Payment for outstanding salaries

Renald Zahra writes:

I have been seconded to a German company for the past nine years. I was recently informed that the company will file for insolvency and salaries will not be paid. I have an amount of monies still outstanding with this company for service rendered.

Can you please advice what are my rights as a Maltese employee working with this German company under German laws?

EU law does indeed provide for situations where companies resort to job lay-offs in cases of insolvency and deals specifically with the rights of workers for outstanding salary claims when the business that employs them goes bust.

Actually, this is a rather old EU law dating back to 1980 when the first steps in EU labour law were being made. Nevertheless, it remains relevant, more so now in the prevailing economic climate. In essence, the law seeks to guarantee payment of outstanding claims by workers in such cases.

To this end, it provides for the setting up of what is known as a "guarantee fund", that is, a fund from which such claims may be paid.

Certain categories of workers may be excluded from making claims under this fund. However, part-time employees, employees with fixed-term contracts or persons with temporary contracts must be covered.

The amount paid to each worker for outstanding claims must cover payment for the last three months of the contract of employment prior to the insolvency or dismissal. However, individual countries may decide to set a ceiling to the amount payable for outstanding claims.

The guarantee fund is run according to rules laid down by the national authorities. It is for the member states to lay down detailed rules for the organisation, financing and operation of the guarantee institutions.

It is also up to each country to decide whether employers should contribute to the fund or whether this is covered wholly by the national Treasury itself which, after all, already receives social security payments from employers.

It must also be noted that EU law limits itself to setting parameters - the details of the provisions are then fleshed out in national legislation and not in EU law and, indeed, individual member states may apply or introduce measures that are more favourable to workers than what is laid down in EU law. Of course, the most favourable provisions would apply.

In this particular case raised by the reader, it seems clear to me that German law would apply and that this situation would be covered by German law. One would therefore need to look at how this EU law has been transposed into German law. Since I am not an expert in German law I am not in a position to give precise details about how this EU law was adopted into German law and how German law reacts to these specific issues.

However, from the parameters established under EU law, one can still get a clear indication that salary claims should be covered up to certain limits.

Since Malta is an EU country, it stands to reason that a similar law also covers Maltese workers who were laid off in Malta.

Next year, the Commission is expected to draw up a report on the implementation and application of this directive and this will be a good opportunity to see how it has been applied over the years in different EU countries.

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Dr Busuttil is a Nationalist member of the European Parliament.