EMCC European Monitoring Centre on Change

Employees' Guarantee Fund

Denmark
Phase: Management
Tipas:
  • Response to COVID-19
  • Income support for workers
Last modified: 03 August, 2021
Projekto pavadinimas::

Lønmodtagernes Garantifond

Angliškas pavadinimas:

Employees' Guarantee Fund

Coverage/Eligibility

Support is provided in the following cases:

  • Bankruptcy;
  • Employer’s death where the court declares the company insolvent;
  • Termination of the business while it is proven that the employer is unable to pay the employees’ claims;
  • During the employer’s court-supervised suspension of payments according to the provisions of the bankruptcy law.

All employees are eligible, including part-time and fixed-term workers, except family members and close associates of the insolvent employer. There is no minimum duration for the employment relationship in order for workers to qualify for the guarantee.

Main characteristics

Employees can apply to the Employees’ Guarantee Fund (Lønmodtagernes Garantifond, LG) for wage and holiday compensation, indemnification for interruption of the employment relationship and compensation in connection with discharge from employment. LG is an independent national institution founded in 1964, governed by the social partners and regulated by law.

The claims have to arise in the period of four months after bankruptcy or six months after notice of suspension of payments or the death of the employer. All private employers in Denmark pay a quarterly contribution to the fund. The maximum compensation from the fund is DKK 160,000 (€21,300).

During the COVID-19 crisis the fund had an increased number of requests and applications. However, there is no official figure yet (September 2020).

Funding

  • Companies

Involved actors

National government
Legal framework.
Employer or employee organisations
Governed by the social partners.
Kiti
Employees’ Guarantee Fund (Lønmodtagernes Garantifond, LG).

Effectiveness

In 2018, the fund paid a total of DKK 532 million (€ 71.41 million) to 16,960 employees in relation to wages, compensation, holiday allowance and restructurings.

In 2017, the fund paid a total of DKK 483 million (€ 64.75 million) to employees' wages, compensation, holiday allowance and restructurings.

In 2015, the fund paid DKK 497 million (€ 66.3 million) to 16,217 employees.

In 2014, the Employees' Guarantee Fund paid a total of DKK 587 million (€ 78.3 million) to 20,280 employees.

Between 2006 and the crisis years 2008 and 2009, about 7,300 applications were registered, and claims of about 74,200 workers were satisfied.

The effect of this support instrument is most certainly related to managing restructuring. The employees' wages are secured and they do not stand empty handed in case of bankruptcy of their work place.

Strengths

The Employees' Guarantee Fund  is broadly accepted as a very important support instrument for the employees who otherwise, in case of bankruptcy of their work place, would not be protected.

Weaknesses

No information available. There are no reports on weaknesses of this support instruments.

Pavyzdžiai

No information available.
Šaltinis
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