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Company in financial difficulty: what is the wage guarantee?

Verified 01 January 2022 - Legal and Administrative Information Directorate (Prime Minister)

When a company is in financial difficulty and a safeguard, recovery or judicial winding-up procedure is initiated, every employee (even if he works in the foreigner) benefits from the guarantee of payment of 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 the procedure

At the date of initiation of the judicial reorganisation or liquidation proceedings, the amounts due to the employee guaranteed by the AGS are as follows:

  • Salary, commissions, premiums, allowances
  • Termination payments due to the employee (for breach of contract notified before the opening date of the procedure)

Remuneration is guaranteed for the last 60 days of work.

Maximum salary guarantee amounts based on the length of the contract

Ageing of the contract on the day of initiation of the proceedings

Maximum

Contract concluded more than 2 years before

€82,272

Contract concluded between 2 years and 6 months before

€68,560

Contract concluded less than 6 months before

€54,848

After opening date

After the date of initiation of the proceedings, the AGS shall ensure payment of the compensation due in the event of breach of the employment contract, under the following conditions:

  • the breach of contract occurs either during the period of observation or within one month following the judgement which establishes the plan for safeguarding, reorganisation or transfer,
  • where the occupational security contract (CSP) has been offered to the employee (subject to certain conditions),
  • the employee shall enjoy special protection in respect of dismissal in the event of breach of the employment contract (protected employee, maternity leave, adoption leave, work stoppage after accident at work or occupational disease).

In the event of judicial liquidation

When the court orders the judicial winding-up, the secured claims are:

  • Remuneration due during the observation period or within 15 days of the judgement of liquidation,
  • For staff representatives, the remuneration due within one month of the liquidation judgement,
  • Remuneration due during the provisional maintenance of the activity authorised by the judgement of liquidation within 15 days of the end of the activity.

The maximum amount of the wage guarantee shall be:

  • €10,284 for one and a half months' salary,
  • €6,856 for a month's salary.

Employees designate 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, the employees may refer the matter to the Board of Directors.