Direct Request (CEACR) - adopted 2007, published 97th ILC session (2008)

Part II of the Convention. Protection of wage claims by a privilege. The Committee notes the adoption of the Insolvency Act (No. 22/2003 of 9 July 2003), which consolidates the various insolvency procedures, drastically reduces the number of privileges and preferences relating to claims on the assets available for distribution, and amends section 32 of the Workers’ Charter concerning the protection of wage claims by a privilege. It notes that the provisions of section 32 no longer apply when a declaration of insolvency has been made pursuant to the abovementioned Act.

The Committee notes that section 84 of Act No. 22/2003 establishes a distinction between claims constituting the liabilities and claims on the assets available for distribution. It notes that the following are considered as claims on the available assets: (1) wage claims corresponding to the 30 days of work preceding the declaration of insolvency, up to a limit of twice the inter occupational minimum wage (SMI), being claims that will be paid immediately under section 154(2) of the Act; (2) other claims, including wage claims arising from the debtor’s activity after the declaration of insolvency. The Committee also notes that, under section 154(3) of the abovementioned Act, claims on the available assets will be paid out of the property and entitlements not attached to the payment of claims enjoying a special privilege. If the assets are insufficient, the proceeds will be distributed between all parties making claims on the available assets according to the order of the due dates.

The Committee also notes section 89 of Act No. 22/2003, under the terms of which claims constituting the liabilities are divided into privileged claims (which are in turn divided into special privileged claims and general privileged claims), ordinary claims and subordinate claims. It notes that workers enjoy a special privilege on the goods that they have manufactured or constructed even if they are the debtor’s property or in the debtor’s possession, in accordance with section 90(1)(3) of the Act. Section 91 states that a general privilege applies, inter alia, to wage claims that do not enjoy a special privilege, up to a limit of three times the daily minimum wage for the number of days of unpaid wages, and also to statutory severance payments for an amount not exceeding three times the minimum wage. The Committee also notes that, under section 156, general privileged claims will be paid, after deduction of the property and entitlements necessary for the payment of claims on the available assets, out of the assets not subject to a special privilege and out of the remainder of the assets subject to such a privilege after payment of the corresponding claims.

Hence it can be seen from the above that Act No. 22/2003 grants the status of claims on the available assets to wage claims arising after the declaration of insolvency. However, they do not take priority over the other claims on the available assets, the various claims being paid according to the order of the due dates. At all events, claims on the available assets are paid out of the assets not attached to the payment of claims enjoying a special privilege (such as claims secured by mortgage). Moreover, the wages due for the period preceding the declaration of insolvency (beyond the first month, for which a claim on the available assets also applies) are covered by a general privilege but are paid only after settlement of all the claims against the available assets, including legal costs, etc. The Committee therefore understands that this Act provides substantial protection of workers’ claims by means of a privilege in the event of the insolvency of their employer. The Committee requests the Government to supply all relevant explanatory information on this subject.

Further, the Committee notes that the Spanish Government submitted a Bill to Parliament on 8 September 2006 concerning insolvency and the order of priority of claims in the case of individual liquidation (i.e. in the absence of a creditors’ agreement), which is likely to have consequences for the protection of wage claims. It notes that the Economic and Social Council has expressed certain reservations with regard to this Bill. The Committee requests the Government to supply information on the progress made on the the adoption of this Bill and on its possible impact on the order of priority of wage claims.

Part III. Protection of workers’ claims by a guarantee institution. The Committee notes that section 33(1)(2) of the Workers’ Charter was amended by Act No. 43/2006 of 29 December 2006 concerning the increase of economic growth and employment. It notes with interest that the maximum amount of wage claims protected by the wage guarantee fund, which used to correspond to twice the daily minimum wage for a maximum period of 120 days, now corresponds to three times the minimum wage for a maximum period of 150 days. The Committee also notes with interest that the guarantee fund also covers new types of payment for dismissal or termination of employment, including termination of the contract on objective grounds, judicial termination in the context of the Insolvency Act, and the expiry of temporary contracts and fixed-term contracts. Moreover, it notes with interest that the ceiling for payments covered by the guarantee fund remains fixed at one year’s wages but that the daily wage serving as the basis for calculation is now limited to three times (and no longer twice) the minimum wage, including, proportionally, the 13th and 14th months. Finally, the Committee notes with interest that the amount of payments in the event of termination of the employment contract on the worker’s initiative is calculated on the basis of 30 (and no longer 25) days’ wages per year of service, without prejudice to the abovementioned ceiling.

In addition, the Committee notes the fourth supplementary provision of Act No. 43/2006, under the terms of which future modifications to contributions and benefits relating to the wage guarantee fund will be determined according to the financial surplus of this fund. The Committee requests the Government to provide further information on the possible impact of the application of this provision on the level of protection of workers’ claims in the event of the insolvency of their employer.

Part IV of the report form. The Committee notes the information in the Government’s report to the effect that, in 2005, 68,557 workers were protected, for a total amount in excess of €232 million; and in 2006, 75,081 workers (+9.5 per cent) were protected, for a total amount in excess of €312 million (+34.5 per cent). The Committee requests the Government to supply further information on the reasons why the amount of wages and benefits paid by the wage guarantee fund increased so sharply between 2005 and 2006.