Bulgarians to Receive Compensations of Up to BGN 1200 in Case of Employer's Bankruptcy

Finance | July 10, 2013, Wednesday // 16:57|  views

Photo by BGNES

Amendments to the Act on Factory and Office Workers' Claims Guaranteed in the Event of Their Employer's Bankruptcy were passed by Bulgaria's Parliament on Wednesday.

The amendments stipulate that a company must have been functioning at least 12 months (up from the current six months) before bankruptcy in order for its employees to be entitled to compensations for unpaid salaries.

The new provisions increase the maximum amount and period of guaranteed payments from BGN 1000 to BGN 1200 and from three to six months for the last accrued but unpaid salaries before the company stopped functioning, according to reports of dnevnik.bg.

Kornelia Ninova, MP from the Bulgarian Socialist Party, BSP, argued that the Guaranteed Receivables of Workers and Employees (GRWE) Fund from which the compensations were paid was inefficient because it had amassed a reserve of BGN 200 M and it spent considerably less than it absorbed.

In 2009, the Fund received BGN 21 M from social security contributions and paid BGN 710 in compensations.

Since its establishment in 2005, the Fund has absorbed over BGN 215 M and has spent only BGN 6 M.

By mid-2013, the Fund had received around BGN 4 M but paid out around BGN 200 000.

According to Ninova, a total of 24 companies have gone bankrupt in Bulgaria since the beginning of 2013, while only 213 people have requested compensations.

Vesela Nacheva, acting director of the Fund, explained that the Fund was no longer supplied through monthly social security contributions but through fines, administrative fees and government bonds due to the reserve of BGN 200 M.

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Tags: bankruptcy, Bulgarian Socialist Party (BSP), Kornelia Ninova, compensation


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