Buy / Sell Business, Financial Services, Latvia, Legal Counsel, Legislation, Markets and Companies, Wages

Answer: The law “On Protection of Employees in case of Insolvency of Employer”, hereinafter – the Law, prescribes the procedure for payment of the unpaid salary. The Law prescribes the formation of the employee claims guarantee fund, the holder and manager of which is Insolvency Administration.

According to Section 5, Paragraph 1 of the Law, employee claims shall be satisfied from the resources of the employee claim guarantee fund in the following amounts:

1) work remuneration for the last three months of employment legal relationship in twelve months before the insolvency of the employer came into effect;

2) reimbursement for annual paid leave the right to which has been acquired in the twelve months before the insolvency of the employer came into effect;

3) reimbursement for other types of paid leave in last three months of employment legal relationship in the last twelve months before the insolvency of employer came into effect;

4) severance pay in the minimal amount prescribed by law the rights to which acquired in the twelve months before the insolvency of the employer came into effect;

5) reimbursement for damages for the whole unpaid time period;

6) reimbursement for damages for the four subsequent years.

An administrator of an insolvent employer shall accept and process the claims of employees and submit the claims to the Insolvency Administration. Administrator shall submit to Insolvency Administration application for satisfaction of claims of the employees, whose employer is declared insolvent and who submitted their creditor claims to administrator and administrator has taken a decision for accepting each creditor claim and included the same to the Register of creditor claims (Section 10, Paragraph 1 of the Law).

According to clause 12 of the Cabinet regulations No. 995 “Procedure for satisfaction of employee claims and payment of remuneration to administrator”, Insolvency administration within a month after receipt of all necessary document shall decide on the provision of funds for satisfaction of employee claims or refusal thereof. Insolvency administration shall pay the approved funds by means wire transfer to the employee’s bank account.

Law office INLAT PLUS

Brivibas 40-15, Riga

+371 67505970

+371 26403577

[email protected]