European Restructuring Monitor (ERM)
Eurofound's ERM database on restructuring-related legal regulations provides information on regulations in the Member States of the European Union and Norway which are explicitly or implicitly linked to anticipating and managing change.
articles L.3253-2 to L.3253-21, D.3253-1 to D.3253-3, R.3253-4, D.3253-5 and R.3253-6
Wage guarantees are offered in the case that an employer is bankrupt (debt cannot be covered by assets), reorganises the company, or is in temporary financial difficulties. All employees are eligible irrespective of the duration of the employment contract including part-time and fixed-term workers, workers that temporarily work outside of France as well as foreign workers working in France for an employer located in another European Union Member State.
Wage guarantees cover everything that is owed to the worker on the day of filing for insolvency including indemnification in case of termination of the employment contract, claims from financial employee participation and social plans.
There is a maximum amount per employee which takes into account the following considerations:
There is no minimum duration of the employment relationship.
The guarantee is administered by the Wage Guarantee Scheme (Association pour la Gestion du regime de garantie des creances des salaries). The insolvency administrator appointed by the court has to draft an overview of all employees’ claims. He/she has to compile in a statement the employee's identity including the national identification number; the nature of his/her employment contract; the date he/she joined the company; his/her function and job title; the termination date of his/her employment contract; the sums already paid and the outstanding amounts to be paid. In a next step, the insolvency administrator submits this statement to the AGS.
An employee representative is appointed by employees to check the amount of sums due and paid to employees and serves as the intermediary between the employees and the administrator or court.
At receipt of the statement of wage claims compiled by the insolvency administrator, the AGS checks that the claims fall within the guarantee scope of the AGS. The AGS, as an advance, makes a payment to the insolvency administrator who distributes the payment to the employees.
In practice, statements are drawn up and presented to the AGS by the administrator within a period of less than 30 days from the start of the insolvency proceedings for salaries and incidental expenses, and of less than three months for all other receivables (including severance pay). The AGS provides a judicial representative with the funds required to pay the amounts owed to employees within a period of 5 days following receipt of the statement of wage claims.
According to the last AGSs' annual report, in 2022, over 17,000 companies and more than more than 130,000 employees benefited from the wage guarantee. As a result, AGS Scheme interventions increased by 58% compared with 2021, although without reaching the 2019 benchmark. As a direct consequence of the increase in the number of cases opened and the number of beneficiaries, the amount of advances paid by the AGS Scheme has rebounded by almost 30% compared with 2021, to €1,137 million.
The year 2022 saw the start of a real turnaround, with an upsurge in the number of business failures, which intensified in 2023. In 2022, businesses with fewer than 10 employees accounted for more than 85% of cases opened. Businesses with between 10 and 49 employees experienced the sharpest rise, with an increase of 84.4% compared with 2021.
Eurofound (2015), France: Wage guarantee in case of insolvency, Restructuring legislation database, Dublin, https://apps.eurofound.europa.eu/legislationdb/wage-guarantee-in-case-of-insolvency/france
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