Company in financial difficulty: what is wage guarantee?
Verified 01 January 2023 - Directorate for Legal and Administrative Information (Prime Minister)
When a company is in financial difficulty and there is a safeguard, recovery or bankruptcy procedure, all employees (even if they work abroad) are guaranteed wages.
This guarantee is covered by the wage guarantee insurance (AGS), which is financed by a compulsory employer contribution. The amount of secured claims varies under the following conditions:
On the date of initiation of proceedings
On the date of commencement of the administration or winding-up proceedings, the sums due to the employee guaranteed by the AGS are as follows:
- Salary, commissions, bonuses, allowances
- Termination benefits due to the employee (for breaches of contract notified before the date of initiation of proceedings)
Remuneration is guaranteed for the last 60 days of work.
After the opening date
After the date of initiation of proceedings, the AGS shall guarantee payment of the compensation due in the event of termination of the employment contract, under the following conditions:
- The contract shall be terminated either during the period of observation or within one month following the judgment which adopts the plan for safeguarding, reorganization or disposal
- The security contract (CSP) was offered to the employee (under certain conditions)
- Accident at work The employee is entitled to special protection in the event of termination of employment (protected employee, maternity leave, adoption leave, work stoppage after a child or occupational disease)
In the event of winding up by a court
Where the court orders the winding-up by the court, the secured claims are as follows:
- Remuneration due during the observation period or within 15 days of the liquidation judgment
- For staff representatives, remuneration due within one month of the judgment of liquidation
- Remuneration payable during the provisional continuation of the activity authorized by the court's liquidation judgment within 15 days of the end of that continuation of the activity
The maximum amount of the wage guarantee shall be:
- €10,998 for a month and a half's salary,
- €7,332 for a month's salary.
Employees appoint a representative, who controls the amount of money owed and paid. It acts as an intermediary between the employees and the administrator or the court.
In the event of a dispute over the sums paid, employees may refer the matter to the Labor Council.