Bankruptcy Law

Pursuant to Article L. 625-9 of the Commercial Code , and without harm to the rules relating to privileged rights in respect of employee claims, claims arising from employment contracts or apprenticeship contracts are guaranteed, under the conditions set out in Articles L. 3253-6 to L. 3253-21, by the AGS. This guarantee stems from the obligation imposed on all employers under private law to insur …

Guarantee of payment of wage claims by AGS

Pursuant to Article L. 625-9 of the Commercial Code , and without harm to the rules relating to privileged rights in respect of employee claims, claims arising from employment contracts or apprenticeship contracts are guaranteed, under the conditions set out in Articles L. 3253-6 to L. 3253-21, by the AGS. This guarantee stems from the obligation imposed on all employers under private law to insure their employees, including those seconded abroad or expatriated, against the risk of non-payment of sums due to them under the employment contract, in the event of a receivership procedure . Foreign employees within the meaning of Article L. 8252-1 benefit from these provisions for sums due to them under the aforementioned texts . Accordingly, when a company is placed under receivership in a Member State and has an establishment in France, the claims of employees working there are guaranteed in the event of their employer's insolvency .

1) Amounts owed to employees at the date of the opening judgment

Insurance against the risk of non-payment covers sums owed to employees on the date of the judgment opening any receivership procedure, as well as contributions owed by the employer under the occupational security contract . The AGS's guarantee applies to claims for compensation from employees resulting from dismissal without real and serious cause, prior to the commencement of the co-employer's receivership procedure . Similarly, an employee's claim arising prior to the opening of his employer's insolvency procedure must be covered if, as a result of the conversion of the safeguard procedure into the insolvency procedure, it was due on the date of the opening judgment . Furthermore, professional expenses also fall within the scope of the AGS guarantee, regardless of whether or not they are in the nature of wages . However, the guarantee does not apply to claims arising after the opening of the receivership procedure and resulting from the continuation of the employment contract, in the absence of a court-supervised liquidation .

2) Claims arising from the termination of employment contracts

Insurance against the risk of non-payment also covers claims arising from the termination of employment contracts during the observation period and in the month following the judgment adopting the safeguard, receivership or sale plan . The termination must be initiated by the receiver or the legal representative, and not by the employee .

However, the AGS cannot be called upon to guarantee the payment of severance pay in the event of the opening of collective proceedings during the labor court proceedings, if this claim predates the opening judgment , or if the employment contract was terminated more than three years after the judgment establishing the plan . Nor does the AGS guarantee the payment of sums owed by the employer pursuant to Article 700 of the Code of Civil Procedure, which do not arise from the enforcement of the employment contract .

On the other hand, the insurance of employees against the risk of non-payment of sums due to them under the employment contract covers payment of the pecuniary consideration for the non-competition clause resulting from the termination of the employment contract during the observation period . On the other hand, the guarantee body may not be called upon if the employment contract was terminated prior to the opening of the insolvency procedure .

In addition, in accordance with Article L. 3253-9 of the French Labor Code, claims arising from the dismissal of employees benefiting from special protection relating to dismissal are also covered where the receiver or the employer has indicated its intention to terminate the employment contract during the observation period or in the month following the judgment adopting the safeguard, receivership or sale plan. Accordingly, the compensation awarded to a protected employee for dismissal without real and serious cause must be guaranteed when the receiver indicates his intention to terminate the employment contract within one month of the judgment adopting the receivership plan by informing the employee in writing that dismissal procedure will be initiated against him, regardless of the date on which the contract is actually terminated .

