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R180 - Protection of Workers' Claims (Employer's Insolvency) Recommendation, 1992 (No. 180)

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Preamble

The General Conference of the International Labour Organisation,

Having been convened at Geneva by the Governing Body of the International Labour Office, and having met in its 79th Session on 3 June 1992, and

Stressing the importance of the protection of workers' claims in the event of the insolvency of their employer and recalling the provisions on this subject in Article 11 of the Protection of Wages Convention, 1949, and Article 11 of the Workmen's Compensation (Accidents) Convention, 1925, and

Noting that, since the adoption of the Protection of Wages Convention, 1949, greater value has been given to the rehabilitation of insolvent enterprises and that, because of the social and economic consequences of insolvency, efforts should be made where possible to rehabilitate enterprises and safeguard employment, and

Noting that since the adoption of the aforementioned standards, significant developments have taken place in the law and practice of many Members which have improved the protection of workers' claims in the event of the insolvency of their employer, and considering that it would be timely for the Conference to adopt new standards on the subject of workers' claims, and

Recognising that guarantee institutions, if properly designed, afford greater protection of workers' claims, and

Having decided upon the adoption of certain proposals with regard to the protection of workers' claims in the event of the insolvency of their employer, which is the fourth item on the agenda of the session, and

Having determined that these proposals shall take the form of a Recommendation supplementing the Protection of Workers' Claims (Employer's Insolvency) Convention, 1992;

adopts this twenty-third day of June of the year one thousand nine hundred and ninety-two the following Recommendation, which may be cited as the Protection of Workers' Claims (Employer's Insolvency) Recommendation, 1992.

I. DEFINITIONS AND METHODS OF APPLICATION

  1. 1.
    • (1) For the purposes of this Recommendation, the term insolvency refers to situations in which, in accordance with national law and practice, proceedings have been opened relating to an employer's assets with a view to the collective reimbursement of its creditors.
    • (2) For the purposes of this Recommendation, Members may extend the term "insolvency" to other situations in which workers' claims cannot be paid by reason of the financial situation of the employer, and in particular to the following:
    • (a) where the enterprise has closed down or ceased its activities or is voluntarily wound up;
    • (b) where the amount of the employer's assets is insufficient to justify the opening of insolvency proceedings;
    • (c) where, in the course of proceedings to recover a worker's claim arising out of employment, it is found that the employer has no assets or that these are insufficient to pay the debt in question;
    • (d) where the employer has died and his or her assets have been placed in the hands of an administrator and the amounts due cannot be paid out of the estate.
    • (3) The extent to which an employer's assets are subject to the proceedings referred to in subparagraph (1) should be determined by national laws, regulations or practice.
  2. 2. The provisions of this Recommendation may be applied by means of laws or regulations or by any other means consistent with national practice.

II. PROTECTION OF WORKERS' CLAIMS BY MEANS OF A PRIVILEGE

PROTECTED CLAIMS
  1. 3.
    • (1) The protection afforded by a privilege should cover the following claims:
    • (a) wages, overtime pay, commissions and other forms of remuneration relating to work performed during a prescribed period prior to the insolvency or prior to termination of the employment. This period should be fixed by national laws or regulations and should not be less than 12 months;
    • (b) holiday pay due as a result of work performed during the year in which the insolvency or the termination of the employment occurred, and in the preceding year;
    • (c) amounts due in respect of other types of paid absence, end-of-year and other bonuses provided for by national laws or regulations, collective agreements or individual contracts of employment, relating to a prescribed period, which should not be less than 12 months, prior to the insolvency or prior to the termination of the employment;
    • (d) payments due in lieu of notice of termination of employment;
    • (e) severance pay, compensation for unfair dismissal and other payments due to workers upon termination of their employment;
    • (f) compensation payable directly by the employer in respect of occupational accidents and diseases.
    • (2) The protection afforded by a privilege might cover the following claims:
  • (a) contributions due in respect of national statutory social security schemes, where failure to pay adversely affects workers' entitlements;
  • (b) contributions due in respect of private, occupational, inter-occupational or enterprise social protection schemes independent of national statutory social security schemes, where failure to pay adversely affects workers' entitlements;
  • (c) benefits to which the workers were entitled prior to the insolvency by virtue of their participation in enterprise social protection schemes and which are payable by the employer.
  • (3) Claims enumerated in subparagraphs (1) and (2) that have been awarded to a worker through an adjudication or arbitration within 12 months prior to the insolvency should be covered by the privilege regardless of the time-limits specified in those subparagraphs.
LIMITATIONS
  1. 4. Where the amount of the claim protected by a privilege is limited by national laws or regulations, in order that this amount should not fall below a socially acceptable level it should take into account variables such as the minimum wage, the part of the wage which is unattachable, the wage on which social security contributions are based or the average wage in industry.
CLAIM WHICH FALL DUE AFTER THE INSOLVENCY PROCEEDINGS HAVE BEEN OPENED
  1. 5. Where, in accordance with national laws and regulations, an enterprise in respect of which insolvency proceedings have been opened is authorised to continue its activities, workers' claims arising out of work performed as from the date when the continuation was authorised should not be subject to the proceedings and should be paid, out of the funds available, as and when they fall due.
ACCELERATED PAYMENT PROCEDURES
  1. 6.
    • (1) Where the insolvency proceedings cannot ensure rapid payment of workers' privileged claims, there should be a procedure for accelerated payment to ensure that the claims are paid, without awaiting the end of the proceedings, out of available funds or as soon as funds become available, unless the rapid payment of workers' claims is ensured by a guarantee institution.
    • (2) Accelerated payment of workers' claims may be ensured as follows:
    • (a) the person or institution responsible for administering the employer's assets should pay such claims as soon as it has been determined that they are genuine and payable;
    • (b) if the claim is contested, the worker should be able to have its validity determined by a court or any other body with jurisdiction over the matter, so as to have it paid in accordance with clause (a).
    • (3) The accelerated payment procedure should cover the totality of the claim protected by a privilege, or at least a part of it to be fixed by national laws or regulations.

