Background information

Employees can apply to the Employees’ Guarantee Fund (Lønmodtagernes Garantifond, LG) for wage and holiday compensation, indemnification for interruption of the employment relationship and compensation in connection with discharge from employment. LG is an independent national institution founded in 1964, governed by the social partners and regulated by law.

The Employees' Guarantee Fund is broadly accepted as a very important support instrument for the employees who otherwise, in case of bankruptcy of their workplace, would not be protected.

Content of measure

Support is provided in the following cases:

• Bankruptcy;

• Employer’s death where the court declares the company insolvent;

• Termination of the business while it is proven that the employer is unable to pay the employees’ claims;

• During the employer’s court-supervised suspension of payments according to the provisions of the bankruptcy law.

The claims have to arise in the period of four months after bankruptcy or six months after notice of suspension of payments or the death of the employer. All private employers in Denmark pay a quarterly contribution to the fund. The maximum compensation from the fund is DKK 160,000 (€21,300).

All employees are eligible, including part-time and fixed-term workers, except family members and close associates of the insolvent employer. There is no minimum duration for the employment relationship in order for workers to qualify for the guarantee.

During the COVID-19 crisis the fund had an increased number of requests and applications. However, there is no official figure yet (September 2020).

Use of measure

In 2020, the fund paid a total of DKK 780 million to employees' wages, compensation, holiday allowance and restructurings.

• In 2018, the fund paid a total of DKK 532 million (€71.41 million) to 16,960 employees.
• In 2017, the fund paid a total of DKK 483 million (€64.75 million) to employees.
• In 2015, the fund paid DKK 497 million (€66.3 million) to 16,217 employees.
• In 2014, the Fund paid a total of DKK 587 million (€78.3 million) to 20,280 employees.

The effect of this support instrument is most certainly related to managing restructuring. The employees' wages are secured and they do not stand empty handed in case of bankruptcy of their work place.

Target groups

Workers	Businesses	Citizens
Applies to all workers	Applies to all businesses	Does not apply to citizens

Actors and funding

Actors	Funding
National government	Companies Other

Social partners

Social partners' role in designing the measure and form of involvement:

	Trade unions	Employers' organisations
Role	Unknown	Unknown
Form	Not applicable	Not applicable

Social partners' role in the implementation, monitoring and assessment phase:

• Unknown
• Main level of involvement: Unknown

Involvement

Unknown

Views and reactions

Unknown

Sources

• 02 June 2011: Europäische Beispiele für die Insolvenzentgeltsicherung (www.yumpu.com)
• 20 June 2011: Anticipating and managing change (www.google.com)
• 20 June 2011: Udbetaling ved konkurs, ophør og rekonstruktion (www.borger.dk)
• 20 June 2011: Retsinformation_ Bekendtgørelse af lov om Lønmodtagernes Garantifond (www.retsinformation.dk)
• 20 June 2011: Restructuring: support measures for affected workers (www.eurofound.europa.eu)
• 20 June 2011: Denmark: Wage guarantee in case of insolvency (www.eurofound.europa.eu)
• 20 June 2011: Pension og Erhvervssikring (www.atp.dk)
• 20 June 2011: Lønmodtagernes Garantifond Årsrapport 2020 (www.atp.dk)