Members of VR can seek the help of the union regarding any matters regarding disputes with employers if the company suddenly ceases operations or becomes bankrupt.
It is important to respond quickly and seek the assistance of an expert in the Employment Terms Department of VR as soon as possible. This page contains information you will find important if you find yourself in the problematic situation described above.
You can also seek the assistance of the VR Employment Terms Department in phone no. 510 1700 or send an enquiry to vr@vr.is. See also important information on unemployment benefits and general information on termination of employment and notice of termination.
In the event that the dispute between a union member and the employer involves unpaid wages, VR will assist in the collection of such wages. Members who seek such assistance are advised of the following:
- At the beginning of a case, it is important to provide detailed information on the situation. The information required is the beginning of the employment relationship, what the work entailed, working location, agreed wage terms and the end of the working relationship, if appropriate.
- It is important to submit all documented data to VR at the very beginning, i.e. employment contract, pay slips, time registrations, notice of termination, medical certificate and other such documents, as this will make it easier and quicker to process the case.
- The assistance of the VR Wage Terms Department involves the calculation of the claim together with normal collection measures, at no cost to the member. The Wage Terms Department, in consultation with the union’s attorney, reserves the right, however, to dismiss union member claims in the event of any doubt of their legitimacy.
- An examination should be made of whether the employer has paid the pension fund and union dues of the wage earner. If not, such claim must be sent for collection by the pension fund in question.
- If the employer against whom the claim is made becomes bankrupt during the collection process, the claim will be made against the bankruptcy estate (see here). In cases where the wage claim covers a long period, a bankruptcy can have considerable effect on its collection.
- In the event that a bankruptcy estate proves to have no assets, the Wage Guarantee Fund only guarantees wage claims for the three most recent months at work together with up to a three-month notice-of-termination period. Older claims, therefore, are excluded from the guarantee and will not be paid. Further details are available on the Wage Guarantee Fund here.
Disputes that cannot be resolved by normal collection means are referred to the courts. VR attorneys are responsible for the proceedings at no cost to the member. It should be noted, however, that if the case of the member is rejected by the courts, the attorney fees of the counterparty may fall on the member and that VR does not pay such cost.
Company closure
The situation may arise that the company ceases operations on very short or no notice. Under such circumstances, employees may be owed wages and/or the right to wages during their termination period. It is important to seek the assistance of the VR Wage Terms Department as soon as possible when a company ceases operation regarding wage claims owed and to keep pay slips, employment contract and other documentation verifying their employment relationship.
- The sudden cessation of operations of a company generally means that employees are unable to complete working for the company during their notice period. The notice period is in accordance with the length of service within the company:
1‐3 months’ employment = notice period is 1 week
3‐6 months’ employment = notice period is 1 month, as of the beginning of a month
6 months’ employment or more = notice period is 3 months, as of the beginning of a month - If an employee is not given the option of undertaking his/her work for the company during the notice period, he/she is entitled to be paid a wage from the company for that period. In the event of a prior unpaid wage, moreover, he/she also has a claim against the company thereto.
- If the employee begins working for another company within the notice-of-termination period of his/her previous employer, the claim for wages during the notice period will expire from that date. If, however, the wages paid by the new company are lower, the employee will be entitled to be paid the difference.
- Employees are not entitled to unemployment benefits during the notice period. This situation changes, however, if a company is ruled bankrupt, in which case a payment obligation forms within the Wage Guarantee Fund for the period that the person in question has registered.