- Response to COVID-19
- Income support for workers
Association pour la Gestion du régime de garantie des créances des salariés (AGS)
Wage guarantee fund
Wage guarantees are offered in the case that an employer is bankrupt (debt cannot be covered by assets), reorganises the company, or is in temporary financial difficulties.
All employees are eligible irrespective of the duration of the employment contract including part-time and fixed-term workers, workers that temporarily work outside of France as well as foreign workers working in France for an employer located in another European Union Member State.
Founded in 1973, wage guarantees cover everything that is owed to the worker on the day of filling for insolvency, including wages, compensations in case of termination of the employment contract, claims from financial employee participation and social plans.
There is a maximum amount per employee which takes into account the following considerations:
- If the contract has been concluded less than six months before the opening judgement for insolvency, the maximum is set at €54,848 for 2020.
- If the contract has been concluded between six months and two years before the opening judgement for insolvency, the maximum is set at €68,560 for 2020.
- If the contract has been concluded more than two years before the opening judgement for insolvency, the maximum is set at €82,272 for 2020.
There is no minimum duration of the employment relationship.
The guarantee is run by the Wage Guarantee Scheme (Association pour la gestion du régime de Garantie des créances des Salariés, AGS). The insolvency administrator appointed by the court, either the commercial court or the civil court depending on the employer's activity, has to draft an overview of all employees’ claims. He has to compile in a statement the employee's identity including the national identification number; the nature of his/her employment contract; the date he/she joined the company; his/her function and job title; the termination date of his/her employment contract; the sums already paid and the outstanding amounts to be paid. In a next step, the insolvency administrator submits this statement to the AGS.
An employee representative is appointed by employees to check the amount of sums due and paid to employees and serves as the intermediary between the employees and the administrator or court.
At receipt of the statement of wage claims compiled by the insolvency administrator, the AGS checks that the claims fall within the guarantee scope of the AGS. The AGS, as an advance, makes a payment to the insolvency administrator who distributes the payment to the employees.
In practice, statements are drawn up and presented to the AGS by the administrator within a period of 10 days from the start of the insolvency proceedings for salaries and incidental expenses, and of less than three months for all other receivables (including severance pay). The AGS provides a judicial representative with the funds required to pay the amounts owed to employees within a period of five days following receipt of the statement of wage claims (regarding salaries and incidental expenses) and within a period of eight days regarding other receivables (including severance pay).
The system is financed by contributions from all employers (0.15% of the payroll since July 2017 - a decrease since 2016). The national body responsible for collecting social contributions and family allowances (URSSAF) is responsible for collecting these contributions.
Due to the COVID-crisis, the AGS has taken exceptional measures, applicable retroactively from 16 March 2020, aimed at maintaining and strengthening its mission as a social shock absorber while adapting to the current needs and constraints of companies, employees and court officers. This especially implies that, from 16 March 2020, the AGS pays the amounts owed to employees within a period of 72 hours following receipt of the statement of wage claims. In addition, from 1st March 2020 to 31 August 2020, in case of financial difficulties resulting from the pandemic,the deduction of the employer contributions required to finance the AGS scheme may be deferred.
Public employment services
The public employment service (URSSAF) is responsible for collecting the companies' contributions. The UNEDIC is in charge of the technical and financial management of the scheme, through a specific body : the Délégation Unedic AGS
Association pour la Gestion du régime de garantie des créances des salariés (AGS); insolvency administrator.
From 2010 to 2019, the number of cases submitted to the AGS has been decreasing by 31.6 %, from 29,393 in 2010 to 20,105 in 2019. Most of the cases relate to companies with less than 10 employees (85% of the cases) from 2010 to 2019. However, one might notice, from 2017 to 2019, an upturn due to the slight increase in cases involving companies with 100 or more employees (135 cases in 2019 compared with 133 in 2018). As for sectors most covered by the AGS, construction is the first one despite the fact that number of cases decreased by 48% from 2010 to 2019; the second one is the retail sector and the third one, the catering and accommodation sector.
The consequences of the financial crisis of 2008 continued until 2014, when the amount of AGS advances reached its peak and exceeded the record reached in 2009 (2.201 billion against 2.114 billion). Over the next five years, advances fell by almost 33%, falling in 2018 and 2019 below the one and a half billion, thus returning to their pre-crisis level. In 2019, €1,488 million were spent on paying employees who did not receive their salary from their employer for 181,497 employees concerned.
Strong protection for the workers in case of insolvency of the company.
Amounts owing are paid quite quickly (maximum time limit should be no longer than three months after the legal decision of judicial redress).
Litigations with the Wage Guarantee Fund are quite numerous, as money is at stake. Either the fund claims back overpayments or workers file a complaint to recalculate their rights.