The Supreme Court has upheld a €16,818.75 damages award to Magdalena Glegola after finding that Irish law had failed to provide a procedure required by an EU directive for certain employees of insolvent companies.
The judgment, delivered by O’Donnell J. on 20 December 2018, dismissed an appeal by the Minister for Social Protection, Ireland and the Attorney General against the Court of Appeal’s decision. The appeal concerned damages for Ireland’s failure to correctly transpose Directive 2008/94/EC on protecting employees when their employer becomes insolvent.
Ms Glegola had worked for Metro Spa Limited, which had premises on Clarendon Street in Dublin. She said she was dismissed on 30 November 2011 after being told the company was going into liquidation. In a letter dated 7 June 2012, the company’s solicitors said it had stopped trading in November 2011 but lacked the resources to meet the costs of liquidation.
A Rights Commissioner later made a binding recommendation totalling €16,818.75 in her favour: €10,000 for unfair dismissal, €5,000 under working-time legislation and €1,818.75 in unpaid wages. The company was struck off the Register of Companies in October 2013. Ms Glegola then sought to have it restored and wound up, but explained that the company could not meet the cost of liquidation. The High Court restored the company and declared that it could not pay its debts and that insufficient assets were the reason it was not being wound up. It did not declare that the business had definitively closed down.
The Department refused her request for payment from the Social Insurance Fund. In judicial review proceedings, the High Court rejected her claim, but the Court of Appeal reversed that decision and awarded damages against the State. The State appealed to the Supreme Court.
The Supreme Court held that Article 2(1) of the directive required Member States to provide an alternative route for employees where insolvency proceedings had been requested and the competent authority established that a business had definitively closed and its assets were insufficient to justify opening proceedings. The court agreed that the relevant Irish legislation then in force did not provide that route. It left open whether section 216 of the Companies Act 1963 might permit an appropriate order, as that question had not been argued.
On damages, the court upheld the Court of Appeal’s conclusions that the breach was sufficiently serious and that the evidence supported a causal link to Ms Glegola’s loss. It accepted that, on the balance of probabilities, she would have met the directive’s criteria and applied within the relevant time. The Supreme Court therefore upheld her entitlement to €16,818.75 against the State.