Directive 2008/94 Does Not Compel Redundancy Fund Payments to Workers Employed Without Employment Permits in Ireland

1. Introduction

De Morais v Minister For Social Protection and Ors (Approved) [2026] IEHC 163 is a High Court judicial review in which Mr Justice Barr refused to quash a decision denying an undocumented worker access to the Irish State redundancy/insolvency payment schemes. The applicant, Mr Nilton De Morais (a Brazilian national), worked for many years in Ireland without immigration permission and without an employment permit. After his employer became insolvent and he was made redundant (October 2021), he sought a redundancy payment from the central fund under the Redundancy Payments Act 1967 (as amended) and the Protection of Employees (Employers Insolvency) Act 1984.

The core dispute was not whether he had worked and paid PAYE/PRSI, but whether—given the absence of an employment permit—he could satisfy the statutory condition of being in “insurable employment” under the Social Welfare Consolidation Act 2005. The applicant argued that Irish law had to be disapplied because it conflicted with Directive 2008/94/EC on protecting employees on employer insolvency, relying heavily on the CJEU decision in Tumer v Raad van bestuur van het Uitvoeringsinstituut werknemersverzekeringen (Case C-311/13).

Two issues fell for determination:

  • Whether judicial review should be refused because an adequate alternative statutory appeal route existed (WRC/Labour Court/High Court on a point of law).
  • Whether Irish exclusion of workers without employment permits from redundancy/insolvency payments conflicts with Directive 2008/94/EC such that Irish law must be disapplied.

2. Summary of the Judgment

  • Alternative remedy: The Court held it was appropriate to entertain judicial review. The applicant’s earlier WRC appeal failed for want of jurisdiction on the “insurable employment” question, and further appeals would likely have been confined to that jurisdictional issue rather than the substantive EU-law question.
  • Substantive outcome: The Court refused relief. Applying Sobhy v Chief Appeals Officer [2022] 1 IR 807, it held that a person who worked without the required employment permit is not working under a valid “contract of service” for the purposes of Irish social welfare law, is not in “insurable employment”, and therefore is not an “employee” entitled to redundancy/insolvency fund payments under the Irish statutory schemes.
  • Directive argument rejected: The Court held that Directive 2008/94/EC (in particular Article 2(2)) leaves Member States scope to define “employee”. The CJEU ruling in Tumer was distinguished: it prevents exclusion where national law otherwise recognises the undocumented person as an employee with enforceable wage claims; Irish law (as per Sobhy) does not adopt that position generally.
  • No CJEU reference: The Court found no need to refer a question to the CJEU, given the clarity of the Directive’s wording and Irish law.

3. Analysis

3.1 Precedents Cited (and How They Shaped the Decision)

(a) Sobhy v Chief Appeals Officer [2022] 1 IR 807

Central authority. The High Court treated Sobhy as dispositive on Irish law’s treatment of employment performed without an employment permit. In Sobhy, the Supreme Court held that work done without the required permit renders the employment contract “illegal as a matter of statute law” for most purposes, with only limited statutory exceptions. Crucially, it concluded that such an arrangement cannot be a qualifying “contract of service” for the purposes of the social welfare code, so PRSI contributions made during that period do not found entitlement to benefits.

Mr Justice Barr imported that reasoning into the redundancy context: the statutory redundancy/insolvency schemes are conditioned on “insurable employment” under the social welfare code. If there is no qualifying contract of service, there is no insurable employment, and therefore no statutory redundancy entitlement from the fund.

(b) Tumer v Raad van bestuur van het Uitvoeringsinstituut werknemersverzekeringen (Case C-311/13)

Key EU comparator, but distinguished. The applicant relied on Tumer to argue that excluding undocumented workers from insolvency guarantees undermines the social objective of the Directive. The High Court accepted Tumer as standing for an important constraint: Member States cannot define “employee” in a way that undermines the Directive’s purpose where their own civil law otherwise recognises the person as an employee.

However, the Court distinguished Tumer on a factual and legal hinge explicitly emphasised by the CJEU: Dutch civil law recognised the worker as an employee with enforceable wage claims. Irish law, by contrast (per Sobhy and earlier authorities), generally does not recognise a worker without the required permit as working under a lawful contract of service for the relevant statutory purposes. On that basis, there was no “discrimination between categories of employees” in Irish law, because the applicant did not fall within the threshold category at all.

