EMCC European Monitoring Centre on Change

Wage guarantee in case of insolvency

Czechia
Phase: Management
Type:
  • Income support for workers
Last modified: 26 November, 2020
Native name:

Ochrana zaměstnanců před platební neschopností zaměstnavatele

English name:

Wage guarantee in case of insolvency

Coverage/Eligibility

All private law employment relationships are eligible, including part-time workers, fixed-term workers and domestic servants. Public officials are excluded.

Other employees are also excluded from protection, namely employees who are members of the employer’s statutory body and shareholders with half and higher participation, and employees who work for the employer as temporary agency workers (TAW) and whose wages are covered by a TAW insurance in case of insolvency.

Main characteristics

The employee has to submit the application for claims to the labour office according act no. 118/2000 Coll., Protection of employees in the event of insolvency of their employer. The employee has to apply within 5 months and 15 calendar days following the date on which the labour office published its official board information to the court regarding the employer who has filed an insolvency petition or has impounded property. All claims (wage, payment for holidays, termination of a job, payment for time off to visit a doctor) that arose in the period of three months before and three months after the month when the insolvency was announced are covered. Wage claims are covered for a maximum period of three months, for a monthly amount of one and a half average wage in Czechia as prescribed by law. The guarantee is financed by the state and paid by the labour office; there are no employers’ contributions.

Funding

  • National funds

Involved actors

National government
Legal framework, funding
Public employment services
Administration
Other
Local court responsible for insolvency proceedings

Effectiveness

The number of employers, number of submitted employees' applications and paid wage guarantee followed the economic cycle in the country, as it can be observed in the table below.

 

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

Number of employers whose employees are qualified for the wage guarantee in insolvency

382

386

750

847

840

961

802

693

437

345

316

-

-

Submitted employees' applications

5,983

3,973

16,281

9,998

7,100

9,101

8,031

6,094

4,569

3,826

2,177

-

-

Processed applications

6,888

5,055

19,451

11,028

8,253

7,694

8,202

6,830

5,610

4,402

3,290

3,793

4,431

Wage guarantee paid to employees in total (thousands CZK)

196,033

150,330

844,033

497,837

389,142

451,799

333,208

391,856

229,500

250,339

167,343

257,154

277,672

Wage guarantee paid to emplyoees in total (thousands EUR)

7,128

5,467

30,692

18,103

14,151

16,429

12,117

14,513

8,500

9,628

6,436

9,891

10,680

Source: Labour office of Czechia (Úřad práce ČR )

Strengths

This measure can guarantee the living standard of employees in case of employer's insolvency.

Weaknesses

The payments are limited to 1.5 times of the average wage or salary in Czechia.

Examples

No information available.
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