Background information

FOGASA was created by Article 31 of Law 16/1976, of 8 April 1976, on Labour Relations, with the aim of guaranteeing wage claims in the event of employer insolvency.

This instrument consists of a special insolvency state fund addressed to workers whose employer has been declared insolvent or bankrupt, or who had to stop paying wages due to certain economic reasons.

Anyone providing services for an employer and receiving wage for this, including part-time and fixed-term workers, irrespective of the duration of employment is eligible.

Domestic servants employed by families, artists, partners of worker cooperatives are exempted.

Insolvency is considered if it is for economic, technical and organisational reasons, when force majeure terminates employment contracts or when the assets found by a judicial execution proceeding are insufficient.

An employer is declared insolvent by law if there are not sufficient means to satisfy its obligations.

Content of measure

The special insolvency state fund (FOGASA) is addressed to workers whose employer has been declared insolvent or bankrupt, or who had to stop paying wages for certain economic reasons. Law 22/2003 defines insolvency as the situation in which a debtor company cannot regularly meet its required debtor obligations.

The insolvency law from 2003 establishes the workers’ privilege as creditors in cases where the company becomes insolvent. The claims of the workers of the company (wages for the 30 days before the opening of the collective procedures; wages for work after the start of the collective procedures; economic compensation related to termination of the employment contract etc.) have the priority, ranking ahead of all other claims.

The guarantee only becomes active if there are not enough assets available.

The guarantee covers wages, bonuses and fringe benefits as well as financial employee participation that arises up to one year before the insolvency.

In terms of wages pending to be paid, the fund pays an amount which is the outcome of multiplying the double of the daily National Minimum Wage by the number of days of wages pending to be paid. There is a maximum payment of 120 days since a change enacted by Royal Decree 20/2012 that entered into force the 15 July 2012 (before it was 150 days). Moreover, the government established a maximum period of three months for the resolution of cases by FOGASA during the COVID-19 crisis. (article 33 of the Workers Statute ( Estatuto de los Trabajadores )).

In terms of severance pay, there is a maximum payment of 12 months per year worked. However, the wage which is taken into consideration in order to calculate the severance pay cannot be higher than the double daily minimum wage (national minimum wage was set at €950 for 2020, according to Royal Decree 1077/2017). FOGASA covers only severance pay acknowledged by a court sentence or resolution of the labour authority when dismissal is applied if the company is considered insolvent or goes bankrupt.

The guarantee is managed by the guarantee institution FOGASA of the Ministry of Employment and financed by employer contributions.

Use of measure

In 2021, 20,785 companies and 73,878 workers were covered. ( Ministry of Work and Social Economy 2022 ).

In 2020, 15,898 companies and 63,743 workers were covered.

In 2019, 19,768 companies and 72,369 workers were covered.

In 2018, 81,790 workers and 21,607 companies were covered.

In 2017, claims of 23,714 companies and 90,321 were covered.

In 2015, claims of 43,112 companies and 165,288 were covered.

In 2013, claims of 82,373 companies (-2% compared to 2012) and 234,686 workers (-8%) were covered. 

Similarly, in 2012, 160,036 applications were solved, and claims of 84,257 companies and 254,931 workers were covered. That increase led the government to reduce the level of payment by means of the Royal Decree 20/2012.

In 2010, 135,577 applications were solved, and claims of 71,866 companies and 232,722 workers were covered.

In 2008, figures remained more or less stable: 49,792 applications were solved, and claims of 25,637 companies and 90,320 workers were covered.

In 2007, 39,032 applications were solved, and claims of 20,498 companies and 73,447 workers were covered.

Strengths: It offers protection to employees in case of company insolvency. It guarantees that employees recover part of the wages and severance pay pending ( Roqueta 2017 ).