(c) Hussein v The Labour Court [2012] 2 IR 704

Backdrop on illegality and harshness. The Supreme Court in Sobhy had discussed Hussein as illustrating the potentially exploitative effect of treating employment without a permit as illegal and unenforceable. Mr Justice Barr referred to that line of reasoning via Sobhy to acknowledge the policy tension (worker vulnerability versus statutory prohibition), but the High Court’s function was to apply the statutory scheme and binding Supreme Court authority.

(d) FAS v Minister for Social Welfare (Unreported, Supreme Court 23 May 1995)

Foundational illegality principle applied to social welfare contexts. Quoted in Sobhy, it expresses the proposition that where the Oireachtas has prohibited a type of contract, it cannot be treated as a “contract of service” for social welfare purposes. This supports the interpretive bridge from “prohibited employment” to “non-insurable employment” that ultimately defeats redundancy fund eligibility.

(e) Langton v Hughes [1813] 1 M&S 593 and Weatherell v Jones [1832] 3 B&Ad 221

Common law non-enforcement of illegal contracts. These older authorities were referenced in Sobhy to show the longevity of the principle that courts do not enforce rights flowing from illegality. In this case, they indirectly reinforce the conclusion that statutory benefit entitlements cannot be built upon prohibited employment unless the legislature clearly creates an exception.

(f) The State (Abenglen Properties Ltd) v Dublin Corporation [1984] IR 381; Stefan v Minister for Justice [2001] 4 IR 203; McGoldrick v An Bord Pleanála [1997] 1 IR 497; EMI Records v Data Protection Commissioner [2014] ILRM 225

Judicial review discretion where alternative remedies exist. These cases structured the Court’s approach to whether it should decline judicial review because a statutory appeal route existed:

  • The State (Abenglen Properties Ltd) v Dublin Corporation [1984] IR 381 establishes that the presence of an alternative remedy does not automatically bar certiorari; the court considers adequacy, justice, purpose, and conduct.
  • Stefan v Minister for Justice [2001] 4 IR 203 confirms the court retains discretion to achieve a just solution even where an appeal exists.
  • McGoldrick v An Bord Pleanála [1997] 1 IR 497 frames the inquiry as which remedy is more appropriate in common-sense, fairness, and capacity-to-decide terms.
  • EMI Records v Data Protection Commissioner [2014] ILRM 225 states the default preference for statutory appeals, while recognising exceptional cases.

Applying these principles, Mr Justice Barr held the applicant was not being unreasonable in proceeding by judicial review because the WRC had already found it lacked jurisdiction on the decisive “insurable employment” issue.

(g) Petecel v Minister for Social Protection [2024] 2 IR 685 and Fitzgibbon v Law Society of Ireland [2015] 1 IR 516

Limits of “appeal on a point of law”. The High Court used Petecel to explain why insisting on the statutory appeal chain would not deliver a decision on the substantive EU-law issue. An appeal on a point of law is narrow (as categorised in Fitzgibbon v Law Society of Ireland [2015] 1 IR 516) and typically cannot entertain issues that could not have been decided by the first-instance body. This reinforced the conclusion that judicial review was the procedurally suitable route.

3.2 Legal Reasoning

(a) The statutory “gateway”: redundancy entitlement depends on “insurable employment”

The Court traced the interlocking statutory structure:

  • The Redundancy Payments Act 1967 applies to employees in employment “insurable for all benefits” under the Social Welfare Consolidation Act 2005.
  • “Insurable employment” under the 2005 Act depends on employment under a “contract of service”.
  • The Employment Permits Act 2003 (as amended) criminalised working without a permit (and employing someone without one), and the Immigration Act 2004 treated presence without permission as “for all purposes” unlawful.

Once Sobhy establishes that work performed without the required permit cannot amount to a qualifying “contract of service” for the social welfare code, the redundancy claim fails at the threshold: the applicant cannot pass the “insurable employment” gateway.

