The employer’s role in the wage guarantee system
The purpose of the pay guarantee system is to safeguard an employee’s undisputed employment‑related claims in situations where the employer is insolvent. The process is primarily applicant‑driven; however, as an employer, you can already support the employee at an early stage, for example by informing them about the possibility of applying for pay guarantee and ensuring that the employee has the necessary information about their claims (e.g. payslips). The employer is a party to the pay guarantee procedure.
Once the applicant has submitted the application, it is forwarded to the employer and a statement is requested. Providing either a supportive or a disputing statement facilitates the resolution of the matter. If you are able to pay part of the claims directly to the employee, this should also be reported to the pay guarantee authority in order to avoid overlapping payments.
What should I do if I am unable to pay my employees’ wages?
Ensure that employees are aware of the need to apply for pay guarantee in time. You may, for example, refer them to the pay guarantee website, which contains more detailed information on how to apply. Pay guarantee must be applied for no later than three months after the due date of the claim.
Pay guarantee is not intended as a form of business financing and cannot be used to cover cash‑flow shortages. Due to the time required for processing, the pay guarantee procedure does not provide a quick solution, for example in situations where the receipt of financing is delayed and wages would need to be paid by the next pay date. Advice on handling such situations can be sought from the Entrepreneur’s Financial Advisory Service.
- Entrepreneur’s Financial Advisory Service
Processing time for pay guarantee applications
From the employees’ perspective, the processing times for pay guarantee applications may be very long, especially if employees are without wages for an extended period. If the company is able to make a partial wage payment to employees, this is recommended. Any such payments should be reported to the pay guarantee authority.
- Information on the progress of a pay guarantee application
- Processing time for pay guarantee applications
How can I support my employees’ pay guarantee matters?
You can best support pay guarantee matters by monitoring communications from the pay guarantee authority (e.g. requests for statements) and responding to them within the specified deadlines. Submitting attachments, such as payslips, to the ELY Centre also helps to facilitate the processing of pay guarantee matters.
Repayment of pay guarantee to the state (enforcement)
Claims paid through the pay guarantee system will generally be recovered from the employer directly through enforcement proceedings. In justified cases, the pay guarantee authority may grant a short repayment period prior to enforcement. A reasoned request for this should be submitted by the employer, preferably during the hearing procedure.
Employer’s right to appeal
If pay guarantee is paid to an employee and, in the employer’s view, this should not have occurred, the employer may apply for recovery in accordance with the instructions provided in the written pay guarantee decision.
If the employer has justifiably disputed the claims applied for, the pay guarantee decision instructs the applicant, should they so wish, to bring the matter before the district court for resolution. In such cases, the employer will be the opposing party in the district court proceedings.
If you notice a factual or clerical error in the pay guarantee decision, you may contact the pay guarantee authority and request that the error be corrected, in which case the matter will be reviewed.
Other matters to note
If pay guarantee is paid, the pay guarantee authority acts as a substitute payer. In such cases, the actual employer must submit earnings payment reports to the Incomes Register for the income paid through pay guarantee, using the income types intended for substitute payer situations and designated for the actual employer. The information required for reporting can be found in the pay guarantee decision. The payment date to be reported to the Incomes Register is the same as the date of the pay guarantee decision.
More detailed information is available on the tulorekisteri.fi website:
- Reporting information to the Incomes Register: payments made by a substitute payer (tulorekisteri.fi)