Background information

According to the Pay Security Act 866/1998 (Palkkaturvalaki), employees, including part-time and fixed-term workers, are entitled to pay security in the event of the employer's insolvency.

In the case of employer insolvency, wages and other claims of employees resulting from the employment contract are secured by the national pay security system, which is financed by the employers' contribution to unemployment insurance. An employer is considered insolvent if the employer is unreachable or has terminated the business activity; or if the employer has been declared bankrupt or else been established to be unable to pay its debts.

Content of measure

The guarantee covers claims that have become due within three months before applying for the guarantee, irrespective of the duration of the employment or the type of contract.

The pay security system is administered by the Centres for Economic Development, Transport and the Environment (ELY Centres). The Centres make decisions in pay security matters and handle other functions connected with enforcement of the Act. A guarantee application may also be handed in at a local job centre.

According to specialists at ELY Centres, employees applying for pay security sometimes do not know what and how much their employers are due, which complicates the process. Employers may lack adequate bookkeeping, making it impossible to prove potential debts.

Use of measure

The number of pay security beneficiaries was some 5,800 in 2017 and 5,200 in 2016.

On average, applications based on unilateral judgement amounted to 30 applications annually beetween 2017-2021.

Target groups

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

Actors and funding

Actors	Funding
National government Local / regional government	Companies

Social partners

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

	Trade unions	Employers' organisations
Role	Consulted	Consulted
Form	Direct consultation outside a formal body	Direct consultation outside a formal body

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

• No involvement
• Main level of involvement: Peak or cross-sectoral level

Involvement

Unknown

Views and reactions

Unknown

Sources

• 27 November 1998: ELY Centres, 'Palkkaturva' (www.ely-keskus.fi)
• 23 May 2016: Yleisradio (2016), 'Keskitäminen ei lyhentänyt pitkiä käsittelyaikoja - isoissa kaupungeissa palkkaturvajonot edelleen lähes vuoden', 23 May. (yle.fi)
• 05 April 2017: Pay Security Act (866/1998) in English (www.finlex.fi)
• 29 June 2021: Pay Security Act (Palkkaturvalaki) (866/1998) (www.finlex.fi)
• 10 December 2021: Eurofound database on restructuring related legislation - Wage guarantee in case of insolvency (www.eurofound.europa.eu)
• 08 July 2022: Työttömyysturvalaki (1290/2002) (www.finlex.fi)
• 19 September 2022: Government proposal to amend the Pay Secutiy Act (Hallituksen ehdotus palkkaturvalain muutoksesta) (tem.fi)