EMCC European Monitoring Centre on Change

Wage guarantee fund

Portugal
Phase: Management
Тип:
  • Income support for workers
Last modified: 03 August, 2021
Име (на собств. език):

Fundo de Garantia Salarial - FGS

Име на английски:

Wage guarantee fund

Coverage/Eligibility

Employers subject to insolvency proceedings or by programmes aimed to reach an arrangement with creditors, as the revitalisation special process or the Extrajudicial Recovery Procedure (Regime Extrajudicial de Recuperação de Empresas - RERE).

 

Main characteristics

The wage guarantee fund (Fundo de Garantia Salarial) is a fund managing structure composed by the government, employee and employer representatives and ensures the financial protection of employees in case of insolvency or difficult economic situation. The fund guarantees the payment of wages, holidays, Christmas and food allowances and redundancy payments.

On 21 April 2015 a new regime of the fund was approved by the Decree-Law 59/2015. This adapts the fund's regime to the Revitalise Programme guaranteeing that claims of employees in companies assigned to revitalisation or recovery plans also have access to the fund.

The fund ensures the payment of labour credits due to workers since the six months preceding the start of the insolvency procedure, of the Extrajudicial Recovery Procedure (Regime Extrajudicial de Recuperação de Empresas - RERE), or the submission of the application to Special Revitalisation Process (Processo Especial de Revitalização - PER).

The payment of the claims referred to above is subject to a double limitation:

  • one of a temporal nature, since the worker is requested to file the application for the payment of outstanding labour credits at district centres or local social security services within one year from the day following the day on which the employment contract ended; and
  • another of a pecuniary nature, as the fund simply ensures the payment of claims arising from the employment contract for at maximum of six months, and with the maximum monthly amount up to three times the minimum guaranteed monthly wage (€635 in 2020).

Under the new regime, the fund now also covers employees who work or have habitually worked within the national territory for an employer with activities in the territories of at least two EU Member States, even if the employer is declared insolvent by a tribunal or competent authority of another Member State of the European Union or of the European Economic Area.

Employers are required to contribute 1% of pay (0.925% to Work Compensation Fund - Fundo de Compensação do Trabalho - FCT - and 0.075% to Guarantee Fund for Work Compensation - Fundo de Garantia de Compensação do Trabalho - FGCT - for employees hired after 1 October 2013).

Funding

  • National funds
  • Companies

Involved actors

National government
This fund is managed by the Portuguese government.
Public employment services
Agency for Competitiveness and Innovation (Agência para a Competitividade e Inovação, IAPMEI, I.P.); Institute for Social Security (Instituto da Segurança Social).
Employer or employee organisations
This fund is managed by employer and employee representatives.
Други
Judicial courts.

Effectiveness

The wage guarantee fund paid around €80 million in 2018, 21% less than in the previous year (TSF, 2019). 

Strengths

The wage guarantee fund ensures the financial protection of employees in case of the employer's insolvency or employer's coverage by the revitalisation special process or by a procedure for extrajudicial recovery. The fund pays any credits (e.g. wages, holiday payments, bonuses, severance pay) due in the six months preceding the filed insolvency or the requisition of a recovery process.

 

Weaknesses

According to a notice from TSF, a national Radio Station, the General Confederation of Portuguese Workers CGTP (Confederação Geral dos Trabalhadores Portugueses, Intersindical Nacional - CGTP- IN) argues that the limit of the amount to which workers are entitled is insufficient, as well as the deadlines for access to the fund (TSF, 2019).

Examples

NOVOPCA - construtores Fábrica Cerâmica de Valadares S. A.; TRIAM - Serviço de Apoio a Aeronaves, S. A.
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