EMCC European Monitoring Centre on Change

Wage guarantee fund

Malta
Phase: Management
Typ:
  • Response to COVID-19
  • Income support for workers
Zuletzt geändert: 03 August, 2021
Ursprünglicher Name:

Wage guarantee fund

Englischer Name:

Wage guarantee fund

Coverage/Eligibility

According to the Employment and Industrial Relations Act, Chapter 452, Part III, the wage guarantee fund is meant to safeguard the protection of wages. Its objective is to guarantee payment of unpaid wages due by an employer to those employees whose employment is terminated because of the employer’s proved insolvency. This regulation does not apply to domestic servants and share-fishermen and employees who on their own or together with their parents, spouse, children or siblings own parts of the enterprise, allowing them considerable influence on its activities.

Main characteristics

The guarantee fund satisfies employees’ claims for unpaid wages and unpaid contributions to schemes arising out of contracts of service with insolvent employers. Insolvency is understood as a situation where there has been a request for the commencement of bankruptcy proceedings and the court has established that the business is definitively closed and that the available assets are insufficient to cover the payment of the claims, or the court has appointed a liquidator.

The law, in this case, does not indicate a minimum duration of the employment relationship to be eligible to benefit from this fund. To recover money owed by the employer (which might include unpaid basic wage, overtime, compensation in place of notice and arrears for any leave entitlement for the current and preceding calendar year), the employee can register a valid claim with the administration board of the guarantee fund. This claim has to be registered within one month from the onset of the insolvency of the employer. The employee can retrieve a total amount of money that does not exceed the equivalent amount of 13 weeks of the national minimum wage, payable at the time of the dismissal or termination.

The fund is administered by the guarantee fund administration board. This is composed by the chairperson who is Director of Employment and Industrial Relations; four representatives of employees and four representatives of employers appointed on the Employment Relations Board; a member nominated by the Minister of Finance; the Chairperson of Jobsplus; and a member of the legal profession appointed by the Minister.

During 2018-2020 no changes were made to this instrument and there are no anticipated changes to the criteria determining this instrument.

Funding

  • National funds

Involved actors

National government
Funding; Labour legislation and relating amendments are discussed at the formulation stage, in the tripartite Employment Relations Board (ERB). Members forming this board come from trade unions, employer associations and government.
Employer or employee organisations
Labour legislation and relating amendments are discussed at the formulation stage, in the tripartite Employment Relations Board (ERB). Members forming this board come from trade unions, employer associations and government.
Andere
Labour legislation and relating amendments are discussed at the formulation stage, in the tripartite Employment Relations Board (ERB). Members forming this board come from trade unions, employer associations and government. In the operational implementation, a liquidator and the Guarantee Fund are involved.

Effectiveness

Between its establishment in 2003 and December 2015, the guarantee fund administration board held 5 sittings in which a total of 103 claims were processed and €106,569.02 were paid out of the fund. Data for the years 2010-2015 show that the fund was only used in 2011 and 2014. During 2011, 52 claims were processed and the sum of €44,667.96 was paid out. During 2014, one claim was processed and the sum of €2,108.47 was paid out. According to the Department of Industrial and Employment Relations (DIER), in 2015, the balance of the fund stood at €487,268. From 2016 up to May 2018 the guarantee fund was used on three separate occasions where the employer was declared insolvent. In total, 31 claims were processed and the sum of €57,657 was paid out from the said fund. Between 2018 and May 2020 the guarantee fund was used once due to insolvency declared by the employer. This sole claim was processed and the sum of €2,184 was paid out. The Department of Industrial and Employment Relations (DIER) believes that the wage guarantee fund is likely to increase its relevance due to the COVID-19 crisis as it is expected that more companies would be declared insolvent. 

Strengths

The fund assists workers who end up unemployed due to their company's insolvency. It gives these persons and their families some economic protection until they find another job. The Department of Industrial and Employment Relations views this instrument as an important fall-back measure and believes that the wage guarantee fund will continue to be relevant in the future.

Weaknesses

The amount of money that an employee can receive cannot exceed the equivalent of 13 weeks of the national minimum wage. This amounts to €2,242.63.  

Beispiele

While law courts hold records of companies filing for insolvency, there are no existing public records of who benefitted from the guarantee fund.
Useful? Interesting? Tell us what you think. Hide comments

Eurofound welcomes feedback and updates on this regulation

Neuen Kommentar schreiben