a partnership;

Form RBN1B: for a body corporate.

The filing fee is €30.

You should note that registration of a business name

1. does not give protection against duplication of the business name;
2. does not imply that the business name will necessarily prove acceptable subsequently as a company name;
3. does not authorise the use of the business name if its use could be prohibited for other reasons.

It should not for instance be taken as an indication that no rights (e.g. trade marks rights) exist in the name.

The companies registration office does not check proposed business names against names on the registers of companies or business names. It is advisable, therefore, to investigate the possibility of others having rights in the name which it is proposed to use before incurring expenditure on business stationery, etc.

You can check the register of companies and register of business names for free using the companies registration office web search facility.

You can undertake a search of the trademark register at the Patents Office.

Requirements following registration of a business name

Certificate of registration

The registrar issues a certificate of registration for each business name registered. A copy of the certificate of registration must be exhibited in a conspicuous position:

in the case of a firm or individual at the principal place of business and in every branch office or place where business is normally carried on;

in the case of a body corporate, at its registered office in the State and in every branch office or place where business is normally carried on.

Business letters

The name(s) of the proprietor(s) of a business must be shown on all business letters, circulars etc. on which the business name appears.

If the proprietor of the business name is a body corporate the following additional information must be shown on business letters:

1. The full name of the company (note that the only permitted abbreviation is “Ltd” for Limited, “PLC” for Public Limited Company, etc.);
2. The names and any former names of the directors and nationality if not Irish;
3. Additional particulars are required on letters and order forms for Irish registered companies (this does not apply to unlimited companies):
4. The place of registration (e.g. registered in Dublin, Ireland);
5. the registered number (i.e. number of certificate of incorporation);
6. the address of the registered office (where this is already shown on the document, the fact that it is the registered office must be indicated);
7. if the company share capital is mentioned on the business letters and order forms, the reference must be to the paid-up share capital.

Registering changes

When a change occurs in any of the particulars of a registered business name (e.g. change of business name or business address) it should be notified to the registrar within one month of the date of the change.

The forms for notifying changes are as follows:

1. Form RBN2: for an individual;
2. Form RBN2A: for a partnership;
3. Form RBN2B: for a body corporate.

Cessation of business name

When an individual, partnership or body corporate ceases to carry on business under a business name, a Form RBN3 should be filed in the companies registration office within three months after the business has ceased.

A fee does not apply to Form RBN3.

The form should be signed as follows:

Individual: by the individual. In the event of the death of an individual by the personal representative of the deceased;

Partnership: by all persons who were partners of the firm when it ceased to carry on business;

Body corporate: by a director or a liquidator.

Checklist for business name forms

In brief:

The appropriate fee must be lodged;

It is essential that the correct form be submitted at the time of application to register a business name.

The full name of the business must be given on all forms and forms must be dated.

Forms RBN1, RBN1A, RBN1B

The general nature of business must be completed;

The full address of the principal place of business must be stated, a PO box number will not suffice. An address outside the State is not acceptable;

The full date of adoption (i.e. day, month, year) of the business name must be given;

RBN1 : The form must be signed by the individual applying for registration;

RBN1A : The forename name and surname of every individual who is a partner in the firm together with the corporate name of every body corporate which is a partner must be given on the form. The form must be signed by either all the individuals who are partners and by a director or secretary of all bodies corporate which are partners, or by some individual who is a partner, or by a director or secretary of some body corporate which is a partner. In this case the form must be verified by a statutory declaration made by the signatory;

RBN1B : The form must be signed by a director or secretary of the company applying for registration.

Displaying the company name

Every business must paint or affix its business name on the outside of every office or place in which the business is carried on, even if it is a director’s home. The name must be both conspicuous and legible.

In addition, the company must state its business name, in legible lettering, on company letter heads, order forms, invoices, etc

Learn more about small business law in Ireland.

How To Register a Limited Company in Ireland and the Advantages/Disadvantages of Limited Liability

Limited liability? Is your liability really limited?


Maybe, maybe not.

This piece will look at how to set up a limited company in Ireland and look at what are the advantages and disadvantages of setting up a company.

