Wage Guarantee Scheme (GSA)

Verified 01 January 2024 - Legal and Administrative Information Directorate (Prime Minister)

The arrangements for the wage guarantee (AGS: titleContent) ensures that the sums due to employees (wages, notice, severance pay, etc.) are paid in the event of safeguard, judicial redress or liquidation proceedings. This guarantee is financed by an employer's contribution obligatory for all employers.

Any employer must pay an AGS contribution to finance the risk of non-payment of remuneration due to employees in the event of collective proceedings.

Who has to pay the SGA?

Any employer, whether an individual contractor (EI) or a business, must pay the contribution to the AGS Guarantee Plan.

All activities are concerned: commercial, craft or liberal.

What is the SGA's contribution rate?

The SGA is a contribution solely at the expense of the employer (i.e. an ‘employer contribution’). It is recovered by the Urssaf on behalf of the unemployment insurance scheme.

The AGS contribution is set at 0.20% salaries used as a basis for calculating unemployment insurance contributions.

Unemployment insurance contributions and the AGS contribution are not payable on earnings exceeding 4 times the monthly social security ceiling (i.e. the sum of €15,456 in 2024).

Who benefits from the AGS?

All employees linked to the company by a contract of employment may benefit from the GSA, including employees posted abroad or expatriates.

The apprentices and employees temporary workers also benefit from the AGS.

The benefit of the AGS guarantee is immediate for the employee, regardless of his seniority in the company. Thus, the remuneration of a newly hired employee is guaranteed by the AGS in the event of a judicial adjustment.

FYI  

The social agents (as do the majority managers of SARL: titleContent, the Presidents of LOCK: titleContent) are not considered to be employees. They cannot benefit from the GSA unless they combine their social mandate with an employment contract.

The AGS guarantees the payment of sums due to employees when 2 conditions the following are combined:

  • The employer is in the process of backupjudicial redress or liquidation.
  • The employer does not have the funds available to pay the employees.

The debts of employees (i.e. remuneration, profit-sharing, the participation) are covered by the AGS only when collective proceedings is open.

Warning  

In the backup procedure, the company is not yet in cessation of payments. It must therefore prove that its funds are insufficient to pay salaries.

The implementation of the SGA guarantee follows a special procedure.

The employee cannot go directly to the AGS but he can demand that his wages unpaid are entered on a statement of wage claims drawn up by the judicial representative.

Where the employer is the subject of safeguard, judicial redress or liquidation proceedings, the commercial (or judicial) court shall appoint a judicial representative. The latter is responsible for verifying that there are no other arrangements capable of meeting the claims owed to employees (e.g. paid leave guarantee fund, temporary agency fund, partial activity financed by the State and the Unedic, etc.). It also confirms that the company does not have the funds available for the payment of wage claims.

Once these elements have been verified, the legal representative identifies the employer's wage claims in a statement of wage claims and sends it to the AGS, which advances the necessary funds.

The extent of the sums guaranteed by the AGS depends on the collective proceedings open: backup, judicial redress or judicial liquidation.

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In case of backup

The AGS only guarantees severance pay for employees made redundant for economic reasons during the observation period (6 months, renewable once) or during the month following the backup plan.

The AGS acts in the alternative, that is to say, where there is no other mechanism for the payment of sums due to employees.

In the backup procedure, the company is not yet in cessation of payments. The judicial representative must then justify its inability to pay wage claims on the funds held by the business. The SGA can challenge the reality of this insufficiency.

