EMCC European Monitoring Centre on Change

Protection of employees in case of insolvency of the employer

Latvia
Phase: Management
Type:
  • Income support for workers
Sidst ændret: 17 September, 2020
Lokalt navn:

Darbinieku aizsardzība darba devēja maksātnespējas gadījumā

Engelsk navn:

Protection of employees in case of insolvency of the employer

Coverage/Eligibility

All employees are eligible for satisfaction of claims in case of insolvency of the employer. Insolvency of an employer is in effect from the day when a court judgement regarding insolvency of the employer enters into legal effect. There is no minimum duration for the contract of employment for workers to qualify.

Main characteristics

For cases where the company becomes bankrupt, an employee claims guarantee fund has been established in Latvia, operated by the Insolvency Control Service (state agency). The employee can submit the claim to the fund after the court's decision on the company's insolvency (as defined by insolvency law). No claims can be submitted before.

The resources of the fund cover the following payments:

  • Work remuneration.
  • Reimbursement for annual paid leave.
  • Reimbursement for other types of paid leave.
  • Severance pay connected with the termination of an employment relationship.
  • Reimbursement for injury connected with an accident at work or an occupational disease.

Employees' claims are satisfied within the limits of the following amounts:

  • Work remuneration for the last three months of employment relationship in the 12 months before the insolvency of the employer came into effect.
  • Reimbursement for annual paid leave, the right to which has been acquired in the 12 months before the insolvency of the employer came into effect.
  • Reimbursement for other types of paid leave for the last three months of employment relationship in the last 12 months before the insolvency of employer came into effect.
  • Severance pay as prescribed by the labour code, the right to which has been acquired not earlier than in the 12 months before the insolvency of the employer came into effect.
  • Reimbursement for damages for the whole unpaid time period.
  • Reimbursement for damages for the four subsequent years.

Resources of the fund are provided by the state entrepreneurial risk fee (employers' contributions for each employee, amount determined by the Cabinet of Ministers), by gifts and donations, and by resources recovered by administrators.

Funding

  • National funds
  • Companies

Involved actors

National government
Legal framework; funding.
Anden
Insolvency Administration. Companies (co)funding.

Effectiveness

In 2014 a total of 3,590 employees' claims to the fund were satisfied, in total amounting to € 2,663,441.

In 2015, the respective figures are 1,432 employees' claims, amounting to €1,159,057.

In 2016 there were 1,226 employees' claims, amounting to €1,077,826.

In 2017, there were 1,425 employees' claims, amounting to €1,328,291.

In 2018, there were 1,252 employees' claims, amounting to 1,278,486.

In 2019, there were 1,269 employees' claims, amounting to 1,703,074.

All above data are available in Annual reports of insolvency control service

Strengths

No information available.

Weaknesses

No information available.

Eksempler

No information available.
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