Weaknesses: In the past, FOGASA has been criticised for being too slow in the recognition and payment of the debts ( El Mundo 2011). Up to 2014, workers had to wait 18 months as an average in order to be paid. In 2014, the government worked to reduce that time to 3 months, as an average. In 2016, the supreme court determined that workers who apply to FOGASA may request interests in case of delay. Also in 2016, an audit carried out by the General Intervention Board of the State Administration (IGAE) on the accounts of FOGASA for 2014 concluded that the Ministry of Employment subcontracted staff without the proper training to manage the applications accumulated during years ( Bernad, 2018 ). However, the government established a maximum period of three months for the resolution of cases by FOGASA during the beginning of the COVID-19 crisis. Morever, the government streamlined FOGASA payments to avoid further collapses due to the increasing of restructuring cases. Specifically, the government has added in the Royal decree 19/2020  (May 2020) the tacit acceptance procedure when there is no resolution within a maximum period of three months.

Target groups

Workers	Businesses	Citizens
Employees in standard employment		Does not apply to citizens

Actors and funding

Actors	Funding
National government Trade unions Employers' organisations Other social actors (e.g. NGOs)	Companies National funds

Social partners

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

	Trade unions	Employers' organisations
Role	Agreed (outcome) incl. social partner initiative	Agreed (outcome) incl. social partner initiative
Form	Consultation through tripartite or bipartite social dialogue bodies	Consultation through tripartite or bipartite social dialogue bodies

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

• Social partners jointly
• Main level of involvement: Peak or cross-sectoral level

Involvement

Social partners are members of the Governing Council of FOGASA, the insolvency guarantee fund.

The President of the Governing Council is the Secretary of State for Employment. In addition, there are five members from the Ministry of Labour, five members representing the employers' representative organisations (CEOE, Spanish Confederation of Business Organisations, and CEPYME - Spanish Confederation of Small and Medium-sized Enterprises) and five members representing the trade unions (one from UGT - General Workers' Union, two from CCOO - Comisiones Obreras, one from ELA/STV - Basque Workers' Union, and one from CIG - Galician Inter-Union Confederation).

Views and reactions

No information available

Sources

• 29 March 1995: Royal Legislative No. 1/1995 or 24 March (Statute of Workers’ Rights) (www.boe.es)
• 10 July 2003: Law No. 22/2003 of 9 July (www.boe.es)
• 22 August 2011: La plantilla del Fogasa denuncia que 400 empleados gestionan 250.000 despidos (www.elmundo.es)
• 14 July 2012: Royal Law Decree No. 20/2012 of 13 July (boe.es)
• 26 December 2013: Law No. 22/2013 of 23 December (www.boe.es)
• 04 January 2016: Expansión (2016), 'Empleo contrató personal sin la formación adecuada para gestionar prestaciones del Fogasa', 4 January (www.expansion.com)
• 23 October 2016: La Vanguardia (2016), 'El TS determina que los trabajadores que cobren con retraso del Fogasa podrán pedir intereses en el mismo procedimiento', 23 October (www.lavanguardia.com)
• 01 January 2017: Roqueta Buj, R., (2017), 'La acción protectora del FOGASA', Tirant lo Blanch, Valencia. (core.ac.uk)
• 01 January 2018: Bernad, J.N. A, (2018),'Acciones por subrogación del FOGASA en supuestos de despatrimonialización empresarial', Revista General de Derecho del Trabajo y de la Seguridad Social, 48, January 2018, pp. 33-69. (core.ac.uk)
• 31 May 2020: CastellónPlaza (2020), 'El Gobierno agiliza los pagos del Fogasa para evitar nuevos colapsos por el auge de expedientes', 31 May (castellonplaza.com)
• 10 December 2021: Eurofound (2020), 'Spain: Wage guarantee in case of insolvency', ERM database  on restructuring related legislation, Dublin (www.eurofound.europa.eu)
• 04 October 2022: Fondo de Garantía Salarial/ Ministerio de Trabajo y Economía Social (www.mites.gob.es)