FOGASA (Fondo de Garantía Salarial) is an autonomous public body attached to the Ministry of Labour and Social Affairs that guarantees workers the receipt of outstanding salary payments, as well as compensation for dismissal or termination of employment, left unpaid due to the employer's insolvency, suspension of payments, bankruptcy or creditors' voluntary arrangement.
Written by Josep Conesa
Employment and insolvency lawyer
WAGES
The Wage Guarantee Fund (FOGASA) pays workers any outstanding salary amounts, including extra payments and accrued processing pay.
The maximum amount payable is calculated by multiplying twice the daily Spanish national minimum wage (SMI) (excluding the pro-rated extra payments) by the number of days of outstanding pay, up to a maximum of one hundred and twenty days. These salary amounts must have been recognised by a Conciliation Agreement or Court Order.
COMPENSATION
The Fund pays workers compensation recognised in a ruling or Resolution issued by the Labour Authority, or any supplementary resolution thereof, for dismissal, termination of employment contracts at the employee's initiative on justified grounds, collective dismissal or objective termination on economic, technical, organisational or production grounds, and for force majeure, in cases of insolvency, suspension of payments, bankruptcy or creditors' voluntary arrangement of the company.
· For the sole purpose of payment by the Wage Guarantee Fund in cases of dismissal or termination of contracts at the employee's initiative on justified grounds, the compensation amount shall be calculated on the basis of twenty-five days per year of service.
· The maximum amount payable is one year's salary, provided that the daily salary used as the basis for calculation does not exceed twice the Spanish national minimum wage (SMI), excluding extra payments.
· Exceptions:
- In companies with fewer than twenty-five employees, the Wage Guarantee Fund (FOGASA) pays 40% of the statutory severance pay due to each employee where the employment relationship is terminated by virtue of collective dismissal, or where there is an objectively established need to eliminate posts on economic, technical, organisational or production grounds, without the need to demonstrate insolvency, suspension of payments, bankruptcy or creditor proceedings.
- The amount of this payment shall be calculated on the basis of compensation capped at a maximum of one year's salary, and the daily salary used as the basis for the calculation may not exceed twice the minimum interprofessional wage, excluding extra payments.
- The labour authority that establishes the existence of force majeure may agree that all or part of the compensation due to the employees affected by the termination of their contracts shall be paid by the Wage Guarantee Fund (FOGASA), without prejudice to the Fund's right to seek reimbursement from the company.
ELIGIBLE BENEFICIARIES
Eligible beneficiaries are workers employed under an employment relationship. Members of worker cooperatives and domestic workers employed in private households are excluded.
APPLICATION PROCESS
The procedure for submitting claims to the Wage Guarantee Fund (FOGASA) may be initiated ex officio, by agreement of the Secretary-General or the relevant regional Administrative Unit, or at the request of the interested parties or their authorised representatives.
· Applications submitted on the official form must be accompanied by the following documentation:
1. Photocopy of the National Identity Document.
2. Certificate from the General Treasury of Social Security.
3. Wages: conciliation record or ruling from the employment tribunal.
4. Compensation: ruling or administrative decision authorising termination of the employment contract. The latter must be accompanied by a conciliation record or court ruling quantifying the compensation.
5. Compensation arising under Article 52(c): objective dismissal letter or court ruling quantifying the compensation.
6. Document evidencing the employer's insolvency.
· In the case of enforcement proceedings in the employment jurisdiction: Order of insolvency.
· In the case of insolvency proceedings:
- Admission for processing of a suspension order or order declaring suspension of payments, bankruptcy or insolvency.
- Certificate of inclusion of the claims in the list of creditors, or their recognition as debts of the insolvency estate.
APPLICATION DEADLINE
One year from the date of the conciliation act, ruling, resolution of the labour authority or supplementary judicial decision.
This period shall be interrupted by the exercise of enforcement actions or the recognition of claims in the insolvency proceedings, as well as by any other means admitted in law.
WHERE TO SUBMIT
· Where proceedings are initiated at the request of the interested parties, the duly completed application must be submitted to the Administrative Unit of the Wage Guarantee Fund (Fondo de Garantía Salarial), or to any other administrative body belonging to the General State Administration or to any regional administration (Comunidad Autónoma), and may also be submitted through Post Offices in an open envelope addressed to the Administrative Unit of the Wage Guarantee Fund.
· Workers submitting their application from abroad may do so through the relevant Spanish diplomatic or consular representation.
PAYMENT OF THE BENEFIT
· Once the file has been reviewed and resolved, a payment order is issued to the Argentaria branch closest to the applicant's or beneficiary's address, who is then notified by the Administrative Unit of the Wage Guarantee Fund of the payment date.
· The Administrative Resolution may be challenged by lodging a claim before the employment tribunal within one year of notification.
