The employee receives, as wage guarantee, an amount which equals up to three monthly wages or less in the case that the employer owes less than three monthly wages. The application has to be registered with OAED (the public employment service) within six months since the insolvency became public.

The fund is partly funded by employers' contributions (0.15%) and partly by the labour ministry.

The employees’ claims are independent from whether or not the employer paid the contributions.

On average, claims for remuneration are met within 1 month after the application by the employee has been made.

Deadlines

The right of an employee to receive salary in arrears from the account to protect employees in the event of an employer's insolvency is exercised by the employee's written application to the competent service of the OAED (public employment service), no later than six months after:

• the publication of the decision declaring the employer's bankruptcy;
• the date that the undertaking entered into liquidation; or
• the date that the operating licence of the (insurance) undertaking was revoked due to violation of the provisions of private insurance legislation.

Entitlement to these benefits lapses after six months.

All employees are protected through an OAED account set up to cover cases of employer insolvency. The purpose of the 'account to protect employees in the event of an employer's insolvency' is to pay salary arrears of up to three months to employees in a dependent employment relationship who have not been paid because of the insolvency of their employer. The OAED takes the place of the employer in respect of the rights of employees and pays the relevant social security contributions in respect of their salaries. Any outstanding salaries paid to beneficiaries must fall within the six-months period prior to the date of the employer's application for the business to be declared bankrupt or the date of publication of the ministerial decision withdrawing the operating licence (for liquidation of a business). Thereof, the maximum amount that the beneficiaries can claim is up to three months' salary, including credits such as holiday payments, among others. Severance pay is not reimbursed.

The guarantee covers claims from dependent employment, irrespective of the duration of employment and whether or not the employment is still upright, even covering illegal employment relationships if they have the structure of a relationship of dependent labour. There is no minimum duration for the employment relationship.

There are four types of insolvency:

• the company is announced insolvent by court and its business activities stopped;
• the company is put under administration;
• an insurance company that loses its authorisation due to violating legal regulations and therefore becomes insolvent;
• an employer terminates all employment contracts and goes into insolvency in order to pay its debts.