Employees who experience that the company they work for is declared bankrupt have a compensation claim against the company due to the termination of their employment contract as a consequence of the bankruptcy. This is usually a compensation that covers the notice period of the relevant employee together with accrued rights such as holiday bonus, December bonus and accumulated holiday leave.
If a company becomes bankrupt, a VR member can seek help at the VR offices, and the union will then make a claim on his/her behalf into the company's bankruptcy estate. It is important that the employee contacts an expert in VR's department of wage terms as soon as possible if assistance is needed. The employee must have the following documents ready, ie. employment contract if it exists, letter of dismissal if applicable, salary slips at least for the last 6 months and other things that could be important regarding the processing of the case.
Bankruptcy is when a company declares itself incapable of paying its debts legally. In the event of bankruptcy, a liquidator is appointed who declares claims to the bankruptcy estate through an advertisement in the State paper for new law announcements. A claim on behalf of the employee is sent to the liquidator within the claim specification deadline. The claim statement deadline is two months from the date of the liquidator's advertisement in the State paper for new law announcements. It is important to arrive well in time within that time limit to the union so that there is time to process the claim. A list of bankruptcies where you can get more information can be found here. If the liquidator of the bankruptcy estate accepts the claim and the company, which has been admitted to bankruptcy, does not have funds to pay, the claim is sent to the Wage Guarantee Fund for payment. Wage claims that are older than 18 months from the date of the bankruptcy (deadline date) do not enjoy priority as claims into the bankruptcy estate and therefore are not covered by the Wage Guarantee Fund.
Wage Guarantee Fund
Wage claims are priority claims in the event of company bankruptcy, which means that such claims are the first to be paid but only when there are assets in the bankruptcy estate. If, however, the bankruptcy estate has no assets, wage claims are covered by the state Wage Guarantee Fund. The Wage Guarantee Fund guarantees payment of claims according to the laws that have been set on the fund, which is a maximum payment of a certain amount for three months during the notice period plus three months before the notice period, holiday pay up to a certain amount together with mandatory pension contributions and a maximum of 2% in personal pension savings. The fund's liability is subject to the condition that the claims have been recognized as priority claims according to bankruptcy laws.
When employees lose their jobs because a company goes bankrupt, they must immediately register as unemployed with the Directorate of Labour. Such a registration is, among other things, a prerequisite for the Wage Guarantee Fund to pay out the wage claim due to the unpaid notice period of a bankrupt company. Unemployment benefit payments are deducted from the claim for loss of wages during the notice period, as well as all other payments that employees receive at the same time from other sources.