Questions and answers
How long is the application process when written comments have been received from the bankruptcy administrator?
The fund usually makes a decision within four weeks after written comments and a list of claimants have been received.
How long does it take to receive payments from the fund?
A requirement for the fund’s guarantee is that the claims have been recognized as privileged claims under the Insolvency Act.
In the case of bankruptcy an administrator is appointed who handles all affairs of the estate. The time for presenting claims against the estate is in most cases a two-month period, but in special circumstances the administrator is permitted by law to decide to prolong it to a certain number of months, from three to six months.
When time for presenting claims has expired the administrator makes a list of claimants and decides whether to accept er reject each claim. The fund usually makes a decision within four weeks after written comments and a list of claimants have been received.
What does the fund’s guarantee for wages involve?
The fund guarantees wages for the last three working months spent with the employer before the date of insolvency which are within the period guaranteed. Wages include payments for work according to an agreement including bonus payments in proportion to the period guaranteed by the fund.
The fund also guarantees wage earner’s claims for compensation for lost wages in case of a cancellation of an employment contract in the termination notice period for up to three months.
Within what deadline can I apply for payment?
A claim against The Wage Guarantee Fund will only be accepted if it is received within six months of the publication of the invitation in the Official Gazette where the administrator has determined a period for presenting claims against the estate. The fund may however, accept a claim received within twelve months of the publication of the invitation if it is demonstrated that it was not possible to present the claim earlier.
What are maximum payments for wages?
The obligations of the fund for lost wages or compensation for lost wages in the termination notice period which fell due after 1. July 2018 shall not amount to a greater sum in respect of a one-month period than ISK 633.000.
Payments from the employer before the bankruptcy shall be deducted from the wage claims. In the same way unemployment benefits and income in the termination notice period shall also be deducted from the claims.
Does the fund guarantee wage claims and vacation pay owed by an employer that has not been declared bankrupt?
The Wage Guarantee Fund guarantees payments of vacation pay under Act. No. 30/1987 when employers are not able to pay, without their estate having been declared for bankruptcy. The fund’s guarantee covers vacation pay earned for the last 18 months.
The fund does not guarantee payments for lost wages when an employer has not been declared bankrupt.
How long is the period for which pension is guaranteed?
The Wage Guarantee Fund is liable for claims by pension funds for pension fund premiums which fell due in the last 18 months before the date of insolvency. The deadline may be preferred if that leads to better results for the claimant.
Does the fund cover payments to managers of a company?
Claims from managers and board members of the bankrupt company are not guaranteed by the Wage Guarantee Fund, the same applies to those who have held a substantial share capital in the company.
This is the case for both wage payments and pension when an employer has been declared bankrupt, and vacation pay due to an employer’s financial difficulty.
Does the fund guarantee legal costs?
If the claim is guaranteed by The Wage Guarantee Fund the fund covers normal cost for its collection including cost by a court ruling. In addition to the cost the fund is liable for the payment of an insurance to cover the cost of liquidation paid by a wage earner or a pension fund.
The fund is only liable for cost on account of legal services and unavoidable expenses in connection with each claim.
The fund’s management board determines a maximum of payments and other conditions and liabilities for claims confirmed by the Minister.