Setting Up a Company

To form a company, also known as setting up a company or incorporating a company, you will need to submit the following documents, along with the registration fee, to the companies registration office:

1. Memorandum of association
2. Articles of association
3. Form A1

To carry out your company set up you can download the forms above from the companies registration office website at CRO.ie.

Memorandum of association

Your company set up will involve whats called a memorandum of association. This memorandum of association sets out the conditions upon which the company is granted incorporation. It must contain provisions dealing with certain matters e.g. the name and objects of the company and, if it is a company with limited liability, that fact must also be stated.

The memorandum of association must be in accordance with, or as near as circumstances permit, to the appropriate table in the First Schedule to the Companies Act 1963. It must be printed and divided into paragraphs and numbered consecutively.

Types of company

To set up a company in Ireland you must decide first which is the most appropriate type of company for your enterprise-

1. Private company limited by shares Table B
2. Company limited by guarantee and not having a share capital Table C
3. Company limited by guarantee and having a share capital Table D
4. Unlimited company Table E
5. Public limited company Second Schedule of Companies (Amendment) Act 1983

Articles of association

Your company set up will also require the use of articles of association. The articles of association is a document which sets out the rules under which the company proposes to regulate its affairs.

Articles of association are required to be registered by a company limited by guarantee and having a share capital or an unlimited company. Articles of association must be printed and divided into paragraphs and numbered consecutively.

A company limited by shares or a guarantee company not having a share capital may register articles of association with the CRO. Model form articles of association are set out in the First Schedule to the Companies Act 1963.

Samples of memorandums and articles may be obtained from legal stationers, accountants, solicitors or company formation agent.

Form A1

Form A1 requires you to give details of the company name, its registered office, details of secretary and directors, their consent to acting as such, the subscribers and details of their shares. It incorporates a statutory declaration that the requirements of the Companies Acts have been complied with, and as to the activity which the company is being formed to engage in.

Applications for company set up can be submitted under any one of three schemes, each of which has a different customer service standard:

Ordinary: while there is no guaranteed service level, in practice it takes 15 working days.

Fé Phrainn: ten working days

Companies Registration Office Disk: five working days

Documents are processed in chronological order and are subject to checks. Documents returned for correction are processed according to their date of re-submission to the companies registration office.

Statutory declarations sworn abroad will often require further legalisation.

Company set up in Ireland is a relatively straight forward process. The companies registration office are helpful and they have quite a lot of information on their website.

Sooner or later when forming your small business or even if you choose to work from home, you will have to carry out a company set up. This need not be a complex task but only you can decide at the time whether you need to carry out a company set up……

……..or whether the disadvantages of company set up outweigh the advantages.

Company Registration-the Advantages and Disadvantages of a Limited Company in Ireland

If you are thinking of starting a business in Ireland you may be considering registering a limited company rather than trading as a sole trader or partnership.

 What are the advantages of setting up a limited company?

There are three broad advantages of registering a company with the Companies Registration Office (www.cro.ie).

Advantages of a limited company

Firstly a company has a separate and distinct legal identity from it’s member or shareholders. This allows it to enter into contracts, sue and be sued, and so on in it’s own right.

Secondly a company can live forever provided it is not liquidated or struck off the companies’ register-this is called perpetual succession.

Thirdly it’s potential liability is limited to it’s paid up share capital unless it is an unlimited company but the vast majority of companies in Ireland are private limited companies. In theory this means that you as shareholder or member are protected from creditors and banks should the company cease. In practice however you will find that many banks and suppliers will insist on personal guarantees from directors or shareholders.

Disadvantages of a limited company

The main disadvantage of setting up your own company are

  • Cost, although this is minimal as you can incorporate a company for between €200 and €300
  • Filing financial statements every year with the Companies Registration Office with those details being open to public scrutiny.

On balance, notwithstanding the limitations on the concept of limited liability and protection from creditors, setting up a company is a smart move. The alternatives of trading as a sole trader or partner in a partnership offer no protection from creditors and can leave you open to losing everything you own and bankruptcy.

Learn more about small business law in Ireland here.