1. What is the Guarantee Fund?
It is a fund intended to guarantee payment of unpaid wages (please refer to Question 5) due by an employer to those employees whose employment is terminated because of the employer’s proved insolvency. This Fund is administered by the Guarantee Fund Administration Board
2. Who is entitled to present a claim to the Guarantee Fund?
All employees’ whose employers company is in a state of Insolvency except employees who are:
(a) private domestic servants;
(b) share-fishermen; and
(c) an employee who, on his or her own or together with his or her parents, spouse, children or siblings, was the owner or part owner of the employer’s undertaking or business and had a considerable influence on its activities.
3. What is insolvency for the purposes of the Guarantee Fund?
(a) For the purposes of the Guarantee Fund, an employer shall be deemed to be in a state of insolvency:
(i) where a request has been made for the commencement of proceedings for bankruptcy of the employer under Part III of the Commercial Code and the Court has established that the employer’s undertaking or business has been definitely closed down, and that the available assets are insufficient to cover the payment of the claim, or
(ii) where the Court has either appointed a provisional liquidator or administrator, or a liquidator after a winding up order in terms of the Companies Act.
(b) The date wherein an employer shall be considered to be insolvent shall be the earlier of the date:
(i) of adjudication of bankruptcy by the Court; or
(ii) when a liquidator is appointed in accordance with the Companies Act.
4. How can an employee make a claim to the Guarantee Fund?
An employee can make a valid claim for unpaid wages by sending the following document:
(i) a valid claim for unpaid wages to the Guarantee Fund Administration Board;
(ii) certified evidence that he/she has registered a valid claim for unpaid wages in the insolvency proceedings of the employer; and
(iii) certified evidence that he/she has registered a valid claim for unpaid wages with the Department for Industrial and Employment Relations to the Guarantee Fund Administration Board within two months from the onset of the insolvency of the employer to:
Guarantee Fund Administration Board
c/o 121, Melita Street
5. What can the employee claim?
(a) Every individual employee may register a claim limited to the unpaid amounts due for:
(i) unpaid wages, which shall consist of the basic wage for the relevant unpaid period;
(ii) any unpaid overtime;
(iii) arrears for any leave entitlement for the current and preceding calendar year, and
(iv) any notice money due in accordance with the laws of Malta;
(b) The claim registered by every individual employee shall refer to unpaid amounts which were due for wages payable within six months preceding the date of the onset of insolvency of the employer or preceding the termination of employment.
(c) Amounts paid by the Guarantee Fund shall in no case exceed a sum which is equivalent to thirteen weeks’ national minimum wage payable at the time of the termination of employment of such employee.
6. What is the procedure adopted following the employee’s claim?
The documentation given by the employee would be forwarded to the Administration Board along with the claim, so that the Administration Board, can reach a decision as to the validity of the claim being presented. The Administration Board may request any information from any person to enable it to perform its obligations, and it shall be the duty of any such person to cooperate fully with the Administration Board.
7. What are the duties of the employee who benefits from the Guarantee Fund?
The employee binds himself to reimburse the Fund with a sum equivalent to the amount paid out of the Fund by the Administration Board in respect of the claim made by the employee from any amounts retrieved from any court proceedings or from any settlement received from a liquidator, as the case may be.
8. What happens if an employee lodges a false claim?
Any person who is found guilty of registering a false claim for unpaid amounts or who is found guilty of acting in collusion with an employer or an employee in order to obtain payments from the Fund, shall be guilty of an offence and shall be liable on conviction to a fine (multa) which is equivalent to ten times the amount paid out of the Fund, together with any other punishment to which the offender shall be liable according to any other applicable law.
to the Guarantee Fund Regulations (S.L.452.84)
To apply for the Guarantee Fund, please click here