3) Accompanying measures resulting from a job protection plan

The AGS covers the accompanying measures resulting from a job protection plan determined by a majority collective agreement or by a document drawn up by the employer, in accordance with Articles L. 1233-24-1 to L. 1233-24-4 of the Labor Code, provided that it has been validated or approved under the conditions set out in Article L. 1233-58, before or after the receivership procedure has been opened . The guarantee extends to the sums provided for in the job protection plans to promote the redeployment of employees, including outside the company or the group to which it belongs, as well as to damages and interest to compensate for the non-fulfilment of a redeployment undertaking . When an employer does not comply with the commitment made, prior to the judgment approving the sale plan, to present a minimum number of valid job offers with a view to facilitating the external redeployment of employees, the AGS must guarantee the sums awarded by way of damages to compensate for the loss caused by the non-fulfilment of this obligation, even if this is only enforceable after the dismissal . In addition, a parent company is obliged, in its capacity as co-employer, to compensate employees made redundant by its subsidiary, where it does not prove that it is impossible to redeploy them within the group .

Under Article L. 3253-10 of the Labor Code, the AGS covers sums due in respect of profit-sharing, employee profit-sharing or an employee fund when they take the form of a claim against the company. The cover only extends to sums due in respect of employee profit-sharing if they take the form of a claim against the company and not to sums which, in application of a profit-sharing agreement, are used to acquire shares in a mutual fund of which the employees have become co-owners . However, the insurance does not cover payments made by employees into a company savings plan simply because these sums have been allocated to the plan .

5) Claims resulting from a company agreement

The insurance covers early retirement arrears due to an employee or former employee in application of a professional or inter-professional agreement, a collective agreement or a company agreement, in application of Article L. 3253-11 of the Labor Code. Wage claims resulting from a company agreement concluded after the judgment approving the company's sale plan are covered by the AGS  guarantee. However, a collective agreement that provides for an increase in the period of notice and the amount of redundancy pay, with full knowledge of the harm that may be caused to the AGS due to the debtor company's inability to honor its commitments, constitutes fraud that renders the employees' guarantee unenforceable against the AGS .

In addition, contributions to a supplementary pension scheme provided for by a collective agreement or a company agreement are not debts owed by the company's employees but constitute a debt owed by the company to the institution managing the pension scheme, the payment of which the AGS does not guarantee .

Under Article L. 3253-15 of the Labor Code, the AGS advances the sums included in a statement drawn up by the legal representative, even if they are disputed by a third party. It also advances sums corresponding to claims established by an enforceable court decision, even if the guarantee periods have expired. The employee is not obliged to notify the wage guarantee institutions of the judgment handed down prior to the employer's insolvency procedure, which may be set up against them ipso jure , even if they are not called to the proceedings . 

An employee who benefits from a final court decision ordering his employer to pay a wage claim arising from the termination of an employment contract prior to the opening of his employer's insolvency procedure is entitled to request that the AGS advance the funds corresponding to the sentences handed down . The insurance must also guarantee payment of the sums owed to the employee and entered on the supplementary statement drawn up following a decision by the labor court, even if the decision was handed down after the closure of the insolvency procedure .

If the claims cannot be paid in whole or in part from the funds available before the expiry of the time allowed to the legal representative to draw up the statements of claims, Article L. 3253-20 of the Labor Code allows the legal representative to request, upon presentation of the statements, that the necessary funds be advanced by the AGS. Proof of the absence or insufficiency of funds for the payment of claims arising from the employment contract, which enables the guarantee to be triggered, is not incumbent on the employee . Article L. 3253-21 specifies the deadlines within which the AGS must pay the legal representative, and not the employee , the sums appearing on the statements that remain unpaid.

Article L. 3253-17 of the Labor Code provides that the AGS guarantee is limited, for all sums and advanced claims combined, to six times the monthly ceiling used to calculate contributions to the unemployment insurance scheme . This amount is set at five times this ceiling if the employment contract from which the claim arises was entered into less than two years and at least six months prior to the date of the judgment opening the insolvency procedure, and at four times this ceiling if the contract from which the claim arises was entered into less than six months prior to the date of the judgment opening the insolvency proceedings . The amount of the ceiling is assessed on the date on which the employee's claim is due and at the latest on the date of the judgment adopting the plan or ordering the compulsory liquidation .  The wage guarantee ceiling, which covers all employee claims, includes the deductions made by the employer for the benefit of the social security bodies, pursuant to Article L. 242-3 of the Social Security Code , but does not include the claims of the social security bodies as these are not the employee's claims . Nevertheless, when the employee receives a salary significantly higher than that provided for by the applicable collective agreement, freely discussed with the employer, the maximum amount of the AGS guarantee may not exceed four times the monthly ceiling used to calculate contributions to the unemployment insurance scheme .