III. PROTECTION Of WORKERS' CLAIMS BY A GUARANTEE INSTITUTION

SCOPE
  1. 7. The protection of workers' claims by a guarantee institution should have as wide a coverage as possible.
OPERATING PRINCIPLES
  1. 8. Guarantee institutions might operate according to the following principles:
    • (a) they should be administratively, financially and legally independent of the employer;
    • (b) employers should contribute to financing these institutions, unless this is fully covered by the public authorities;
    • (c) they should assume their obligations vis-à-vis protected workers irrespective of whether any obligation the employer may have of contributing to their financing has been met;
    • (d) they should assume a subsidiary responsibility for the liabilities of insolvent employers in respect of claims protected by the guarantee and should, by way of subrogation, be able to act in place of the workers to whom they have made payments;
    • (e) the funds managed by guarantee institutions, other than those from general revenues, may only be used for the purpose for which they were collected.
CLAIMS PROTECTED BY THE GUARANTEE
  1. 9.
    • (1) The guarantee should cover the following claims:
    • (a) wages, overtime pay, commissions and other forms of remuneration relating to work performed during a prescribed period, which should not be less than three months, prior to the insolvency or prior to the termination of the employment;
    • (b) holiday pay due as a result of work performed during the year in which the insolvency or the termination of the employment occurred, and in the preceding year;
    • (c) end-of-year and other bonuses provided for by national laws or regulations, collective agreements or individual contracts of employment, relating to a prescribed period, which should not be less than 12 months, prior to the insolvency or prior to the termination of the employment;
    • (d) amounts due in respect of other types of paid absence relating to a prescribed period, which should not be less than three months, prior to the insolvency or prior to the termination of the employment;
    • (e) payments due in lieu of notice of termination of employment;
    • (f) severance pay, compensation for unfair dismissal and other payments due to workers upon termination of their employment;
    • (g) compensation payable directly by the employer in respect of occupational accidents and diseases.
    • (2) The guarantee might cover the following claims:
  • (a) contributions due in respect of national statutory social security schemes, where failure to pay adversely affects workers' entitlements;
  • (b) contributions due in respect of private, occupational, inter- occupational, or enterprise social protection schemes independent of national statutory social security schemes, where failure to pay adversely affects workers' entitlements;
  • (c) benefits to which the workers were entitled prior to the insolvency by virtue of their participation in enterprise social protection schemes and which are payable by the employer;
  • (d) wages or any other form of remuneration consistent with this Paragraph, awarded to a worker through adjudication or arbitration within three months prior to the insolvency.
LIMITATIONS
  1. 10. Where the amount of the claim protected by means of a guarantee institution is limited, in order that this amount should not fall below a socially acceptable level, it should take into account variables such as the minimum wage, the part of the wage which is unattachable, the wage on which social security contributions are based or the average wage in industry.

IV. PROVISIONS COMMON TO PARTS II AND III

  1. 11. Workers or their representatives should receive timely information and be consulted with regard to insolvency proceedings which have been opened and to which the workers' claims pertain.

See related

Key Information

Recommendation concerning the Protection of Workers' Claims in the Event of the Insolvency of their EmployerINSTR_SUBTITLE_REC

See also

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