A proposal to alter the guaranteed recovery of payments due to employees and workers when their employer becomes insolvent has been filed with Parliament.

The Labour and Social Policy Commission’s proposal aims to increase the protection for some employees and make it easier for them to recover any pay they are owed.

At present, the guarantee extends to all current and former employees and workers (whose contract was terminated during the last 3 months prior to insolvency), but is limited to 3 months’ earnings in the 6 months prior to insolvency.

The changes envisage that the employer should have carried out activity at least 12 months prior to the initial date of insolvency, respectively overindebtedness.

The changes would also restrict the guarantee to:

  • 6 months’ accrued but unpaid earnings in the 12 months before termination (for those no longer employed at the date of insolvency)
  • 6 months’ accrued but unpaid earnings in the 12 months before the insolvency began (for those still employed at the date of insolvency).

Law: Draft bill re amendment of the Law for guaranteeing workers and employees’ receivables in the event of employer’s bankruptcy