Fast-track wage guarantee for bankruptcy estates

Once bankruptcy has been declared, inform the KEHA Centre directly: palkkaturva@keha-keskus.fi. You will receive an e-mail stating the official in charge and a link to instructions on fast-track wage guarantee for estate administrators and payroll clerks. The instructions can also be found on the web page.

When contacting the KEHA Centre, please state whether the company has employees and whether the bankruptcy estate will file for wage guarantee for them. The wage guarantee 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 KEHA Centre. They should consult any unclarities with the referendary before beginning payroll calculations.

Bankruptcy estates need authorisation from the KEHA Centre to file for wage guarantee. 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 wage guarantee.

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

If everything is in order, the referendary will authorise you to file for wage guarantee. 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 the form via e-mail 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 wage guarantee to be paid. If this seems insufficient, please contact the referendary in charge of your case.

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 KEHA 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 wage guarantee. Any employment-based dues normally payable by the employer can be paid as wage guarantee, with only a few exceptions arising from the Wage Guarantee Act.

Bankruptcy and filing for wage guarantee 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 wage guarantee 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 wage guarantee.