Guarantee Fund (Amendment) Regulations, 2004

L.N. 444 of 2004

EMPLOYMENT AND INDUSTRIAL RELATIONS ACT

(CAP. 452)

Guarantee Fund (Amendment) Regulations, 2004

IN exercise of the powers conferred by article 21 of the

Employment and Industrial Relations Act, the Minister of Education,

Youth and Employment has made the following regulations>-

The title of these regulations is the Guarantee Fund

(Amendment) Regulations, 2004 and they shall be read and construed

as one with the Guarantee Fund Regulations, 2002, hereinafter referred

to as “the principal regulations”.

For regulation 1 of the principal regulations, there shall be

substituted the following>-

1. (1) The title of these regulations is the Guarantee

Title and

scope.

Fund Regulations, 2002.

(2) The object of these regulations is to provide

for the protection of employees in the event of the insolvency

of their employer insofar as to guarantee payment of valid

outstanding claims of unpaid wages, and to give effect to the

relevant provisions of Council Directive 80#987#EEC.”.

In sub-regulation (1) of regulation 2 of the principal

regulations, immediately after the definition “Act” there shall be added

the following new definitions>-

“ “Administration Board” means the Guarantee Fund

Administration Board<

“liquidator” includes an executor, an administrator, the official

assignee or a trustee in bankruptcy, a receiver or manager, or a

trustee under an arrangement between an employer and his creditors

or under a trust deed for his creditors executed by an employer<

“occupational pension schemes” means any scheme or

arrangement which, forming part of a contract of employment,

provides or is capable of providing, in relation to employees in

any description of employment, benefits, in the form of pensions

or otherwise, payable to or in respect of any such employees on

the termination of their employment or on their death or

retirement.”.

Regulation 4 of the principal regulations shall be substituted Substitutes

regulation 4 of the

by the following new regulation>-

principal

regulations.

4. (1) For the purposes of these regulations, an

employer shall be deemed to be in a state of insolvency>

(a) 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 claims in accordance with regulation 7 of these

regulations< or

(b) the Court has either appointed a provisional

liquidator or administrator, or a liquidator after a winding

up order in terms of the Companies Act.

(2) The date wherein an employer shall be

considered to be insolvent shall be the earlier of the date>

(a)

of adjudication of bankruptcy by the Court<

or

(b) when a liquidator is appointed in accordance

with the Companies Act.”.

Regulation 6 of the principal regulations shall be substituted Substitutes

regulation

by the following regulation>-

6 of the principal

regulations.

(1) The Fund shall be utilized, at the

Administration Board’s discretion, to guarantee payment of

valid claims for employees’ outstanding wages and for

contributions to be paid by the employer in respect of

occupational pension schemes resulting from contracts of

service, as defined in the Act, when the Administration Board

is satisfied that the employer of an employee to whom these

regulations apply, has become insolvent>

Provided that the maximum amount paid out of the Fund

to an employee shall not exceed a sum which is equivalent to

thirteen weeks’ national minimum wage payable at the time

of the termination of employment of such employee.

(2) Without prejudice to subregulation (1) hereof, the

Administration Board shall only take cognizance of a claim

(a) the employee has registered a valid claim for

unpaid wages with the Administration Board within one

month from the onset of the insolvency of the employer

as defined in regulation 4 of these regulations, and

(b) the employee provides certified evidence that

he has registered a valid claim for the unpaid wages in

the insolvency proceedings of the employer and with

the Department for Industrial and Employment

Relations, and

(c) the claim registered by every individual

employee shall be limited to the unpaid amounts due for

unpaid wages, which, for the purposes of these

regulations, shall consist of the basic wage for the

relevant unpaid period, any unpaid overtime, arrears for

any leave entitlement for the current and preceding

calendar year, and any notice money payable in

accordance with the provisions of the Act< and

(d) the claim registered by every individual

employee refers to unpaid amounts which were due for

wages payable during the last three months of the

contract of service occurring within a period of six

months preceding the date of the onset of insolvency of

the employer or preceding the notification of termination<

and

(e) 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.

(3) The employee shall, on registering a claim

with the Administration Board, forward any documentation

which may be necessary to enable the Administration Board

to reach a decision as to the validity of the claim being

presented and 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.

(4) The Administration Board shall regulate its

own procedure.

(5) The Administration Board shall keep proper

books of account and records regarding claims registered and

paid out of the Fund and any refunds which are obtained by

the Administration Board as a result of its subrogated rights.

(6) The Administration Board shall have the

power to appoint experts to assist it in any matter under its

consideration, as may be required.

