Eligibility requirements for pay security

Employment relationship

Pay security is only paid to employees in an employment relationship. An employment relationship is in question when the employee performs work on behalf of an employer under its management and supervision in exchange for wages or another form of compensation. Pay security will not be awarded to the managing director of a limited liability company, the general partner of a limited partnership, the general partner of a general partnership or a sole proprietor. Other persons holding administrative authority in a company may also be excluded from eligibility for receiving pay security.

Employer insolvency

One of the requirements for receiving pay security is employer insolvency. This occurs when, for example:

• the employer declares bankruptcy
• the employer is unable to pay its liabilities in execution proceedings
• the employer has neglected to pay its tax withholding or employer contributions on time
• the employer's insolvency has been otherwise verified by a pay security authority.

The pay security applicant does not need to submit any account of the employer's insolvency - this will be done by the pay security authority.

Clear and undisputed claim

Pay security is only paid for clear and undisputed claims. If the employer disputes the pay security claim and its validity cannot be ascertained by means of the pay security procedure, the pay security cannot be paid for the claim until its amount and grounds have been ruled on in a final judgement.