Real Decreto Legislativo 1/1995, Ley 22/2003, Real Decreto 20/2012
Legal Decree 1/1995, Law 22/2003, Royal Decree 20/2012
There is a special insolvency state fund (Fogasa) addressed to workers whose employer has been declared insolvent or bankrupt, or who had to stop paying wages for certain economic reasons. Law 22/2003 defines insolvency as the situation in which a debtor company cannot regularly meet its required debtor obligations.
The insolvency law from 2003 establishes the workers’ privilege as creditors in cases where the company becomes insolvent. The claims of the workers of the company (wages for the 30 days before the opening of the collective procedures; wages for work after the start of the collective procedures; economic compensation related to termination of the employment contract etc.) have the priority, ranking ahead of all other claims.
The guarantee only becomes active if there are not enough assets available.
Anyone providing services for an employer and receiving wage for this, including part-time and fixed-term workers, irrespective of the duration of employment is eligible.
Domestic servants employed by families, artists, partners of workers' cooperatives are exempted.
The guarantee covers wages, bonuses and fringe benefits as well as financial employee participation that arises up to one year before the insolvency.
In terms of wages pending to be paid, the fund pays an amount which is the outcome of multiplying the double of the daily National Minimum Wage by the number of days of wages pending do be paid. There is a maximum of payment of 120 days since a change enacted by Royal Decree 20/2012 that entered into force the 15 July 2012 (before it was 150 days).
In terms of severance pay, there is a maximum payment of 12 months per year worked. However, the wage which is taken into consideration in order to calculate the severance pay cannot be higher than the double daily minimum wage (national minimum wage was set at €900 as of 2019, according to Royal Decree 742/2016). Fogasa covers only severance pay acknowledged by a court sentence or resolution of the Labour Authority when dismissal is applied if the company is considered insolvent or goes bankrupt.
The guarantee is administered by the Guarantee Institution Fogasa of the labour ministry and financed by employer contributions.
In 2017, 90,321 workers' application were made and claims by 324,469 companies for a total amount of € 590.60 million.
In 2015, claims of 43,112 companies and 165,288 were satisfied. In 2013, claims of 82,373 companies (-2% compared to 2012) and 234,686 workers (-8%) were satisfied.
In 2012 160,036 applications were satisfied, and claims of 84,257 companies and 254,931 workers were satisfied. That increase led the government to reduce the level of payment by means of Royal Decree 20/2012.
Figures increased compared to 2008: in 2010, 135,577 applications were solved, and claims of 71,866 companies and 232,722 workers were satisfied.
In 2008, figures remained more or less stablecompared to 2007: 49,792 applications were solved, and claims of 25,637 companies and 90,320 workers were satisfied.
In 2007, 39,032 applications were solved, and claims of 20,498 companies and 73,447 workers were satisfied.
Cost covered by
Involved actors other than national government