In accordance with Article L. 3253-16 of the Labor Code, the AGS is subrogated to the rights of employees for whom it has made advances for claims guaranteed by the employees' privilege  and claims advanced under Article L. 3253-8, 3°, during a receivership procedure. Other sums advanced in the context of this procedure are reimbursed to them under the conditions laid down in the provisions of Book VI of the Commercial Code for the settlement of employee claims arising prior to the judgement opening the insolvency procedure. The AGS then benefits from the privileges attached to this procedure.

Applicable to the receivership procedure on reference from art. L. 631-18.

Cass. soc., 20 December 2017, LawLex202100003807JBJ (LJ).

Cass. soc., 8 November 2011, LawLex202200003974JBJ (S).

Cass. soc., 9 November 2005, LawLex202100003554JBJ (RJ).

Cass. soc., 2 March 1999, LawLex202100003764JBJ (LJ) ; 28 September 2011, précit.

Cass. soc., 29 January 2003, LawLex202100003810JBJ (RJ).

Cass. soc., 19 May 2016, LawLex202200003985JBJ (S). See already, Cass. soc., 6 May 1997, LawLex202100003760JBJ (RJ).

Cass. soc., 2 October 2001, LawLex202100003811JBJ (RJ) ; 8 February 2012, cited above.

Cass. soc., 8 February 2012, LawLex202100003809JBJ (RJ).

Cass. soc., 28 September 2011, cited above.

Cass. com., 28 November 2007, LawLex202100003765JBJ (LJ).

Cass. soc., 30 September 2009, LawLex202100003756JBJ (RJ).

Cass. soc., 29 September 2009, LawLex202100003757JBJ (RJ).

Cass. soc., 28 March 2000, LawLex202100003806JBJ (LJ).

Cass. soc., 5 June 2012, LawLex202100003540JBJ (LJ) ; 27 November 2013, LawLex202100003538JBJ (LJ).

Cass. soc., 17 October 2018, LawLex202100003761JBJ (LJ).

Cass. soc., 16 March 2022, LawLex202200003968JBJ (LJ).

Cass. soc., 6 March 2019, LawLex202100003818JBJ (LJ).

Cass. soc., 21 October 1998, LawLex202100003744JBJ (RJ).

Cass. soc., 18 March 2008, LawLex202100003558JBJ (RJ) ; 16 December 2008, LawLex202100003544JBJ (LJ).

C. trav., art. D. 3253-5, al. 3. See in particular, Cass. soc., 31 March 2015, LawLex202100003746JBJ (LJ) ; 7 March 2018, LawLex202100003747JBJ (LJ).

Cass. soc., 8 March 2017, LawLex202100003749JBJ (LJ) ; 20 March 2019, LawLex202100003768JBJ (LJ).

Cass. soc., 2 July 2014, LawLex202100003559JBJ (LJ).

Cass. soc., 17 December 1991, cited above.

C. trav., art. L. 3253-2, L. 3253-4 and L. 7313-8.

Cass. soc., 28 September 2011, LawLex202200008945JBJ (LJ).

Cass. soc., 21 January 2014, LawLex202100003751JBJ (RJ).

Cass. soc., 17 December 1991, LawLex202100003754JBJ (LJ).

Cass. soc., 31 January 2018, LawLex202100003815JBJ (RJ) ; 1 February 2012, LawLex202100003819JBJ (RJ).

Bankruptcy Law

543. Guarantee of payment of wage claims by AGS

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543. Guarantee of payment of wage claims by AGS

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Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

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