Insolvency compensation (IE)

Unemployment insurance (ALV) is a bureau of the Labor Division within the Office of Economic Affairs (AVW).

Insolvency Indemnity (IE) is a loss of earnings insurance provided by the ALV in the event that the employer becomes insolvent. It protects the employee's outstanding wage claims for a maximum of four months to prevent the employer's inability to pay from threatening the employee's livelihood.

Unlike unemployment compensation, which covers lost wages in the event of unemployment, insolvency compensation covers lost wages for work already performed. Insolvency compensation and unemployment compensation cannot be drawn simultaneously for the same period.

A claim for insolvency compensation may be made if one of the following events has occurred:

• Opening of insolvency proceedings against the employer's assets; or
• Dismissal of the application to open insolvency proceedings for lack of assets to cover costs;
• whole or partial unsuccessful execution of wage claims against the employer;

Scope of the insolvency compensation:

The insolvency compensation covers outstanding wage claims for work performed

• of the last three months of the employment relationship prior to the occurrence of one of the above events, and
• one month after the occurrence of one of the above events.

A claim for insolvency compensation requires in particular:

• Timely submission of the fully completed and signed claim form and submission of all documents relevant to the decision;
• Certification of outstanding wage claims;
• Compliance with the duty to mitigate damages;

Please direct inquiries regarding bankruptcy compensation via email to: ie.alv@llv.li