Insolvency Compensation

The Insolvency Wage Fund (IEF) provides a state benefit throughout Austria to secure outstanding claims of employees, former employees, freelance service providers, and homeworkers, as well as their heirs, when insolvency proceedings have been initiated against the company. In accordance with the Insolvency Wage Security Act (IESG), the fund assumes responsibility for paying outstanding wage and salary claims as well as termination claims such as severance payments or dismissal compensations if the employer becomes insolvent. The benefit is designed as a 100% grant and applies to employment relationships subject to the General Social Insurance Act (ASVG). Applications can be submitted at any time without limitation, enabling affected individuals to receive financial security quickly and without bureaucracy.

The program’s objective is the comprehensive protection of employees’ rights in the event of insolvency and thereby the stability of social insurance law. IEF-Service GmbH administers the fund as a sovereign task and ensures prompt processing of all applications. A prerequisite for funding is the initiation of insolvency proceedings against the affected company as well as an existing claim under the provisions of the IESG. This funding not only cushions the loss of earnings but also effectively mitigates potential hardships related to termination claims, thereby significantly strengthening the social security of employees in times of crisis.