EMCC European Monitoring Centre on Change

Insolvency benefit

Estonia
Phase: Management
Típus:
  • Income support for workers
Utoljára módosítva: 12 July, 2021
Név:

Pankrotihüvitis

Angol név:

Insolvency benefit

Coverage/Eligibility

Workers entitled to benefits in case of employer insolvency are: all employees, public servants, natural persons providing services on the basis of a contract, non-working spouses accompanying and officials serving in a foreign mission of the Republic of Estonia who have paid the unemployment insurance premiums, including part-time and fixed-term workers, irrespective of the duration of the employment.

Exempted are sole proprietors, notaries, bailiffs, sworn translators, other independent persons engaging in a profession in public law, creative persons engaged in a liberal profession, management or controlling bodies of a legal person, some civil servants, those who have reached pensionable age and persons receiving early retirement pension.

Employers are defined as legal persons or structural units thereof if granted the rights of an employer or a natural person with active legal capacity.

Insolvency is understood as either the bankruptcy of the employer or the abatement of bankruptcy proceedings (if the assets cannot meet the costs of liquidation).

The trustee in bankruptcy or an interim trustee submits a standard format application to the Unemployment Insurance Fund (Töötukassa) which pays insolvency benefits to employees in case of company bankruptcies.

Main characteristics

The Unemployment Insurance Fund pays employer insolvency benefits in case of company bankruptcies.

The benefits include:

  • pending salary from the period before the declaration of the employer as insolvent;
  • pending holiday pay from the period before the declaration of the employer as insolvent;
  • benefits from the period before or after the declaration of the employer as insolvent which were not received at the time of cancellation of the employment contract.

In case of unpaid wages, the amount to be paid covers up to the employee's gross wages for the last three months of work, but not exceeding the amount equal to three average gross monthly wages in Estonia during the quarter preceding the declaration of the employer as insolvent (data published by the Statistical Office is the reference point).

In case of unpaid holiday pay, the maximum paid amount is one gross monthly wage of the employee, but not exceeding the amount equal to one average gross monthly wage in Estonia during the quarter preceding the declaration of the employer as insolvent (according to the data published by the Statistical Office).

In case of benefits not received, the maximum paid amount is equal to the employee's two gross monthly wages but not exceeding the amount equal to one average gross monthly wage in Estonia during the quarter preceding the declaration of the employer as insolvent (according to the data published by the Statistical Office).

The benefit is financed from the national fund, i.e. from the unemployment insurance premiums paid by employers and employees which are gathered into a national fund administrated and used by the Unemployment Insurance Fund. 

Funding

  • National funds

Involved actors

National government
Legal framework
Egyéb
The Unemployment Insurance Fund makes the payments.

Effectiveness

According to data provided by the Estonian Unemployment Insurance Fund, the number of people entitled to benefit upon insolvency of the employer was significantly higher during the economic crisis, when it served its purpose well. The COVID-19 pandemic has also increased the number of cases. 

Year Number of people entitled to benefit Average benefit in €
2008 2,249 1,912
2009 6,709 2,020
2010 6,341 1,712
2011 2,467 1,749
2012 2,225 1,678
2013 1,493 2,232
2014

1,578

2,063
2015 1,212 2,334
2016 1,614 2,385
2017 1,217 2,628
2018 1,229 2,920
2019 1,033 2,979
2020 2,419 3,363

Source: Estonian Unemployment Insurance Fund

Strengths

Employees are guaranteed to receive their income. No research available.

Weaknesses

In case of unpaid wages, the amount to be paid covers up to the employee's gross wages for the last three months of work but not exceeding in total the amount equal to three average gross monthly wages in Estonia during the quarter preceding the declaration of the employer as insolvent. The benefit might not cover the total loss of the employees' income, as the benefit covers maximum of three months' gross wage with the ceiling of the total amount being three national average gross wages.

Also, maximum of one-month holiday pay is paid, with a ceiling of one month national average gross wage. In case of unpaid holiday pay, the maximum paid amount is one gross monthly wage of the employee but not exceeding the amount equal to one average gross monthly wage in Estonia during the quarter preceding the declaration of the employer as insolvent (according to the data published by the Statistical Office). 

It usually takes some time until the person receives the benefit, as the process of declaring the employer's insolvency in itself takes time.

Példák

No information available.
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