Lønmodtagernes Garantifond (LG)

LG pays to a so-called zero offset (protected from creditors) account which has been created in connection with the restructuring. As far as possible, the money is paid three working days after the application was received. Please note that it may then take another additional three working days before the amount is usable from the company’s account. The money will at the earliest be usable the day before the designated date for salary payments.

Make sure to report to the Danish Tax Agency

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.

If a company is taken over by another, the payments stop

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.   

 Employees’ claims for collateral

LG covers the claims that fall due during the restructuring period. This means that LG can cover claims in situations where the employees can demand collateral as a condition for working, cf. The Danish Bankruptcy Act’s Section 12(2).   

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

 Ask LG to confirm that payments are on their way

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. 

LG’s payments during a restructuring process are a loan to you as an employer. The loan must be paid back with interest to LG.

Before the end of the restructuring process, you must have entered into an agreement with LG about the repayment terms. Both the restructuring agent and the company are obliged to ensure this happens when applying.  

 Rate of interest

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.   

Repayment within 14 days   

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. 

 You can apply for an instalment plan   

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.   

If the restructuring process ends in bankruptcy

If the restructuring process ends in bankruptcy, LG’s claims for repayment will normally take precedence in the bankruptcy estate as per the Danish Bankruptcy’s Act’s Section 94.

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

If you as an employer goes bankrupt, cease operations or are insolvent, your employees must themselves reports salaries, etc. to LG via Lifeindenmark.dk/lg. If your employees are members of a labour union, the labour union can help fill out the report to LG.

LG reports claims concerning salaries, pensions, holiday pay, etc. to the bankruptcy estate once your employees have been paid all of the money from LG that they are owed.

The amounts that LG pays to your employees are no longer owed to them by you as an employer - instead, you now owe the money to LG.

LG can accept a repayment instalment plan lasting up to 36 months. However, as a minimum you must repay DKK 500 per month.

There is added interest 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.

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

You must pay indexation of holiday pay up to and including the month, in which LG took over the collection from Lønmodtagernes Feriemidler.

Lønmodtagernes Feriemidler calculates the indexation in June every year. Your first demand note from LG includes indexation which has been added until no later than 31 May.

Indexation of the holiday pay from 1 June up to the time when LG took over the collection from Lønmodtagernes Feriemidler will be calculated and collected in the next June.

Read about how Lønmodtagernes Feriemidler calculates the indexation

If you do not pay your demand note from LG within the deadline for payment, you will receive reminders for payment up to two times. You will be charged interest and a fee of DKK 250 for each reminder that LG sends.

You must pay interest from the date when LG took over the collection from Lønmodtagernes Feriemidler and until LG receives your payment.

The annual rate of interest is the Nationalbanken’s (the Danish National Bank) discount rate plus 5.75 per cent.

If you still do not pay, the matter can continue in the enforcement court. This means that court fees of DKK 750 and any further expenses in connection with enforcement proceedings will accrue.

LG may also submit a petition in bankruptcy against the business.

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.