A case with implications for the rights and entitlements of workers whose employers go out of business has come before the High Court.

Magdalena Glegola, a beautician, is suing the State over its alleged failure to correctly transpose an EU directive into Irish law. Had the State done so, she claims she could recover a €16,000 award for unpaid wages from the Social Insurance Fund.

Ms Glegola had worked with the Metro Spa Ltd at Pembroke Place in Dublin but was let go in November 2011 because it was being wound up. She made a complaint about unpaid wages to a rights commissioner and was awarded €16,000 against the company.

She applied to the Minister for Social Protection, who manages the fund, for payment but claims she has not received any money due to a requirement a liquidator or receiver must be appointed to a company before it can be deemed insolvent. Metro Spa Ltd did not go into formal liquidation because it lacked the assets to cover the costs of a liquidation and Ms Glegola was unable to fund the costs of a liquidator, the court heard.

In her High Court action, she says she is entitled, under Article 3 of EU Directive 2008/94 and the Protection of Employees Acts, to be paid some or part of that award from the Social Insurance Fund.

In proceedings against the Minister for Social Protection and the State, she wants the court to order the Minister to pay her award from the Social Insurance Fund. She claims the State is in breach of the EU directive in requiring the appointment of a receiver or a liquidator before an employer is deemed insolvent.

She claims the State has failed to correctly transpose the EU directive requiring member states to establish institutions to guarantee the payments of employees outstanding claims resulting from the their employment. She is also claiming damages.

Feichin McDonagh SC, for Ms Glegola, The Orchard, Greenwood Walk, Ayrfield, Dublin, said this was an important case for employees of companies that cease trading.

Ms Glegola’s former employer was struck off by the Registrar of Companies for its failure to file accounts but, last April, her lawyers secured a High Court order restoring the company to the register, counsel outlined.

Mr Justice Peter Charleton had also made a declaration under the 1990 Companies Act the company was unable to pay its debts and the reason it was not being wound up was due to insufficiency of assets.

Leave to bring the action was granted, on an ex-parte (one side only represented) basis, by Mr Justice Bernard Barton who returned the matter to October.