Background information

The Wage guarantee act 1992:497 [lönegarantilagen] gives employees up to 8 months worth of salary after their employer goes bankrupt. It gives the employee time to look for other jobs. The payments towards the employees are realised by each regional county administrative board, which is independent of the employer paying the contributions.

Content of measure

In case of the employer's insolvency, all employees are eligible for wage guarantee except workers who have been hired with the intervention of the public employment service and those who, alone or together with close relatives, own at least 20% of the company.

Claims are not only guaranteed in case of employer insolvency (permanent inability of the employer to pay the debts), but also if the company undergoes restructuring (current or foreseeable inability of the employer to pay the debts at the due date, but there are activities to make the company survive a temporary crisis and avoid insolvency).

The wage guarantee is independent of the duration of the employment contract. It covers all claims that arose within the last three months before registering for insolvency and one month after the decision of the insolvency court.

The maximum amount in 2020 is SEK 189,200 per person (around €19,000). The amount for 2021 has been revised to around €18,600 (SEK 190,400).

The guarantee is financed by the payroll tax and the state. There is no specific fund, but the financial means are registered as a special element in the national budget.

Use of measure

Between 2017 and 2019, 310 wage guarantee processes were completed. In 2019, SEK 2.3 billion (approximately €220 million) were paid out. For example, in April 2018, the company Rydbergs AB announced that they were going bankrupt and that all employees (approximately 100 people) would have received a wage guarantee.

Cases of exploitation of the Wage guarantee act have been identified and several people have been convicted for fraud. In 2020, the Enforcement Authority who is responsible for supervising bankruptcies in Sweden and other involved authorities estimated that 7-10% of the sum that is paid out through this instrument goes to fraud cases ([Kronofogden, 2020]

An assessment from 2017 shows that that lack of coordination between the different authorities involved in the process is a factor that makes the wage guarantee system vulnerable for fraud.

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 National funds

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