EMCC European Monitoring Centre on Change

The Public Scholarship, Development, Disability and Maintenance Fund of the Republic of Slovenia

Slovenia
Phase: Management
Type:
  • Income support for workers
Last modified: 14 August, 2020
Native name:

Javni štipendijski, razvojni, invalidski in preživninski sklad Republike Slovenije

English name:

The Public Scholarship, Development, Disability and Maintenance Fund of the Republic of Slovenia

Coverage/Eligibility

The Public Scholarship, Development, Disability and Maintenance Fund of the Republic of Slovenia (hereafter, the Guarantee Fund) protects claims of the employees whose employment has been terminated due to bankruptcy proceedings, a valid decision on compulsory workforce composition, insolvency procedures in one of the other EU Member States or European Economic Area (in which the employment or active work was being carried outside the Republic of Slovenia), or if the company is being removed from the court register without liquidation under the provisions of the Financial Operations, Insolvency Proceedings and Compulsory Dissolution Act (ZFPPIPP). All employees are eligible, irrespective of the type of their employment contract. In case of insolvency, unpaid wages, severance pay, and social contributions for the last six months are priority claims in the insolvency procedure.

Main characteristics

 Coverage by the Guarantee Fund includes the right to receive payment (total amount not exceeding four and a half minimum wages) of: 

  • unpaid wages for the period of the last three months prior to the termination of the employment relationship (maximum of three minimum wages prescribed by the Minimum Wage Act, lowered by taxes and contributions);
  • unpaid wage compensation for sick leave for the last three months before the termination of the employment relationship (maximum of three minimum wages prescribed by the Minimum Wage Act, lowered by taxes and contributions);
  • wage compensation for unused annual holidays to which the employee was entitled in the current year (maximum of one half of minimal wage prescribed by the Minimum Wage Act, lowered by taxes and contributions);
  • severance payment, as provided by the law on employment relations (maximum of one minimum wage prescribed by the Minimum Wage Act, lowered by taxes and contributions).

The Guarantee Fund is financed (with regard to covering payments to the employees) by the state budget, by employers (0.06% of the payroll costs) and by the Guarantee Fund by means of transfer and enforcement of claims from the insolvent employer.

The deadline for filing an application for financial protection is 90 days after the termination of the employment relationship. The Guarantee Fund has to meet all its obligations within 30 days after the decision and the procedure is final.

Funding

  • National funds
  • Employer
  • Companies

Involved actors

National government
Legal framework; funding.
Other
The Public Scholarship, Development, Disability and Maintenance Fund of the Republic of Slovenia. Companies (funding) through social contributions.

Effectiveness

In the period 1997–2019, the Guarantee Fund paid out wage guarantees to 90,625 individuals in the amount of €134 million. The largest share of this sum was spent in the first two years as the law on the Guarantee Fund had retroactive force. The economic crisis brought about a progressive increase in the number of workers’ claims. It reached the peak in 2011 when €20,617,799 was disbursed to 7,205 individuals, a record in the history of the Guarantee Fund. In the last years, the bankruptcies of small businesses (in which administrators find it difficult to establish all claims of employees) prevail.

The Guarantee Fund disbursed €4 million to 1,218 individual employees in 2019 (Annual Report for the year 2019). In 2018, the average net payment amounted to €1,790 per beneficiary. In 2018, the Guarantee Fund received the most requests for financial protection from former employees of Adria Airways and Arum, a clothing manufacturer.

Strengths

Provides a financial guarantee for workers who have lost their jobs, facilitates the exercise of workers' claims and shifts part of the burden of unpaid claims to public funds.

Weaknesses

The Guarantee Fund does not guarantee payment of all liabilities of employers to workers who have lost their jobs through bankruptcy. The remainder of the workers’ entitlements become part of the bankruptcy estate for which their payments have priority. However, these procedures are both lengthy and risky.

Examples

In 2018, the Guarantee Fund received the highest number of requests for financial protection from former employees of air company Adria Airways (523 claims), clothing manufacturer Arum (243), foundry Litostroj (82), retailer Vetpet (75) and many other small and micro companies.
Sources
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