Insolvency Payments (Insolvenzgeld)

If an employer is insolvent and employees have received their wages or salaries only in part or not at all, the Employment Agency settles the outstanding payments to the employees concerned under certain circumstances in the form of insolvency payments. An entitlement to insolvency payments exists in case of insolvency for the past three months (period of insolvency payments) of the employment relationship.

Entitled persons

Only employees are entitled to insolvency payments.

This also includes persons working from their homes, employed students and pupils, trainees as well as marginally employed persons.

Hence, the existence of an employment relationship subject to social insurance contributions does not matter.

The employee status of e.g. managing partners, who significantly influence the company, can be subject to questions. In case of doubt, the "Assessment sheet for the evaluation of managing partners of a GmbH pursuant to insurance law" (German only) should be requested from the Employment Agency.

Total social insurance contributions

In addition to the insolvency payments to the employee, the Employment Agency also pays the outstanding compulsory contributions to the statutory health insurance, pension insurance and social nursing care insurance as well as the contributions for Employment Promotion (Arbeitsförderung) (Section 175 SGB III) upon application of the competent collecting agency (health insurance).


Insolvency (Section 165 Subsection 1 SGB III) exists as soon as

  • the insolvency proceedings have been opened against the assets of the employer,
  • the insolvency application has been rejected due to lack of mass or
  • the employer has completely discontinued all business operations,

if an application to open the insolvency proceedings has not been filed up to that point in time and insolvency proceedings obviously do not come into consideration due to lack of mass. Business operations are completely discontinued if the employer permanently discontinues any activities relating to the objects of the company.

Period of insolvency payments

The period of insolvency payments encompasses the past three months of the employment relationship before insolvency.

If the employment relationship ended before insolvency, the period of insolvency payments encompasses the past three months of the employment relationship.

In case of a leave of absence, not the last working day but also the (later) end of the employment relationship is relevant for the determination of the period of insolvency payments.

Important: A dismissal is only legal if made in writing (Section 623 BGB).


I. Day of insolvency: 01.12.
Period of insolvency payments: 01.09. - 30.11.

II. Day of insolvency: 01.12.
End of employment relationship: 31.08.
Period of insolvency payments: 01.06. - 31.08.

III. Day of insolvency: 01.10.
End of employment relationship: 30.11.
Period of insolvency payments: 01.07. - 30.09.

Continuation of work in unawareness

If an employee continues working or started working while unaware of insolvency (Section 165 Subsection 2 SGB III), the following applies:
The three months ending with the last day of work, holiday or illness before the day of notice of insolvency are applicable.


Day of insolvency: 01.11.
Day of notice: 18.12.
Period of insolvency payments: 18.09. - 17.12.

Further compensations for reduced income

Employees whose employment relationship continues without work performance or continuation of wage payments (for example in case of leave of absence) can apply for unemployment benefit at their local Employment Agency regardless of any entitlement to insolvency payments.

More detailed information can be obtained from the content on "Unemployment Benefit".

Employees receive sickness benefit also during the period of continued payment of wages in case of sickness on application from the statutory health insurance if their employer is insolvent.

If unemployment benefit and payment of wages in case of sickness is granted for the same period in which insolvency payments can be obtained, the benefits paid are counted against the insolvency payments and only the remaining difference to the higher net wage is paid to the employee.

The payment of unemployment benefit during the period of insolvency payments does not reduce the period of entitlement to unemployment benefit.