Background information

All employees are eligible for satisfaction of claims in case of insolvency of the employer. Under the insolvency procedure, employees must submit a creditor's claim to the administrator of the insolvent employer. Insolvency of an employer is in effect from the day when a court judgement regarding insolvency of the employer enters into legal effect. There is no minimum duration for the contract of employment for workers to qualify.

Content of measure

For cases where the company becomes bankrupt, an employee claims guarantee fund has been established in Latvia, operated by the Insolvency Control Service (state agency). The employee can submit the claim to the fund after the court's decision on the company's insolvency (as defined by insolvency law). No claims can be submitted before. The resources of the fund cover the following payments:

• Work remuneration.
• Reimbursement for annual paid leave.
• Reimbursement for other types of paid leave.
• Severance pay connected with the termination of an employment relationship.
• Reimbursement for injury connected with an accident at work or an occupational disease. Employees' claims are satisfied within the limits of the following amounts:
• Work remuneration for the last three months of employment relationship in the 12 months before the insolvency of the employer came into effect.
• Reimbursement for annual paid leave, the right to which has been acquired in the 12 months before the insolvency of the employer came into effect.
• Reimbursement for other types of paid leave for the last three months of employment relationship in the last 12 months before the insolvency of employer came into effect.
• Severance pay as prescribed by the labour code, the right to which has been acquired not earlier than in the 12 months before the insolvency of the employer came into effect.
• Reimbursement for damages for the whole unpaid time period.
• Reimbursement for damages for the four subsequent years.

Resources of the fund are provided by the state entrepreneurial risk fee (employers' contributions for each employee, amount determined by the Cabinet of Ministers), by gifts and donations, and by resources recovered by administrators.

Use of measure

All use of measure data is available in Annual reports of insolvency control service .

• In 2014 a total of 3,590 employees' claims to the fund were satisfied, in total amounting to €2,663,441.
• In 2015, the respective figures are 1,432 employees' claims, amounting to €1,159,057.
• In 2016 there were 1,226 employees' claims, amounting to €1,077,826.
• In 2017, there were 1,425 employees' claims, amounting to €1,328,291.
• In 2018, there were 1,252 employees' claims, amounting to €1,278,486.
• In 2019, there were 1,269 employees' claims, amounting to €1,703,074.
• In 2020, there were 1,376 employees' claims, amounting to €1,980,915 (73 companies).
• In 2021, there were 457 employees' claims, amounting to €572,277 (97 companies).
• In 2022, there were 737 employees' claims, amounting to €1,357,671 (57 companies).
• In 2023, there were 699 employees' claims, amounting to €1,261,954 (62 companies).

Target groups

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

Actors and funding

Actors	Funding
National government Company / Companies Public support service providers	Companies National funds

Social partners

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

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

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

• Unknown
• Main level of involvement: Peak or cross-sectoral level

Involvement

Social partners are informed on legislation via National Tripartite Cooperation council.

Views and reactions

No specific views to report

Sources

• 01 January 2019: Law on the Protection of Employees in Case of Insolvency of the Employer adopted on 20 December 2001 (likumi.lv)
• 10 December 2021: Latvia: Wage guarantee in case of insolvency (www.eurofound.europa.eu)
• 30 September 2022: Insolvency Control Service (www.mkd.gov.lv)