Pay security protects your salary – as long as you act quickly!

Topics

• Labour law
• Legal assistance

Over the past few months, the YTK Worklife Lakikaveri service has received an unfortunate number of contacts about delays in the payment of wages. There have also been challenges with the payment of final wages.

If the employer’s payment difficulties prevent the payment of wages, workers have the right to claim their wages from the Wage Guarantee Fund. However, the application must be made quickly, otherwise the opportunity is missed.

When can you get pay security?

In order to be eligible for the wage guarantee, the reason for the delay in payment of wages or other claims must be the insolvency of the employer. The most obvious insolvency situation is bankruptcy of the employer. Insolvency is also indicated by situations where the employer is unable to pay its debts under execution or where the company has failed to pay its withholding taxes.

A maximum of 19 000 € and only uncontested claims can be paid as pay security to an employee. If the employer disputes the claim and the guarantee procedure fails to settle it, the claim cannot be paid as a guarantee until the amount and the basis of the claim have been settled by a final judgment. 

Wage guarantee is paid only to employees. Therefore, for example, the managing director of a limited company is not entitled to a wage guarantee.

Act now!

The most important thing from the worker’s point of view is that you must apply for wage guarantee within three months of the date on which the wage claim is due. Each instalment and claim is due independently. In other words, each pay period (for example, a month) must be claimed separately within three months of the due date of each pay period.

As a rule, claims arising from the employment relationship are due in each pay period and the so-called “final account” is due at the end of the employment relationship. The period for applying for wage guarantee is therefore relatively short and for many people the deadline expires while they are waiting. So don’t wait and be quick to claim your entitlements!

Even if you know that your employer will dispute your claim, it is important to apply soon. So you cannot wait until the end of a potential dispute to file your claim.

Be prepared to wait for a decision

According to the ELY Centre, the average processing time for applications for wage guarantee is around four months. If further clarification is needed, the processing time can be even longer. 90% of applications are processed in less than eight months.

Unfortunately, Pay security is therefore not a very quick solution in the event of non-payment of wages. However, in situations where the employer is insolvent, it is the only way to ensure that you receive your wages. Therefore, it is not a good idea to wait to apply for a guarantee, but to do so without delay when you have not received your wages.

Remember this about wage guarantee and daily allowance

It’s good to know that the guarantee may have an impact on the earnings-related daily allowance. In practice, wages or other entitlements paid by way of guarantee are treated in the same way as if they had been paid by the employer.

When you apply for earnings-related daily allowance, always remember to state in your claim for earnings-related daily allowance if you have claimed your entitlement under the guarantee. You should also indicate if the guarantee has been granted or refused.

How to apply?

You can find the online application form here. If you want to fill in a paper form, you can find a printable version here.

It is a good idea to have your pay slips and employment contract, among other things, available beforehand. You can find out more about the conditions and application process for the guarantee on the ELY Centre’s website.

 As a member of YTK Worklife, the Legal assistance is also there to help you with your employment relationship’s payroll issues. You can turn to the Lakikaveri if you are having difficulties calculating the amount of your pay claims, for example when applying for a wage guarantee. You can also get general advice on how to apply for wage guarantee.

Read more about the Pay security

Check out the Lakikaveri service

Taija Numminen

Leading lawyer, YTK Worklife

In my work, I develop the Lakikaveri service package. In addition, I advise and help our members with questions and sticky situations concerning law employment.

My goal is that the Lakikaveri is an easily accessible, uncomplicated and timely help for our members when they wonder about something in their work or employment relationship. At the Lakikaveri service, we always strive to offer solution-oriented help and find an agreement as easily as possible.