The insolvency of the employer can have drastic consequences for the employees. The acute insolvency may not only cause a downtime for suppliers or other creditors of the company, also wage and salary payments of their own workforce may be at risk.
To compensate for the loss of salary, the Employment Agency pays a one-time replacement , which is covered by a bankruptcy pre-financing. The insolvency allowance usually pays all German employers.
In principle, only employees are entitled to insolvency benefits if insolvency proceedings have been initiated on the employer’s assets.
How to file for bankruptcy?
Employees can file an application for insolvency money with the Employment Agency, which can also be done electronically . However, the insolvency money must be applied for at the employment office within two months after the opening of the bankruptcy proceedings . In addition, various supporting documents must be enclosed:
- Insolvency certificate of the employer or the insolvency administrator
- Copy of the employment contract
- Salary statements (last three)
- File number of the insolvency proceedings
- possibly termination notice
What is the bankruptcy fee?
Insolvency benefit is paid retroactively in the amount of the salary which is outstanding for the last three months of the employment relationship before the insolvency proceedings are opened. Normally, the net salary is decisive, under certain circumstances, overtime pay, commissions or the like may also apply. be taken into account.
However, there are upper limits for insolvency money, which may vary depending on the state. Therefore, higher earners may only receive insolvency allowance up to a certain threshold. How much the payment actually turns out can be calculated by the Employment Agency.
Bankruptcy money is tax-free! Therefore, it makes sense to specify the bankruptcy money in the tax return. The Employment Agency issues corresponding certificates of tax exemption .
Bankruptcy money as advance
Normally, an advance of insolvency money is not possible. Only if
- the insolvency proceedings have been requested ,
- the employment relationship has ended and
- for the receipt of insolvency money the conditions are likely to be fulfilled ,
the employment agency can make an advance. Normally, not all bankruptcy money is granted, but only 50 to 80 percent of the probable claim.
Are social security contributions paid?
During the insolvency period, the employer will normally continue to pay the social security contributions . However, it may happen that the contributions are affected by the bankruptcy.
In this case, the employment agency will pay the social security contributions. However, it is necessary that the health insurance company makes a corresponding application to the Office. Even then, the contributions are paid in addition to the bankruptcy money for the duration of the last three months before the bankruptcy.
Unemployment benefit during insolvency
Both Unemployment Benefit I and Unemployment Benefit II can be paid in parallel to the insolvency allowance, for example because the employer has terminated the employment relationship as a result of the bankruptcy.
In this case, the one-time payment of the bankruptcy fee will be credited towards the other benefits.