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 the insolvency law). No claims can be submitted before.

All employees are eligible to the fund in case of insolvency of the employer. Employer's insolvency applies from the day when a court judgement regarding insolvency of the employer enters into legal effect.

There is no minimum duration of the employment contract required for workers to qualify.

From the resources of the Employee Claims Guarantee Fund, the following payments have to be covered: work remuneration, reimbursement for annual paid leave, reimbursement for other types of paid leave, severance pay in connection with the termination of an employment relationship, reimbursement for injury in connection with an accident at work or an occupational disease.

Employee claims are satisfied according to the following rates:

• 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 law, the right to which has been acquired not earlier than 12 months before the insolvency of the employer came into effect;
• reimbursement for damages for the whole period of unpaid time;
• reimbursement of damages for the four subsequent years.

Resources of the Employee Claims Guarantee Fund consist of the share of the state entrepreneurial risk fee (employers' contribution for each employee, amount determined by the Cabinet of Ministers), gifts and donations, and resources recovered by administrators. The risk fee is €0.36 per employee.