The employer is bankrupt.
What do I do?

If the conditions in the Bankruptcy Act are met, a company can be declared bankrupt, either by the company itself filing for bankruptcy or by a creditor filing for bankruptcy. The main purpose of the right to file for bankruptcy of a company is to realise the company's assets in cash and ensure that the funds are distributed among the company's creditors. As an employee of a company, you are considered an employee and a creditor, and you therefore have the opportunity to petition your employer for bankruptcy if your employer defaults on its payment obligations to you. We recommend that you contact us if your employer does not pay salary or holiday pay as agreed.

Bankruptcy opening

If your employer is bankrupt, your salary will normally be covered in full. Through the NAV Wage Guarantee, the state is obliged under certain conditions to cover claims for wages and holiday pay that your employer is no longer able to cover.

Shortly after the bankruptcy is opened, the trustee will make an assessment of whether or not you should continue in your position. In some cases, the trustee in bankruptcy may order you to work for a given period if this is considered necessary for the estate. Remuneration for this will be covered by NAV Lønnsgaranti or the estate. You will be notified if you are not to continue in your position and will eventually receive a written notice of termination sent to you by post or e-mail. In some cases, the business in the company may be sold, and you may therefore have a preferential right to continue in your position with the new employer.

If you are not contacted by the trustee during the first three weeks after the bankruptcy is opened, we recommend that you contact the trustee's office. You can find out who the trustee is by searching for the bankruptcy estate in the Brønnøysund Register. 

Application to NAV Lønnsgaranti

If the trustee concludes that you should not continue in your position, you will receive a notice of termination. Attached to this notice of termination will be information on how to apply for the NAV wage guarantee, including an A-form to be completed and returned to the trustee.

It should be noted that you are responsible for substantiating your claim. It will therefore be appropriate for you to enclose other documentation relevant to your application when submitting Form A. We recommend that you enclose your employment contract, your last three payslips, as well as payslips for December and January if you are applying for holiday pay from the previous year, as well as timesheets if you are applying for outstanding wages.

Who can apply?

In order for you to apply for cover through NAV Lønnsgaranti, there must be a current or former employment relationship between you and the bankrupt company. Self-employed persons or contractors are not covered by the scheme, and shareholders with at least a 20 per cent stake in the company will not be covered either, unless it can be substantiated that the person in question has not had a significant influence over the operation of the company.

It should be noted that the trustee will inform NAV Lønnsgaranti if an applicant has had a significant influence over the company's operations, including whether he or she is the general manager or chairman of the board. This is irrespective of whether the applicant has had an ownership interest in the company or not.

What can you apply for?

Salary and other remuneration:

If your employer has not paid wages in whole or in part in the period before the bankruptcy was opened, you can apply for outstanding wages and other remuneration for up to 6 months. The salary claim must not have a due date further back than 12 months from the day when the company was filed for bankruptcy (the deadline date).

Example 1: If company A was declared bankrupt on 01.01.21, and bankruptcy was opened on 15.01.21, you can apply for outstanding salary in the period 01.01.20 up to and including 15.01.21. Within this period, you can apply for a maximum of six months' outstanding salary or other remuneration. If company A has paid salary for 01.01.20 up to and including 31.08.20, and partially for 01.10.20 up to and including 15.01.21, you can apply for outstanding salary for 01.09.20 up to and including 30.09.20, and partially for 01.10.20 up to and including 31.12.20. The decisive factor here is that the total time period for which outstanding salary is applied for does not exceed six months.

In addition to applying for outstanding salary, you can also apply for salary during the notice period. That is, from the opening of bankruptcy and one month ahead. This salary is calculated on the basis of various factors, including what follows from the employment contract, scheduled timesheets or an average calculation of your last three payslips.

Example 2: You are entitled to apply for salary after the bankruptcy has been opened for the period 15.01.21 up to and including 15.02.21. In relation to example no. 1, you will then be able to apply for outstanding salary for the period September up to and including December 2020, as well as salary after the opening of bankruptcy, for the period 15.01.21 up to and including 15.02.21, or the months of January and February 2021. Such a claim would be within the absolute limitation of six months.

Holiday pay

The main rule is that you can apply for holiday pay earned in the same year as the deadline date and the year before.

In some cases, you can also apply for holiday pay for 3 years, if the deadline is before the end of the year and the bankruptcy is opened after the end of the year.

Example 3: If the deadline is 15.12.20 and the bankruptcy is opened on 15.01.21, you will be able to apply for outstanding holiday pay for 2019, 2020 and 2021. If you apply for salary after bankruptcy, you can also apply for holiday pay related to this.

It should be noted that holiday pay from NAV Lønnsgaranti is paid in accordance with section 10 (4) of the Holiday Act, with a holiday pay rate of 10.2 %. If it follows from your employment contract, or if you can otherwise substantiate that there is an agreement with your employer on a higher holiday pay rate, you can apply for payment of holiday pay at a higher holiday pay rate. 

Other

In addition to salary and outstanding holiday pay, you can seek to recover pension benefits for up to six months (OTP), compensation for lost remuneration for up to six months, interest up to the due date on salary claims that have not been paid, as well as reasonable costs of filing for the employer's bankruptcy, including collection costs in the period before the bankruptcy petition is submitted to the court. Contact the bankruptcy trustee if you have any questions about outstanding claims related to this.  

Restrictions

It should be noted that the salary guarantee scheme is limited to two times the basic amount, as of 1 May 2020 this amounts to NOK 202,702. 202 702,-. Reasonable costs associated with petitioning the employer for bankruptcy will be added.

If you have had other income during the application period instead of income from your previous employer, this income will be deducted from your claim. This also applies to holiday pay. You are obliged to provide information about other income in the A form.

If you have received advance unemployment benefits, these will be deducted before any payment from NAV Lønnsgaranti. You do not need to state this in the A form.

When do you need to apply?

The deadline for applying is six months after the bankruptcy is opened or as long as the estate is open. This means that if the bankruptcy estate is closed before six months have passed, you can still apply for outstanding salary and holiday pay from NAV Lønnsgaranti before the six-month deadline has expired. After the six-month deadline has expired, claims can be submitted to the trustee in bankruptcy until the estate is cancelled or terminated. If a claim is submitted after the bankruptcy estate has been finalised and the six-month deadline has expired, you will not be entitled to have your application processed by NAV Lønnsgaranti.   

Closure - Case processing time, decision and payment

After your application has been submitted to the trustee, he will assess and check this. The administrator will then send his recommendation to NAV Lønnsgaranti, which decides whether the claims can be covered.

The recommended processing time at NAV Lønnsgaranti is 6-12 months.

After processing by NAV Lønnsgaranti, the claims are either approved or rejected in whole or in part. Along the way, it may also be necessary for NAV Lønnsgaranti to obtain more information from the trustee.

Once the claims have been processed by NAV Lønnsgaranti and amounts have been received in the bankruptcy estate's account, the trustee will carry out payroll runs for you and ensure mandatory deductions, including tax deductions and any deductions for advanced unemployment benefits, etc.

If you receive a rejection, you can appeal. The deadline for appeals is 3 weeks from when you receive the rejection.