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Responsible for the service ELY Centre

Fast-track pay security for bankruptcy estates

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The security system ensures that employees are paid their contractual dues should the employer become insolvent. Any employment-related dues payable by the employer can be paid through the system, provided that the amount and legal grounds have been established.

There is a special fast-track procedure through which insolvency estates can apply for pay security for their employees, subject to authorisation by the ELY Centre. The fast-track procedure is meant to ensure that employees receive their termination pay within two weeks from the end of the notice period.

Insolvency estates need make only one application for the wages of all their employees, attaching the payroll statements and a summary of the unpaid wages. The ELY Centre pays the total sum of the wages to the bankruptcy estate, which pays the wages to the employees.

Thereafter, the State claims the paid amount from the employer or the bankruptcy estate with interest. Decisions granting pay security are immediately enforceable. If the employer has been declared bankrupt, dues are claimed through proof of debt. Debts included in the bankruptcy estate are claimed through reminder.

Do the following

Once bankruptcy has been declared, inform the Uusimaa ELY Centre directly: palkkaturva.uusimaa(at)ely-keskus.fi. You will receive an e-mail stating the official in charge and a link to instructions on fast-track pay security for estate administrators and payroll clerks. The instructions can also be found on the ELY Centre's web page.

When contacting the ELY Centre, please state whether the company has employees and whether the bankruptcy estate will file for pay security for them. The pay security clerk will give you contact details for the draftsperson and the referendary handling your case. Your payroll clerk will need the referendary's contact details and the instruction “Nopeutetun palkkaturvamenettelyn ohje palkanlaskijalle” from the ELY Centre. They should consult any unclarities with the referendary before beginning payroll calculations.

Bankruptcy estates need authorisation from the ELY Centre's to file for pay security. To avoid pay for waiting days and late payment interests, the procedure should be set in motion as soon as bankruptcy is declared. The payroll clerk should begin calculating pay swiftly so that the employees can receive their wages upon termination.

The payroll statements must be sent to the referendary as soon as they are finished, as they may need to be changed. If that is the case, the referendary will inform the payroll clerk directly after revising the statements. The payroll statements must show the method of calculation, the period of accrual, the due date, the sum of gross pay and the deductions.

The estate administrator must consult with the employees or a representative to agree on which debts that are to be grounds for pay security.

If the bankruptcy estate applies for so-called administrative expenses, it must apply for a Business Identification Number directly and send it to the ELY Centre.

If everything is in order, the referendary will authorise you to file for pay security. Fill out the form Palkkaturvahakemus (C). Attach the payroll statements for your employees. Attach a summary stating the total gross wages of your employees, withholding taxes and other deductions and the net wages. Send e-mail the form with all required attachments to the handling draftsman and the referendary.

It usually takes 3–4 working days after the payroll statements are finished for pay security to be paid. If this seems insufficient, please contact the referendary in charge of your case.

To whom and on what terms

The payroll procedure in a bankruptcy scenario is very similar to normal situations. The payables must be based on labour law, an employment contract and a collective agreement, if applicable. If a collective agreement is applicable, the ELY Centre must be informed of the agreement in question. Payroll statements are written as usual. Based on them, the administrator of the estate files for pay security. Any employment-based dues normally payable by the employer can be paid as pay security, with only a few exceptions arising from the Wage Guarantee Act.

Bankruptcy and filing for pay security involve a few non-ordinary payroll steps. The wages must be separated into different payroll statements as follows:

Claims based on proof of debt

  • The payroll period is shortened as necessary based on the first day of bankruptcy. Wages and other dues are calculated according to when they have become due, before or during bankruptcy. Any dues predating the bankruptcy are calculated for a period that includes and ends with the first day of bankruptcy.
  • Holiday compensation is paid as per proof of debt. This also applies to the last month, even if some holiday time has been accrued after bankruptcy was declared. The exception to this rule is if holiday compensation is calculated according to the percentage rule. See administrative expenses.

Debts regarded as administrative expenses (massavelka)

  • The period after bankruptcy has been declared usually only involves wages corresponding to the notice period of 14 days. The notice period normally includes 10 working days. Wages are paid per working day. If the wages for the notice period include percentage-based holiday compensation, as in the construction sector for example, the holiday compensation is regarded as an administrative expense (“massavelka”).

Please note:

  • Debts arising during company reorganisation must be separated from other debts. Please request more detailed information from the administrator of the estate or the pay security authorities regarding which additional periods of time the separation of debt applies to.

Read the instructions detailing the contents of payroll statements and the conditions for filing for pay security.

The service is free of charge.

Basic information

The service is provided byELY Centre for Uusimaa
Other responsible organisationsELY Centre for Pirkanmaa, ELY Centre for Ostrobothnia, ELY Centre for Lapland, ELY Centre for South Ostrobothnia, ELY Centre for Varsinais-Suomi, ELY Centre for South Savo, ELY Centre for Central Finland, ELY Centre for North Savo, ELY Centre for North Karelia, ELY Centre for North Ostrobothnia, ELY Centre for Uusimaa, ELY Centre for Satakunta, ELY Centre for Southeast Finland, ELY Centre for Kainuu, ELY Centre for Häme
Responsible for the serviceCentre for Economic Development, Transport and the Environment
Area Whole Finland
Available languagesFinnish, Swedish
Text edited by: ELY Centre
Updated: 2/26/2020