The Importance of the Wage Guarantee Fund During Concordat and Bankruptcy Periods

In cases where the employer faces financial difficulties, under certain conditions, the Wage Guarantee Fund pays up to three months of unpaid wages to the employees. This way, the Wage Guarantee Fund not only serves to protect workers' rights but also helps alleviate economic difficulties by maintaining employment from the employers' perspective.

The processes involved in payments made under the Fund create rights and responsibilities for both the employer and the employee. Necessary documents must be correctly and completely prepared and submitted to the Institution on time. If documents are prepared contrary to the law, regulations, and sub-regulations, the Fund cannot be utilized, and any undue benefits obtained may be reclaimed with interest. Therefore, it is advisable to conduct the process with support from an expert on the subject to ensure legal security and avoid potential future administrative and legal sanctions.

This article will explain the application conditions and procedures related to the Wage Guarantee Fund (WGF) for wage payments to employees in the event of the employer's financial difficulties in a question-and-answer format.

1. What is the Wage Guarantee Fund?

The Wage Guarantee Fund is established to pay up to three months of unpaid wages arising from the employment relationship in cases where the employer declares concordat, goes bankrupt, postpones bankruptcy, or obtains an insolvency certificate.

2. What conditions are necessary for employees to benefit from the Wage Guarantee Fund?

Employees' wage claims are paid from the Wage Guarantee Fund in cases where the employer declares concordat, obtains an insolvency certificate, goes bankrupt, or postpones bankruptcy.

3. How to apply to the Wage Guarantee Fund?

Applications must be made personally by the employee with a wage claim to the nearest Employment Agency Service Center. However, the heirs of a deceased employee can apply with a certificate of inheritance.

4. What conditions are required to receive payment from the Wage Guarantee Fund?

• The employee must have worked during the period with wage claims and have paid unemployment insurance premiums.
• The employer must have fallen into financial difficulty (such as concordat, insolvency certificate, bankruptcy, or postponing bankruptcy).
• The employee must have worked at the same workplace for at least one year before the employer's financial difficulty.
• The unpaid wage claims must pertain to periods before the employer's financial difficulty.
• The employee must have worked at the same workplace under the Unemployment Insurance Law No. 4447 within the last year (even for one day).
• The wage claim must not have expired.

5. Are there exceptions to the condition that the employee must have worked at the same workplace within the last year under Law No. 4447 (even for one day)?

There are exceptions in calculating the last year's period, including:

• Fulfilling legal obligations,
• Military service,
• Periods of detention or imprisonment,
• War,
• Martial law,
• State of emergency,
• Long-term illness requiring treatment,
• Periods without reported unemployment insurance premiums,
• Annulment of bankruptcy postponement decisions.

Additionally, in cases where the wage claim is determined by court decision, the period between the filing date and the decision date is also considered in the calculation of the last year.

6. What documents are required to apply to the Wage Guarantee Fund?

To benefit from the Wage Guarantee Fund, the following are required: a petition of request, documents related to the employer's financial difficulties, the employee's wage claim document, and other documents essential for payment.

6.1. What are the cases where the employer is considered in financial difficulty?

The employer is considered in financial difficulty if they declare concordat, obtain an insolvency certificate, go bankrupt, or postpone bankruptcy.

6.2. What is an Employee Wage Claim Document?

The Employee Wage Claim Document shows the employee's wage claims by month and is necessary to request payment from the Wage Guarantee Fund.

6.3. What are the other essential documents for payment?

When applying to the Wage Guarantee Fund, certain documents must be submitted according to the reason for the application. In the case of postponed bankruptcy, the original or notarized copy of the signature circular of the trustee, in case of concordat, the concordat commissioner, or the liquidator, and in case of an insolvency certificate, the employer or the employer's representative should be attached to the application.

7. What income ceiling is considered when making payments from the Wage Guarantee Fund?

The Wage Guarantee Fund makes payments for up to three months of wage claims from the employer. These payments are calculated according to the daily income ceiling set by Article 82 of Law No. 5510 and cannot exceed 7.5 times the minimum wage.

8. What is the nature of the wage to be paid from the Wage Guarantee Fund?

Payments from the Wage Guarantee Fund are made according to the employee's net wage claims. However, if the wage claim document specifies gross wages, payment can also be made based on the gross amount.

9. What is an Insolvency Certificate, and how is it obtained?

An Insolvency Certificate is a document obtained from the Enforcement Office or Directorate under Article 143 of the Enforcement and Bankruptcy Law. It is issued when no assets are available for seizure and is used for the employee's wage claim application. The document must be obtained from the employer.

10. How to apply to the Wage Guarantee Fund in case of bankruptcy?

In case of the employer's bankruptcy, the application is made with the bankruptcy decision issued by the court or the announcement of this decision published in the Trade Registry Gazette. The document must be obtained from the employer.

11. How to apply to the Wage Guarantee Fund in case of postponed bankruptcy?

The application is made with the court's bankruptcy postponement decision or the announcement of this decision published in the Trade Registry Gazette. The document must be obtained from the employer.

12. How to apply to the Wage Guarantee Fund in case of a concordat declaration?

In case of a concordat declaration, the application is made with the court's provisional/final postponement decision or the announcement of this decision published in the Trade Registry Gazette.

13. Is payment made from the Wage Guarantee Fund if the subcontractor faces financial difficulties?

If the subcontractor faces financial difficulties, wage claims should first be directed to the main employer. However, if the main employer also faces financial difficulties, the Fund can be utilized if wage claim documents from both employers are submitted.

14. Will the Wage Guarantee Fund pay the subcontractor's employees if the main employer faces financial difficulties?

If the main employer faces financial difficulties but the subcontractor does not, payments will not be made to the subcontractor's employees.

15. What is the role of Labor Court decisions in payments from the Wage Guarantee Fund?

Finalized wage claim decisions by Labor Courts serve as an Employee Wage Claim Document if they specify the period and amount of the wage claim.

16. Will payment be made if suspicious circumstances arise after application?

If, during the process of concluding the application or determining eligibility, a suspicious situation is identified regarding the existence, amount, or payment of the wage claim, payment will not be made without a detailed investigation.

17. What actions are taken if an undue payment is discovered under the Wage Guarantee Fund?

Excess payments due to the employee's fault are recovered with legal interest from the employee. In cases of employer fault, such as fraudulent bankruptcy or disqualification from trade, excess payments are recovered with legal interest from the employer.

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