Company insolvency: what employees should bear in mind

The economic consequences of the corona epidemic are now clearly noticeable: for a good fifth of german companies, the current situation is threatening their existence, according to the munich-based ifo institute. A wave of insolvencies is to be expected in the fall. For employees in such a situation many questions arise: how long will they still get wages? Must continue to work despite outstanding wages? Should it be better to terminate? And what happens with working time accounts and company pensions??

No hasty resignation

Company insolvency: The last one turns off the lights - tips for employees

Company insolvency: the last one turns off the light
(image: thomas gunther / aboutpixel.De)

Cancellations are often unavoidable in the case of a company insolvency – so why not cancel the contract yourself and save yourself a longer period of uncertainty?? But here affected employees should not rush: "only if there is a prospect of a new job, this is a reasonable alternative. Because with the notice the right on a possible social plan compensation is lost , explains in addition markus hannen, specialist lawyer for industrial law and partner lawyer of the roland right protection insurance AG. In addition, employees who quit their jobs and do not find a new job face a blocking period of up to twelve weeks for unemployment benefits.

An (imminent) insolvency is not in itself a reason for extraordinary termination of a company. In order to make employees redundant, they must be given proper and timely notice of termination by the company management. In the event of insolvency, the law only grants special rights of termination to an insolvency administrator – then also to the disadvantage of the employees: "A maximum notice period of three months to the end of the month applies, if the period is not shorter anyway according to the labor or collective agreement," says hannen. Those who do not know this can be caught cold.

Continuing to work despite loss of wages?

Many people automatically associate insolvency with lost wages, or. A reduced wage claim. In fact, the employee is still entitled to a full salary as long as he or she is not duly terminated. But what if a company no longer pays the wages? "In the event of wage arrears of two months or more, the employee has the right to refuse to continue working until the arrears have been cleared. If he does not want to take any risks, he should make use of this option," advises labor lawyer hannen. During the period of refusal to pay, the employee's wage entitlement remains intact, as he or she is not responsible for the failure to perform the work.

If insolvency proceedings are opened, employees' wage claims are to be served by the insolvency administrator as a matter of priority. However, if the insolvency administrator lacks the money to pay wages and insolvency proceedings, the court cannot force him to do so either. The proceedings are then discontinued as a result of so-called mass poverty and the employees go home empty-handed.

Bridging the gap: three months of insolvency benefits

If a company's insolvency becomes apparent, employees are required to act quickly: "within two months of the opening of insolvency proceedings, workers and employees must apply for insolvency benefits from the federal employment agency," emphasizes roland partner attorney hannen. This replacement salary is paid for the last three months before the insolvency, during which the employee was left empty-handed. The employment agency pays the full amount of the last net wage, social security contributions and possibly an advance until the court has ruled on insolvency.

What happens to working time accounts?

Saving up working time is a popular way for many employees to prepare for career breaks or early retirement. Those who fear for these savings in the event of a company bankruptcy can breathe a sigh of relief: the corresponding credit balance remains intact in the insolvency proceedings. "Since the end of 2008, employers have been legally obliged to protect working time accounts against insolvency," explains hannen.

Since early 2009, long-term accounts can also be transferred to a potential new employer. If a new job has not yet been found, the credit balance – d.H. The financial compensation for working hours – since 1. July 2009 can also be transferred to the german pension insurance association (deutsche rentenversicherung bund). The latter later takes over the payments as a pension.

Company pension plan

Even company pensions do not simply fall by the wayside in the event of a company bankruptcy. In the event of insolvency, the pensions-sicherungs-verein (pension insurance association) takes over the company pension scheme. This association is supported by over 70.000 companies financed that have promised their employees a company pension. In the event of insolvency, the security fund then takes over payment of the full benefit.