Lønmodtagernes Garantifond (LG)

You are hired as an employee if you have been officially working for an employer. This means that you must have done the work personally for the employer and subject to the instructions and control of the employer. It is the functions of a job and not the job title that determines whether one is an employee.

Who is not an employee?

If you have not been hired as an employee, you cannot get money from LG. You can also not get money from LG if you have been closely related to the company’s owner. At lifeindenmark.dk, you can read more about how does not qualify for receiving money from LG: Read more about who does not qualify for receiving money from LG

LG pays:

• Salary and supplements

• piece work advances - profits

• pensions, including ATP contributions

• holidays with pay

• holiday supplements

• holiday pay, if there is a lack of contributions to FerieKonto

• Public holiday payments

• extra holiday entitlements

• compensation for lack of salary during the termination period

• severance pay

• allowance for improper termination

• salary during illness and maternity/paternity leave

LG does not pay:

• Pension payments that were due before the deadline

• payment in lieu of untaken days of holiday for amounts paid for by LG

• payment in lieu of untaken days of holiday if there is a holiday guarantee scheme

• mileage allowance

• travel reimbursements

• subsistence allowance

• representation costs

• other costs that the employer must refund

• competition clause (lump sum)

• G-days - allowance for 1st, 2nd and 3rd day of unemployment

When applying for the loan, you must send the following documentation:

• Copy of a statement from the probate court to serve as documentation that the company is in the midst of a restructuring process.

• Printout from the Danish Business Authority documenting those who have the power to bind the company (only applies to companies)

• Copy of the document setting up the zero offset (protected from creditors) account

• Copy of original payslips - LG cannot use test calculations from a payroll system.

If documentation is missing

If there has not been attached the proper documentation, it will take time to retrieve this and LG cannot therefore guarantee that the payment is made within three working days.

It is important that you send the documentation within the deadline set by LG, as otherwise LG can reject the application.

A-taxes and labour market (AM) contributions must be reported by yourselves and paid to the Danish Tax Agency. LG will notify the Danish Tax Agency about every salary payment from LG.

LG can only pay as long as the company is in the midst of a restructuring process. If significant parts of the company are taken over by others, LG can no longer pay for the employees who are involved in this transfer of ownership.

LG must therefore be notified so that there can, if relevant, be made an agreement on repaying salary to the employees who are covered by the transfer of ownership.

LG covers the claims that fall due during the restructuring period and up to one month’s salary due before the restructuring. This applies to employees who are still working for virksomheden under rekonstruktionen. This means that LG can cover claims in situations where the employees can demand collateral as a condition for working.

However, it is rare that collateral is needed once LG has agreed to cover the net salary during the restructuring period.

The company may need to document that there has been applied for payments from LG and that the payments have been approved.

You can therefore ask LG to confirm that they have approved the payments to the employees until the restructuring process ends or the maximum payments have been reached.

Every individual employee will be notified the first time that LG receives an application from you about the payment of net salaries.

When an employer undergoes a restructuring process, the employees who have been terminated and released from their duties must report to LG themselves. They need to report their missing salary, etc. via lifeindenmark.dk: Go to 'Payment in the event of bankruptcy, cessation of operations and restructuring'

The amounts that LG pays to the employees is money that you no longer owe to the employees - instead, you owe it to LG. The amounts must therefore be repaid to LG if the company continues operating after the restructuring process is over.

There is added interest from the time of payment until the amount is repaid. The annual rate of interest is the Nationalbanken’s (the Danish National Bank) discount rate plus 5.75 per cent.

LG does not require a written agreement if the company pays immediately after the end of the restructuring process.

However, the money must be repaid within 14 days. If this does not take place, then LG will normally file a bankruptcy request against the company to ensure that LG’s claims preserve their precedence in the company’s bankruptcy estate.

LG can accept a repayment instalment plan lasting up to 36 months. LG’s offer of an instalment plan will depend on a concrete assessment of the company and its finances. However, as a minimum you must repay DKK 500 per month.

If you want an instalment plan, you must contact LG.

Bekendtgørelse af lov om Lønmodtagernes Garantifond, LBK nr. 686 af 20/06/2011

Bekendtgørelse om Lønmodtagernes Garantifond

Bekendtgørelse om størrelsen af bidrag til Lønmodtagernes Garantifond til dækning af fondens udgifter: 

• Nr. 1279 af 14. november 2018

• Nr. 1127 af 14. november 2019

Bekendtgørelse om udbetaling af dagpenge, efterløn og overgangsydelse som lån mod overdragelse af krav mod Lønmodtagernes Garantifond m.v.

Bekendtgørelse om beregning af Finansieringsbidrag

If you disagree with LG’s decision, you can send your comments to us and, if relevant, attach additional documentation. LG will then review the case again and send you a new decision. If you still believe that our decision is incorrect, you can sue LG via the Hillerød District Court. LG has no board of appeal, and therefore the case can only be referred to the courts.