In the case of judicial redress

The AGS guarantees the following amounts:

  • Amounts Due to employees to the date of the judgment initiating the procedure for judicial adjustment: salaries, professional expenses, paid leave allowances. Wages are guaranteed for the last 60 days of work. Payments due to foreigner workers employed irregularly shall also be covered.
  • Receivables resulting from termination of employment contracts (e.g. statutory severance pay) during the observation period or within one month of the judgment which adopts the recovery or disposal plan.
  • Contributions due under the business security contract (CSP). This contract organizes a return-to-work pathway for the dismissed employee with reinforced and personalized accompanying measures and periods of training and work.
  • Accompanying measures resulting from a job protection plan (PES)) determined by a majority collective agreement or by a document drawn up by the employer (for example, taking over training, support for entrepreneurship)
  • Amounts due under profit-sharing, of the participation of employees

FYI  

The GSA does not guarantee wages during the observation period if the judicial redress procedure is followed by a continuation plan. Management will only be done in case of conversion into bankruptcy, within a limit of 45 days in amount and duration.

In the event of winding up by a court

Winding-up following judicial redress

Where liquidation is ordered following a judicial redress procedure, the AGS guarantee payment of the following amounts:

  • Amounts Due to employees on the date of the judgment initiating the winding-up proceedings: salaries, professional expenses, allowances for paid leave. Wages are guaranteed within 45 days. Payments due to foreigner workers employed irregularly shall also be covered. Amounts due under employment contracts to the coursethe observation period.
  • Claims arising from the breach of contract (e.g. severance pay) within 15 days of the court order of liquidation (or within 21 days where a employment protection plan (ESP) is elaborated).
  • Contributions due under the business security contract (CSP). It organizes a return-to-work pathway for the dismissed employee with reinforced and personalized support measures and training and work periods.
  • Accompanying measures resulting from a job protection plan (PSE) determined by a majority collective agreement or by a document drawn up by the employer (e.g. taking over training, support for entrepreneurship)
  • Amounts due under profit-sharing, of the participation of employees
Settlement ex officio

Where the court order the winding up of the court of its own motion, the AGS shall cover up to a maximum amount corresponding to a ceiling of 1 and a half months of salary the following amounts:

  • Amounts Due to employees : wages, professional expenses, holiday pay. They shall be guaranteed up to a maximum of 1 and a half months salary.
  • Claims arising from the breach of contract (e.g. severance pay) within 15 days of the court order of liquidation (or within 21 days where a employment protection plan (ESP) is elaborated).
  • In case of temporary continuation of the activity authorized by the judgment of judicial winding-up, the sums resulting from the breach of contract occurred within 15 days (or 21 days when a PSE is developed), following completion of this maintenance activity.
  • Contributions due under the business security contract (CSP). It organizes a return-to-work pathway for the dismissed employee with reinforced and personalized support measures and training and work periods.
  • Accompanying measures resulting from a job protection plan (PSE) determined by a majority collective agreement or by a document drawn up by the employer (e.g. taking over training, support for entrepreneurship)
  • Amounts due under profit-sharing, of the participation of employees

Warning  

To benefit from the AGS guarantee following the compulsory liquidation, on judicial representative must respect the deadlines for dismissing employees. This period is 15 days after the judgment initiating the judicial winding-up or 21 days in the case of an employment protection plan (ESP).

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In the case of a safeguard or recovery procedure

The wage payment guarantee shall be limited to a ceiling fixed according to the length of service of the employment contract on the day on which the collective proceedings are opened.

Tableau - Maximum wage guarantee amounts according to the age of the contract

Age of the contract at the date of opening of proceedings

Maximum amount

Contract concluded more than 2 years before

€92,736

Contract concluded between 2 years and 6 months before

€77,280

Contract concluded less than 6 months before

€61,824

In the event of winding up by a court

In the event of compulsory liquidation, the wage guarantee shall be limited to the following amounts:

  • €11,592 for 1.5 months of salary
  • €7,728 for 1 month's salary.

AGS pays to the judicial representative the amounts shown on the statement of wage claims within the following periods:

  • 5 days from receipt of the statement of claim (e.g. for salary and paid leave allowances due to the employee)
  • 8 days from receipt of the statement of claims (e.g. for accompanying measures resulting from job protection plan),

The court representative shall immediately return the sums he has received to the employees by check or transfer.

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