GUARANTEE FUND REGULATIONS

SUBSIDIARY LEGISLATION 452.84

GUARANTEE FUND REGULATIONS

1st January, 2003

LEGAL NOTICE 432 of 2002, as amended by Legal Notices 444 of 2004,

413 of 2005, 427 of 2007, 445 of 2007 and 445 of 2011; Act XXVII of 2016,

and by Legal Notice 283 of 2017.

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

Regulations.

(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

c la im s o f u n p a id wa g e s , a n d t o g iv e e ff e c t to t h e r e l ev an t

provisions of Council Directive 80/987/EEC.

(1)

In these regulations -

"Act" means the Employment and Industrial Relations Act;

"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 arr an gement between an employ er and h is

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

employer;

"Member State" means a member state of the European Union or

of the European Economic Area;

"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.

(2) Subject to the provisions of subregulation (1), terms and

expressions used in these regulations shall, unless the context

otherwise requires, have the meaning assigned to them in the Act.

These regulations shall apply to employees’ claims for

unpaid wages arising out of contracts of service and existing

against employers who are in a state of insolvency as defined in

regulation 4, but shall not apply to

(a) private domestic servants; and

(b) an employee who, on his or her own or together with

his or her parents, spouse, children or siblings, was the

owner or part owner of the employer’s undertaking or

business and had a considerable influence on its

activities.

(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; 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.

The Guarantee Fund (hereinafter referred to as "the Fund")

established by virtue of article 21 of the Act is hereby being

endowed with the sum of five hundred and eighty-two thousand

and three hundred and forty-three euro and thirty-five cents

(582,343.35) which shall be paid out of the Consolidated Fund over

a maximum period of five years, at a minimum rate of one hundred

and sixteen thousand and four hundred and sixty-eight euro and

sixty-seven cents (116,468.67) annually.

(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

f r o m c o n t r a c ts o f s e r v ic e, a s d e f in e d i n t h e Ac t, w h e n th e

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

w eek s ’ n at i o n al m i n i m u m wa g e p ay a b le a t th e t im e o f t h e

termination of employment of such employee.

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

Board shall only take cognizance of a claim if -

(a) the employee has registered a valid claim for unpaid

wages with the Administration Board within two

months from the onset of the insolvency of the

employer as defined in regulation 4, 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 within six months preceding the date of the

onset of insolvency of the employer or preceding the

termination of employment

Provided that these unpaid amounts shall in no case

exceed a sum which is equivalent to thirteen weeks’

national minimum wage payable at the time of the

termination of employment of such employee as

provided in the proviso to sub-regulation (1); 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.

(1) The Fund shall be administered by a Guarantee Fund

Administration Board which shall be composed of

(a) the Director of Employment and Industrial Relations

who shall act as Chairperson;

(b) the four representatives of employees appointed on the

Employment Relations Board in accordance with

article 3(2)(c) of the Act;

(c) the four representatives of employers appointed on the

Employment Relations Board in accordance with

article 3(2)(d) of the Act;

(d) a member nominated by the Minister of Finance;

(e) the Chairperson of Jobsplus; and

(f)

a person appointed by the Minister who shall be a

member of the legal profession.

(2) The Guarantee Fund Administration Board shall regulate its

own procedure.

(3) The Guarantee Fund Administration Board shall keep

proper books of account and records regarding claims registered

and paid out of the Fund as well as any refunds which are obtained

by the Fund as a result of its subrogated rights.

(4) The Guarantee Fund Administration Board shall publish an

annual report of its activities, together with the annual audited

accounts of the Fund.

(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) shall apply

in a case where a liquidator has been appointed.

(6) Subject to subregulation (8), the Administration Board shall

not, in a case referred to in subregulation (5), 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

u n p a i d ; a n d th e li q u id a to r sh a ll , o n a r e q u e s t m a de b y th e

Administration Board, provide the Board as soon as reasonably

practicable with such a statement.

(7) Subject to subregulation (8), an amount shall be taken to be

payable under subregulation (3) or to have been deducted in the

manner referred to in subregulation (4), 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) 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.

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 wit h the clai m agai nst the employer, i nc luding 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.

(1) Notwithstanding any other provision in these

regulations, in the case of any state of insolvency, where a request

has been made for the opening of collective proceedings based on

insolvency of th e employer as pr ovided for under the laws,

regulations and administrative provisions of a Member State,

occurring and affecting an undertaking with activities in the

territories of at least two Member States, the guarantee institution

responsible for meeting any employees’ outstanding claims made

on or after the 8th October, 2005 shall be the institution in the

Member State in whose territory the employees registering their

claim habitually work, and the extent of the employees’ rights shall

be determined by the law of the Member State governing the

competent guarantee institution.

(2) In the cases referred to in subregulation (1), where

insolvency proceedings have been requested in a Member State

other than Malta, any decision taken by the competent

administrative authorities in that Member State shall be taken into

account by the Administration Boardin determining the employer’s

state of insolvency in respect of any valid claims registered with

the Fund.

(3) For the purpose of facilitating the implementation of the

provisions of subregulation (1), the Administration Board shall

take the necessary measures to co-operate fully with the competent

administrative authorities and the guarantee institutions in other

Member States responsible for meeting any employees’ outstanding

claims in terms of Council Directive 80/987/EEC, and such

measures shall include the request for and provision of any

information considered necessary in any particular case.

Any person who is found guilty of registering a false claim

for unpaid amounts or who is found guilty of acting in collusion

with an employer or an employee in order to obtain payments from

the Fund, shall be guilty of an offence and shall be liable on

conviction to a fine (multa) which is equivalent to ten times the

amount paid out of the Fund, together with any other punishment to

which the offender shall be liable according to any other applicable

law.