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Information for employees

Many people are affected when a business is in difficulties. Ackordscentralen's aim is to provide as much assurance as possible by rescuing the value remaining in the business. We therefore adopt an independent position, taking equal of the interests of suppliers, other creditors, employees and society at large, and the interests of our client.

Key aspects of bankruptcy

What is bankruptcy?

A legal entity (a limited liability company or a cooperative) or a private individual may be declared bankrupt if they are insolvent. Bankruptcy proceedings are initiated by order of a district court. The proceedings – administered by a receiver appointed by the court – involve converting all convertible assets of the debtor into liquid assets and distributing them to the creditors as provided by law.

Salary claims in bankruptcy

An employee with a claim for salary may be entitled to payment under the state salary guarantee. "Salary" means all remuneration that the employer has undertaken to pay under an individual employment contract and/or collective bargaining agreement for work performed or for preparing to perform work. You can receive payment of salary for work performed three months before the bankruptcy and for severance pay, subject to a maximum of eight months. The length of a notice period is limited by section 11 of the Employment Protection Act (Lagen om anställningsskydd - LAS). The period varies from one to six months, depending on length of service.

In addition to salary, you can receive compensation for non-receipt of fringe benefits and certain expenses incurred due to your employment. The total amount payable under the state salary guarantee is limited to four times the "price base amount" (prisbasbelopp) – currently SEK 176.000.

Compensation is available for holiday pay and holiday compensation earned before the bankruptcy during the current and preceding year.

Persons who themselves or jointly with close associates have owned a substantial stake in the business and have had a significant influence over it are not entitled to payment under the salary guarantee scheme.

Salary guarantee decisions are made by the receiver.

Registration at the employment office

You will only be entitled to compensation for severance pay if you have registered as a job seeker at the employment office. You should therefore do so at once and ensure you obtain a certificate to that effect. Severance pay compensation cannot be paid out until the certificate and a declaration that you have not obtained a new job have been sent to the relevant County Administrative Board (Länsstyrelsen). The Board will provide you with information about this.

The employer's obligations to its employees following bankruptcy

Following bankruptcy, an employer, on request, is obliged to issue

  • An employer's certificate showing length of service up to and including the date of bankruptcy
  • A certificate of employment
  • A statement of earnings and tax deductions up to and including the date of bankruptcy

We recommend that you contact a representative of your employer as soon as possible if you require any of the above documents.

Salary guarantee during business reorganisation

Since 1 June 2005, the new Salary Guarantee Act (Lönegarantilagen) provides that salary is payable under the salary guarantee scheme not only on bankruptcy, but also during a business reorganisation.

Before the new Salary Guarantee Act, business reorganisation was viewed sceptically, not least by banks and other lenders, since in reorganisation, in contrast to bankruptcy, salaries were payable by the business, something that threatened to rapidly undermine its net worth. However, refraining from use of the salary guarantee instrument in business reorganisation was considered to run counter to the extensive preferential rights reform enacted at the end of 2003. The aim of that reform was that businesses with profitability problems should take action at an earlier stage than had previously been the case. The availability of the salary guarantee during business reorganisation is thus a way of improving the chances of an insolvent business avoiding bankruptcy by reorganisation at an earlier stage.

Thus, a business undergoing reorganisation can now use the salary guarantee during one month's operation. Any unpaid salaries at the time business reorganisation is decided will also be covered by the salary guarantee. Salary guarantee decisions are made by the administrator. Thus, the business is allowed a grace period for payment of salary arrears. They must be, however. Interest on the amount is an additional expense for the business. If the business is later declared bankrupt, the salary guarantee scheme can also be used then.