The purpose of the pay security system is to ensure payment of employees’ claims arising from an employment relationship in the event of the employer’s insolvency. A pay security application may be submitted by the employee or the employee organisation. When the employer has been declared bankrupt, pay security may also be applied for by the administrator of the bankrupt’s estate.
An employee is entitled to pay security if:
- the claim is based on an employment relationship
- the pay security application has been submitted within three months of its falling due
- the employer is insolvent
- the claim is uncontested in terms of its amount and grounds
The maximum amount payable as pay security is 15,200 euros. An employee with claims based on a working time bank is however entitled to pay security corresponding to six months’ wages or salary.
Responsibility of ELY Centres
Pay security applications are considered by ELY Centre Uusimaa but the application may also be submitted to a TE Office.
The state collects the amounts paid as pay security from the employer. ELY Centres are responsible for collecting the state claims.
The pay security is collectively funded by employers through unemployment insurance contributions. The Unemployment Insurance Fund compensates the state annually for the difference between capital paid as pay security and capital collected from employers.
See also Advisory Board on Pay Security (in Finnish)
Law-drafting: Nico Steiner, nico.steiner(at)tem.fi