(b) EU law: Article 2(2) of Directive 2008/94/EC and the “Tumer” constraint

The applicant’s core submission required a finding that Irish law’s definition/exclusion was inconsistent with the Directive’s minimum protection. The Court’s answer had two steps:

  1. Directive 2008/94/EC allows national definitions: Article 2(2) states the Directive is “without prejudice to national law” regarding the definition of “employee” (with specified exceptions not relevant here).
  2. Tumer does not force recognition of undocumented workers as “employees” where national law does not: Tumer prevents a Member State from excluding a subset of persons from insolvency protection after its own law has already attributed employee status and wage-claim rights to them. In Ireland, per Sobhy, the ordinary rule is the opposite: the employment is substantively illegal for most purposes and does not generate the necessary statutory status.

Therefore, there was no obligation on the decision-maker to disapply Irish law, and the refusal of redundancy fund payment was upheld.

(c) Policy observations (non-determinative but revealing)

The Court added two concluding observations: it viewed it as unrealistic that a person could work unlawfully for many years and then claim redundancy from a central fund; and it emphasised the risk to the State’s ability to manage immigration policy and fiscal exposure if such claims were mandated. While not the ratio, these comments underscore the Court’s view of the statutory scheme as aligned with “common good” considerations identified in Sobhy.

3.3 Impact

  • Redundancy/insolvency payments: The judgment confirms that, under current Irish law (as authoritatively described in Sobhy), workers who lacked required employment permits during the relevant employment period cannot satisfy the “insurable employment” condition and therefore cannot access State redundancy/insolvency fund payments.
  • EU-law strategy narrowed: It clarifies that Tumer is not a general “EU law cure” for undocumented work; its force depends on whether domestic law already recognises the claimant as an “employee” with wage-claim rights. Litigants must therefore engage directly with domestic classification rules and any statutory exceptions.
  • Procedural guidance: The judgment is a practical illustration of when judicial review may be entertained despite statutory appeal mechanisms—particularly where the specialist forum has no jurisdiction to reach the substantive issue and further appeals would be constrained (per Petecel).
  • Legislative spotlight: Like Hussein and Sobhy, this decision implicitly points to the legislature as the institution capable of creating targeted exceptions if policy shifts toward broader protection for undocumented workers in redundancy/insolvency contexts.

4. Complex Concepts Simplified

  • “Insurable employment”: Employment that counts for full social insurance coverage under the social welfare code. For redundancy payments from the fund, being “insurable” is a statutory eligibility condition.
  • “Contract of service”: The classic legal form of an employment contract (employee–employer relationship). Irish social welfare eligibility often hinges on whether work was performed under such a contract. If the “contract of service” is treated as illegal/prohibited, it may not count for statutory benefit purposes.
  • Illegality and “no rights from an illegal contract”: A long-standing common law principle (reflected in cases like Langton v Hughes and Weatherell v Jones) that courts generally do not enforce rights that depend on prohibited conduct—unless legislation creates a specific exception.
  • Judicial review and certiorari: Judicial review tests the legality of a public decision-making process. Certiorari is the remedy that quashes an unlawful decision. Even if a statutory appeal exists, the High Court may allow judicial review where justice and adequacy require it.
  • “Disapplying” national law: Where EU law has direct effect/primacy, a national court (or sometimes a decision-maker) may be required to set aside conflicting national rules. The Court held no such conflict arose here given the Directive’s deference to national definitions and the distinction from Tumer.
  • Directive 2008/94/EC “guarantee institution”: An EU-required mechanism ensuring employees receive certain outstanding claims when the employer is insolvent. In Ireland, the relevant protection is delivered through statutory funds and schemes, but only for persons within the statutory category of covered “employees”.

5. Conclusion

De Morais consolidates the post-Sobhy position in the redundancy/insolvency sphere: employment performed without the required employment permit does not constitute “insurable employment” and does not confer entitlement to redundancy payments from the State fund. The High Court also sharply confines the reach of Tumer v Raad van bestuur van het Uitvoeringsinstituut werknemersverzekeringen (Case C-311/13), treating it as a non-discrimination rule that operates only where domestic law already recognises the undocumented person as an “employee” with enforceable wage claims. Absent such recognition in Irish law, the Directive does not oblige Ireland to extend the insolvency guarantee to undocumented workers, and there is no basis to disapply national law.