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Receivership does not affect a subsisting contract-of employment

On 29 March 2017, CC Solicitors were successful before the Court of Appeal in (Conor Brennan v Irish Pride Bakeries (In Receivership) [2015 No. 547], a case which reiterates that a receivership does not affect a subsisting contract of employment and that receivers are not endowed with different and/or additional powers to an employer in respect of employees.

In her judgment, Ms Justice Finlay-Geoghegan upheld Mr Justice Gilligan’s 2015 decision High Court judgment that barred Irish Pride Bakeries (in receivership) from dismissing the Plaintiff on one week’s notice, in breach of his three-month contractual notice entitlement. Mr Justice Gilligan found that redundancy was not a valid reason to breach contractual notice entitlements. Irish Pride appealed the High Court’s decision, arguing that the Plaintiff had been “wrongly elevated… from a category of unsecured creditor to one of a preferential or super preferential.”

Ms Justice Finlay Geoghegan noted that while Sections 437(2) & (3)(m) of the 2014 Companies Act empower a receiver to “engage or discharge employees on behalf of the company”, it does not confer “a power on a receiver to do anything which the company itself could not do.”

She also restated the “well established” law that, in circumstances where an employment contract is repudiated, “unless repudiation is accepted by the innocent party, it does not bring the contract to an end”.

The case is important and precedent setting regarding the protection of employees contractual rights during a receivership.