You may well be aware that three new personal insolvency processes were introduced to Ireland last year. Debt Relief Notices, Debt Settlement Arrangements and Personal Insolvency Arrangements now exist to help people deal with otherwise unmanageable debts. In addition, bankruptcy has been reformed to make it much less onerous than it was before.
While these new options are very welcome, it’s possible that many people will fail to benefit from them due to fears associated with their perception of the stigma associated with personal insolvency. Many people are concerned about whether their friends, family or employer might find out for example. In this article we review whether you have to inform your employer should you choose to become personally insolvent.
The first and possibly most important point to make is that there is no general requirement to notify an employer in the event that you become personally insolvent. You generally don’t have to, your creditors should not and there is no good reason for your personal insolvency practitioner (or authorised intermediary) to do so. Your income will need to be verified, but your payslips and bank statements should suffice for this purpose.
You may wish to review your employment contract to confirm that there are no stipulations about personal insolvency contained within it. Given that so few people have previously become insolvent in Ireland it’s quite unlikely that this subject will be covered contractually at all. In other legal jurisdictions, where insolvency is better established, most people still find that their employment contract has nothing to say on this subject.
There are however certain types of employment where such a contractual requirement might be more likely. If you work (for example) in financial services, cash-handling or in a job requiring security clearance it might be the case that your employer has more of an interest in your personal financial status. This might be a risk-control measure where the employer has concerns about staff becoming vulnerable in one way or another. Once again, a quick check of your contract should confirm what the position is.
Those working in certain “professions” may have to exercise further care in terms of the view that their regulators and authorising bodies might take. For example, a recent article in the Irish Examiner suggested that a solicitor could continue to practice while bankrupt, but auctioneers and chemists cannot. Professionals might therefore want to anonymously seek the views of their regulators or authorisers before making any final decisions.
It’s clear that most people will not have to inform their employer should they choose a personal insolvency option to deal with their debts, but might the employer find out anyway? The fact of the matter is that personal insolvencies will be recorded on a public register. Anyone that chose to go looking, whether they’re a private individual or a representing a company, will in the future be able to establish whether someone has become formally insolvent or not.
In reality however it’s unlikely that most employers will have any interest in spending their time looking for such information about their employees. Most employers will be concerned about the performance of their staff. There’s little reason to go digging into the affairs of an employee who is doing their job well, something that can only be encouraged by putting financial worries behind you. More enlightened employers will soon realise that staff with financial problems and stresses may well be distracted at work and that their performance will suffer. Dealing effectively with debts can lead to improvements to health, relationships and workplace performance. In the longer-term good employers are therefore likely to encourage financially-stressed staff to proactively deal with their debt.
Author: For further information about personal insolvency you may wish to visit the Debt Advice Ireland website. The site is full of information about Debt Relief Notices, Debt Settlement Arrangements, Personal Insolvency Arrangements, bankruptcy and dealing with mortgage arrears. There’s an online forum where you can ask questions to debt experts (anonymously if you wish) and the site’s experienced advice team can offer one-to-one advice to enquirers.