Background information

Decree-Law 219/99 of 15 June created the Wage Guarantee Fund, aimed at ensuring the payment of amounts due to employees in the event the employer defaulted.

Later, on 21 April 2015 a new regime of the fund was approved by the Decree-Law 59/2015. This adapts the fund's regime to the Revitalisation Programme guaranteeing that claims of employees in companies assigned to revitalisation or recovery plans also have access to the fund.

Content of measure

The FGS is an autonomous fund that is not part of the social protection guaranteed by the social security system. Its management and operation are carried out by the Social Security Institute of Financial Management (Instituto de Gestão Financeira da Segurança Social - IGFSS, I.P.) and is financed by the employers.

The FGS ensures the financial protection of employees in case of insolvency or difficult economic situation by the employer. The fund guarantees the payment of wages, holidays, Christmas and food allowances and redundancy compensation.

The fund ensures the payment of labour credits due to workers since the six months preceding the start:

• When a court declares the insolvency of the employer;
• When a judge makes an order appointing a provisional judicial administrator, in the case of a Special Revitalisation Process (Processo Especial de Revitalização - PER);
• When an order is made accepting the application made by the IPAMEI, I.P., in the context of the Out-of-court Company Recovery System - SIREVE.

The payment of the claims referred to above is subject to a double limitation:

• One of a temporal nature, since the worker is requested to file the application for the payment of outstanding labour credits at district centres or local social security services within one year from the day following the day on which the employment contract ended; and
• Another of a pecuniary nature, as the fund simply ensures the payment of claims arising from the employment contract for at maximum of six months, and with the maximum monthly amount up to three times the minimum guaranteed monthly wage (€705 in 2022).

The fund also covers employees who work or have habitually worked within the national territory for an employer with activities in the territories of at least two EU Member States, even if the employer is declared insolvent by a court or competent authority of another Member State of the European Union or of the European Economic Area.

The Law 59/2015 of 21 April also establishes a link between the FGS system and the funds created by Law 70/2013 of 30 August – the Work Compensation Fund (Fundo de Compensação do Trabalho - FCT) and Work Compensation Guarantee Fund (Fundo de Garantia de Compensação do Trabalho - FGCT): Employers are required to contribute 1% of pay (0.925% to Work Compensation Fund - Fundo de Compensação do Trabalho - FCT - and 0.075% to Guarantee Fund for Work Compensation - Fundo de Garantia de Compensação do Trabalho - FGCT - for employees hired after 1 October 2013).

Use of measure

According to the Annual report and accounts of the IGFSS, the number of requests to the FGS increased by 22.5% in 2020 compared to the previous year: in 2020, 14,278 requests were made to the FGS services, 2,621 more than in 2019. On average, during 2020, 1,189 requests were received per month.

In 2020 the expenditure on payment of salary credits was €75,848,547.04, representing an increase of 8% compared with 2019. This expenditure corresponds to 13,979 applications. The average amount paid per application was €5,426.

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 Employers' organisations Public employment service	Companies National funds

Social partners

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

	Trade unions	Employers' organisations
Role	Consulted	Consulted
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:

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

Involvement

Tripartite consultation involving the government, the trade union confederations CGTP and UGT and the employer confederations CIP, CCP, CTP and CAP at the Standing Committee for Social Concertation.

Views and reactions

Social partners were consulted at the Standing Committee for Social Concertation. Their views are not known.

Sources

• 15 June 1999: Decree-Law 219/99 of 15 June (dre.pt)
• 12 February 2009: Labour Code (article 336) (dre.pt)
• 30 August 2013: Law 70/2013 of 30 August (dre.pt)
• 21 April 2015: Decree-Law 59/2015 of 21 April (dre.pt)
• 18 October 2021: Annual Report and Accounts 2020 of FGS (www.seg-social.pt)
• 28 December 2021: Wage Guarantee Fund - Practical Guide (www.seg-social.pt)