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Protection of Workers' Claims (Employer's Insolvency) Convention, 1992 (No. 173) - Lithuania (RATIFICATION: 1994)

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The Committee notes the information provided by the Government, which answers the points raised in its previous direct request and has no further matters to raise in this regard.

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Articles 5 and 6 of the Convention. Limits applicable to wage claims protected by privilege. Further to its previous comment, the Committee notes the Government’s indications that all relevant legislation, i.e., section 35(2) of the Enterprises Bankruptcy Act, section 13(3) of the Enterprises Restructuring Act, section 29(3) of the Natural Persons Bankruptcy Act, section 2.113 of the Civil Code and section 754 of the Code of Civil Procedure, grant first-rank privilege to employees’ claims arising out of their employment. The Committee also notes the Government’s explanation that privileged protection is granted to all employee claims irrespective of their nature and without any limitation in terms of maximum amount or period of service. The Committee understands that the Government is planning to introduce a major reform of the insolvency regime through the adoption of a new and comprehensive Bankruptcy Act. The Committee requests the Government to keep the Office informed of any further developments which might have an impact on the application of the Convention.

Article 3(2). Acceptance of Part III – protection by a guarantee institution. The Committee notes that, under the Guarantee Fund Act, the scope of employment-related claims protected by the guarantee insurance extends beyond the minimum entitlements specified in Article 12 of the Convention. Noting that the Convention appears to be implemented in its entirety both in law and practice, the Committee once again recalls that the Government, which at the time of ratification accepted only Part II of the Convention dealing with protection of workers’ claims by means of a privilege, may now extend its acceptance to Part III of the Convention dealing with protection through a guarantee institution. The Committee accordingly requests the Government to keep the Office informed of any decision taken or envisaged in this regard.

Part IV of the report form. Practical application. The Committee notes the statistical information provided by the Government with relation to the number of claims settled and amounts paid by the Guarantee Fund in the period 2007–11. The Committee notes in particular that, in the last two years, the number of applications examined increased five times (from 342 to 1,825), the number of employees who received payments increased more than four times (from 6,579 to 28,100), and the amounts allotted more than tripled. The Committee would appreciate if the Government would comment on the reasons for such a marked increase in the volume of claims filed with the Fund and any predicted difficulties in this regard. It also requests the Government to continue to supply up-to-date information on the practical application of both Parts II and III of the Convention.

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The Committee notes the information provided by the Government in reply to its previous comment.

Articles 5 and 6 of the Convention. Privileged treatment of workers’ claims. Further to its previous request on this point, the Committee notes the Government’s reference to section 2.113 of the Civil Code and section 754 of the Code of Civil Procedure which grant second rank of privilege to workers’ wage and other service-related claims, i.e. after secured claims but before tax claims of tax authorities and social security institutions, in the case of enterprises which are bound for liquidation without the opening of bankruptcy proceedings. The Committee requests the Government to provide additional explanations as to the nature of workers’ claims covered under these provisions and any monetary or time limits applicable to privileged protection.

Part IV of the report form. The Committee notes the statistical information provided by the Government with relation to the number of claims settled and amounts paid by the Guarantee Fund in the period 2001–06. The Committee would appreciate if the Government would continue to supply up to date information on the practical application of both Parts II and III of the Convention.

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The Committee takes due note of the Government’s report and the attached documentation.

Article 3, paragraph 2, of the Convention. The Committee notes with interest the establishment of a wage guarantee fund by virtue of Act No. VIII-1926 of 12 September 2000 and Decree No. 685 of 7 June 2001. The fund is administered by a tripartite Council and is financed mainly by compulsory contributions payable by employers at a rate currently set at 0.2 per cent of the assessment base. It covers claims in the event of an employer’s bankruptcy or insolvency in respect of unpaid wages, holiday pay and severance pay within certain limits which are fixed by the Government by reference to the amount of the minimum monthly wage. Noting the Government’s statement that the provisions of the Convention dealing with the protection of workers’ claims by means of a guarantee institution are fully applied, the Committee recalls once again the possibility under this provision of extending the acceptance of the Convention to Part III and asks the Government to keep it informed of any possible decisions taken in this matter.

Articles 5 and 6. The Committee notes the Government’s indication that according to the 2001 Enterprise Bankruptcy Act, in case the debts of the insolvent company do not exceed half the value of its assets, no bankruptcy proceedings may be initiated and debt enforcement is carried out along the terms set forth in the Civil Code and the Civil Procedure Code. The Committee would appreciate receiving a copy of the text of the relevant provisions of the Civil Code and the Civil Procedure Code as regards the priority treatment accorded to workers’ wage and other service-related claims.

Part IV of the report form. The Committee notes the statistical information concerning the number of applications received and claims settled by the wage guarantee fund in its first year of operation. The Committee would be grateful if the Government would continue to provide in future reports all available information on the functioning, management and financing of the fund, including statistics on the number of beneficiaries, the sums advanced and recovered, any changes regarding the contribution rate or the entitlement limits and any other particulars bearing on the effect given to the Convention in practice.

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The Committee has noted the Government's first reports. It requests the Government to supply further information on the Civil Code (Chapter V of which is mentioned in the first report) and the Civil Procedure Code as regards the priority of satisfaction accorded thereunder to workers' claims arising out of the labour relationship, including the text of relevant provisions.

Article 1, paragraph 3, of the Convention. The Committee also requests the Government to indicate the extent of the employers' responsibility in the insolvency proceedings, for instance if the employers' personal goods are not attachable by virtue of company law.

Article 3, paragraph 2. The Committee recalls that Lithuania has accepted the obligations of Part II of the Convention at the time of ratification. It notes that the Government has made a decision to establish a fund to meet the claims of employees of bankrupt enterprises related to the employment relationship. The Committee recalls the possibility under this provision of extending the acceptance to Part III, once such a fund has been established.

The Committee would be grateful to the Government for information on the application in practice of the Convention in accordance with point IV of the report form.