EMCC European Monitoring Centre on Change

Insolvency income fund

Austria
Phase: Management
Type:
  • Response to COVID-19
  • Income support for workers
Last modified: 17 November, 2020
Native name:

Insolvenz-Entgelt-Fonds

English name:

Insolvency income fund

Coverage/Eligibility

The programme covers employees, freelancers, home workers, apprentices and inheritors in case of employer insolvency.

Employees of the state, federal states (provinces) and municipalities, as well as those having decisive influence on the organisation in insolvency are not eligible applicants.

Main characteristics

In case of employer's insolvency or bankruptcy, employees, freelancers, home workers, apprentices and others who have a contract with a company to conduct work in Austria may direct insolvency claims to the insolvency income fund if their claims have not yet been satisfied by the employer.

Insolvency is understood as:

  • opening of a bankruptcy proceeding;
  • appointment of an administrator;
  • rejection of an application for opening bankruptcy proceedings due to insufficient assets or lack of court jurisdiction;
  • deletion from the commercial register due to lack of assets;
  • lack of assets in the case of the death of the entrepreneur or court decision that inheritance proceedings are to be devoted to the creditors.

Eligible are claims for:

  • wages and severance payments;
  • compensation for damages;
  • other claims against the employer (such as company pensions, daily allowances etc.); and
  • costs related to the legal and administrative procedures to realise payment from these claims.

If the claims arose up to six months before filing for insolvency, applicants may receive up to twice the maximum amount considered for social security (outstanding wages and severance payment), that is up to a gross monthly income of €10,740 in 2020 (IEF). 

Employees have to apply within six months after the opening of insolvency proceedings. The assessment procedure includes a consultation with the employer or insolvency administrator.

Insolvency payments are processed by the state-owned Insolvenz-Entgelt-Fonds-Service which was specifically established for this purpose. The fund is financed by employers’ contributions and public funds. In 2015 employers' contribution to the IEF were lowered from 0.55% to 0.45% (BGBl. I Nr. 30/2014), and it was further lowered to 0.35% in 2016 (BGBl. Nr. 375/2015).

If an employer does not pay these contributions, this does not affect the benefits of the employees in case of insolvency.

Response to COVID-19

The fund adopted a digital telecommunication strategy during COVID-19 to raise awareness about its services.

Funding

  • National funds
  • Companies

Involved actors

National government
Funding.
Other
The Insolvenz-Entgelt-Fonds-Service GmbH (insolvency administrator) administers the programme.

Effectiveness

As of July 2020, the website of the fund does not provide current budgets and case numbers. It quantifies the number of supported employees with an average of between 24,000 and 35,000 per year (Insolvenzentgeltfonds 2020).

In 2016, the fund registered 23,199 cases of affected workers. 

The time needed for processing claims could be reduced in recent years to an average of 2.26 month in 2013. The first payment is received after 1.51 months on average (Audit report IEF 2013). 

Compared to 2012, cases of insolvency were declining in 2013. However, the number of affected workers increased from 27,146 to 35,482 (applicants) due to two major bankruptcy cases, Alpine and TAP dayli. Accordingly, the payments for outstanding salary realised by the fund increased from €190.8 to €291.4 million (RH 2015).

Strengths

Employees are granted income when the companies they are employed at become insolvent.

Weaknesses

Only claims that date up to six months back are secured.

Examples

No information available.
Sources
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