(7) The Administration Board shall publish an

annual report of its activities together with the annual audited

accounts of the Fund.

(8) The Administration Board shall have a distinct

legal personality and shall be capable of entering into

contracts, of suing and being sued, and doing all such things

and entering into such transactions as are incidental or

conducive to the fulfilling of its objectives.

(9) The legal and judicial representation shall vest

in the Chairperson or in any other member of the

Administration Board whom the Chairperson may authorize

in writing for such purpose.

(10) The address of the Administration Board

shall be any such address which may be in use from time to

time as the head office of the Department of Industrial and

Employment Relations, and any correspondence shall be

addressed to the Chairperson.”.

6. For regulation 8 of the principal regulations, there shall be Substitutes

regulation 8 of the

substituted the following new regulations 8 and 9>

principal

regulations.

“Occupational

(1) If an employee or persons competent to act in

respect of an occupational pension scheme, make a valid claim

to the Administration Board and the Administration Board is

satisfied that on the date of insolvency there were relevant

contributions remaining to be paid by the employer to the

scheme, the Administration Board shall, subject to the

provisions of this regulation, pay into the assets of the scheme

out of the Fund the sum which in the Administration Board’s

opinion is payable in respect of the unpaid relevant

contributions.

(2) In this regulation “relevant contributions”

means contributions due to be paid by an employer in

accordance with an occupational pension scheme, either on

his own account or on behalf of an employee>

Provided that for the purposes of this regulation a

contribution of any amount shall not be treated as due to be

paid on behalf of an employee unless a sum equal to that

amount has been deducted from the pay of the employee by

way of a contribution from him.

(3) The sum payable under this regulation in

respect of unpaid contributions of an employer on his own

account to an occupational pension scheme shall be the lesser

of the following amounts>

(a) the balance of relevant contributions

remaining unpaid on the date on which the employer

became insolvent and payable by the employer on his

own account to the scheme in respect of the period of

twelve months ending on the day immediately preceding

that date,

(b) the amount certified to the Administration

Board’s satisfaction to be necessary for the purpose of

meeting the liability of the scheme on dissolution to pay

the benefits provided by the scheme to or in respect of

the employees of the employer.

(4) Any sum payable under this regulation in respect

of unpaid contributions on behalf of an employee shall not

exceed the amount deducted from the pay of the employee in

respect of the employee’s contributions to the occupational

pension scheme during the period of twelve months ending

on the day immediately preceding the date on which the

employer became insolvent.

(5) The provisions of subregulations (6), (7) and

(8) of this regulation shall apply in a case where a liquidator

has been appointed.

(6) Subject to subregulation (8) of this regulation,

the Administration Board shall not in a case referred to in

subregulation (5) of this regulation make any payment under

this regulation in respect of unpaid relevant contributions until

it has received a statement from the liquidator of the amount

of relevant contributions which appear to have been unpaid

on the date on which the employer became insolvent and to

remain unpaid< and the liquidator shall, on a request made by

the Administration Board, provide the Board as soon as

reasonably practicable with such a statement.

(7) Subject to subregulation (8) of this regulation,

an amount shall be taken to be payable under subregulation

(3) or to have been deducted in the manner referred to in

subregulation (4) of this regulation, only if it is certified by

the liquidator as being so payable, or to have been so deducted.

(8) The Administration Board may, if the

applicant so requests or, if the Administration Board thinks

fit, without such a request, make a payment under this

regulation, notwithstanding the fact that no statement or

certificate referred to in subregulation (6) or (7) of this

regulation has been received, if>

(a) a period of six months has elapsed since the

application for a payment under this regulation was

received by the Administration Board, but no such

payment has been made,

(b) the Administration Board is satisfied that a

payment under this regulation should be made, and

(c) it appears to the Administration Board that

there is likely to be further delay before it receives a

statement or certificate about the contributions in

question.

Subrogation

On receipt of payment made by the Administration

Board, the employee shall sign a statement subrogating the

Administration Board into all the employee’s rights for the

unpaid amounts due up to the amount reimbursed to the

employee by the Administration Board and shall undertake

to provide any evidence, proof or statements which validate

the claim against the employer and to proceed with the claim

against the employer, including an undertaking to give

evidence in any proceedings that may take place in connection

with the insolvency of the employer or the liquidation and

distribution of the employer’s assets.”.

7. Regulation 9 of the principal regulations shall be renumbered

as regulation 10 thereof, and in the English text only of regulation 10

as renumbered, immediately after the word “fine” there shall be inserted

the word “(multa)”.

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