Protection of Workers' Claims (Employer's Insolvency) Convention, 1992 (No. 173) - Finland (Ratification: 1994)

Replies received to the issues raised in a direct request which do not give rise to further comments (CEACR) - adopted 2011, published 101st ILC session (2012)

The Committee notes the information provided by the Government, which answers the points raised in its previous direct request and has no further matters to raise in this regard.

Direct Request (CEACR) - adopted 2006, published 96th ILC session (2007)

The Committee notes the information contained in the Government’s report, in particular, the adoption of the new Bankruptcy Act (120/2004) and the new Annual Holidays Act (162/2005), as well as the latest amendments to the Pay Security Act (866/1998) and the Seamen’s Pay Security Act (1108/2000) introduced in 2004. It requests the Government to supply additional information on the following points.

Article 3, paragraph 2, of the Convention. The Committee notes the Government’s statement that, while the bankruptcy legislation was entirely reformed by the new Bankruptcy Act, the Act on the Ranking of Claims (1578/1992) was not amended, as the principle of the equality of creditors was still considered acceptable, and that the protection of employees’ wage claims is ensured by the existing pay security system. The Government adds that, following the adoption of the company restructuring legislation in 1993, it was felt that the implementation of this legislation was only possible if the preferential treatment of certain creditors was removed. The Committee recalls that the Convention offers the possibility for a member State which has ratified the Convention in respect of either Part II or Part III to extend at any time its acceptance to the other Part. It asks the Government to keep it informed of any further developments in this regard.

Article 12. The Committee notes the Government’s indication that, by virtue of section 17 of the new Annual Holidays Act, employees are entitled to compensation at the end of their employment relationship for any holiday entitlement or holiday compensation earned but not yet received.

Article 13. The Committee notes the Government’s explanations that the current maximum amount of pay security of 15,200 euro was set based on a policy agreement concluded in 1998 between the Government and the labour market organizations, and that the annual monitoring of the maximum amount by the Ministry of Labour indicates that the current amount is higher in most cases than the total amount of employees’ claims. In fact, there would have been a need for an increase in the maximum amount in less than 1 per cent of the pay security decisions. The Government adds that, according to Statistics Finland, the average salary of workers in 2005 was 2,500 euro per month, which means that the total of the average three-month salary (7,500 euro), and the average holiday remuneration (2,500 euro) remains 5,200 euro below the maximum amount. The Committee also notes that an amendment to the Pay Security Act is currently in preparation in order to provide for the maximum amount of pay security under the expanded operation of the working time bank system – a new voluntary working time system which is believed to give rise to pay security claims considerably higher than the current maximum amount. The Committee requests the Government to keep it informed of any developments in this regard.

Part IV of the report form. The Committee notes the information supplied by the Government regarding the administration and management of the pay security schemes, and the statistical data for the period 2002-05 on the total amount paid under the pay security system, the amounts recovered by the employers, the number of applications received and the number of claims settled. It would be grateful if the Government would continue providing up to date information concerning the functioning of the pay security system, including, for instance, relevant extracts from the annual reports of the Unemployment Insurance Fund.

Direct Request (CEACR) - adopted 2003, published 92nd ILC session (2004)

The Committee notes the detailed information provided by the Government in its report, in particular the adoption of the new Pay Security Act (866/1998) and the Pay Security Decree (868/1998), as subsequently amended. It also notes the comments made by the Central Organization of Finnish Trade Unions (SAK), the Finnish Confederation of Salaried Employees (STTK) and the Confederation of Unions for Academic Professionals in Finland (AKAVA). The Committee wishes to draw the Government’s attention to the following points.

Article 3, paragraph 2, of the Convention. The Committee notes the Government’s explanations as to the reasons why it has not been able so far to accept Part II of the Convention dealing with the protection of workers’ claims by means of a privilege. The Government states that, under the Act on the order in which creditors obtain payment (1578/1992), wage claims enjoy no priority. It adds that there have not usually been any claims which are not covered by the wage guarantee, or pay security system, and that in any event in about one-third of bankruptcies the available assets are not sufficient to cover even the costs of the bankrupt estate. For these reasons, it is estimated that instead of restoring statutory priorities in respect of workers’ wage claims, efforts should rather aim at improving the coverage of the pay security system. The Committee notes, however, that according to the observations of the SAK the preferential treatment of wage debts in bankruptcy proceedings should be restored since this would support and complement the pay security system. In the same vein, the STTK considers that granting priority to wage claims would eliminate certain abusive practices which seem to be tolerated under existing pay security legislation. In the view of both organizations, Part II of the Convention should also be ratified. The Committee hopes that the Government will give due consideration to the views expressed by workers’ organizations and asks the Government to keep it informed of any further developments in this respect.

Article 12. The Committee notes the Government’s statement to the effect that, although pay security covers claims arising within the three months preceding the filing of the pay security application, the full annual holiday benefits belong to the benefits payable as pay security under the provisions of the Annual Holidays Act regarding holiday compensation. The Committee requests the Government to specify the relevant provisions of the Annual Holidays Act and to communicate a copy of that text.

Article 13. The Committee notes the Government’s indication that the maximum amount of pay security is currently set at 15,200 euros and that such an amount is considered to correspond well to a socially acceptable level. The Government refers to statistics showing that claims rarely exceed the maximum pay security amount, and adds that the Ministry of Labour monitors the sufficiency of this amount on a yearly basis. The Committee notes, however, that according to the information provided by the Government, the pay security maximum amount has remained practically unchanged since July 1998. It also notes that according to the observation made by AKAVA the maximum amount is at present insufficient to cover all the employee’s claims arising from the employment relationship and that it should be increased at least to 25,200 euros. The Committee would appreciate receiving additional information on this point, and especially on the criteria used in revising the maximum amount of pay security. In this regard, it ventures to suggest that guidance may be found in paragraph 10 of the Protection of Workers’ Claims (Employer’s Insolvency) Recommendation, 1992 (No. 180), which refers to 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.

Part IV of the report form. The Committee notes the information supplied by the Government concerning the evolution of the maximum pay security amount since 1974 as well as the statistical data regarding the pay security payments, the amounts recovered by the employers and the number of beneficiaries per year for the period 1996-2001. The Committee hopes that the Government will continue providing all available information on the practical application of the Convention, especially with regard to the functioning of the pay security system, including information on its management and financing, and statistics on the number of applications received and claims settled. The Committee also notes the comments of the SAK on the difficulties of employees in recovering court expenses as part of the pay security since the State is no longer bound to participate in judicial proceedings initiated by employees against insolvent employers. The Committee would be interested in considering any observations the Government might wish to make on this point, in particular, as regards the allegation that employees may no longer be in a position to seek and obtain satisfaction through court action by reason of the financial costs involved.

Direct Request (CEACR) - adopted 1997, published 86th ILC session (1998)

The Committee has noted the Government's first and second reports, including the attached comments of the Central Organization of Finnish Trade Unions (SAK), the Finnish Confederation of Salaried Employees (STTK) and the Confederation of Unions for Academic Professionals in Finland (AKAVA). It requests the Government to supply further information on the following points.

Article 3 of the Convention. The Committee notes that Finland accepted the obligations under Part III of the Convention at the time of ratification in accordance with Article 3(1). It notes that the three organizations of workers mentioned above (SAK, STTK and AKAVA) are of the opinion that Part II should also be accepted. Recalling the possibility of accepting the other Part under Article 3(2), the Committee hopes that the Government will indicate any development in this respect.

Article 12(b). The Committee notes that the Pay Security Act (649/73) establishes the pay security system to assure the payment of a worker's wages and other claims based on the employment relationship in the event of the employer's bankruptcy or insolvency, and that, under its section 2(1), this system covers the pay and other claims arising out of the employment relationship that have become payable during the three months preceding the filing of the pay security application, which are to be paid in the form of pay security. The Committee recalls that Article 12(b) of the Convention requires the protection of workers' claims for holiday pay due as a result of work performed during a prescribed period of not less than six months prior to the insolvency or the termination of employment. Noting that the comments of the SAK also touch this point, the Committee requests the Government to indicate measures taken or contemplated to extend the coverage of holiday pay to six months in accordance with this provision.

Article 13. The Committee notes that the maximum amount of pay security per worker is laid down by decree, in accordance with section 2(6) of the Pay Security Act. The Government indicates that the current maximum of FIM75,000 has been raised from the original FIM25,000 following general pay levels. The Committee requests the Government to supply information on the criteria used to set up that maximum, which should not be lower than the "socially acceptable level" according to the Convention, and to indicate how often it is revised.

The Committee notes from the Government's reports that the pay security payments were made to 11,174 workers in 1995, and 11,083 in 1996. It requests the Government to continue to supply information on the practical application of the Convention, including the number of workers covered by the pay security system, in accordance with point IV of the report form. The Committee also notes the comments of the SAK and STTK on the difficulties in confirming the employer's insolvency, which is a prerequisite of the payment of pay security, and requests the Government to indicate any measures taken or contemplated in this connection.