Guarantee of Unpaid Salaries: Which Institution is Competent for a Cross-Border Worker?

Imagine: you live in Fougères, but you have been working for a Belgian company for years, never setting foot on its premises. One day, the company goes bankrupt. You are left without a salary, and you turn to the AGS (Association for the Management of the Employee Claims Guarantee Scheme) in France. But the AGS refuses, arguing that the Belgian Enterprise Closure Fund must pay. Who is right? This question, which may seem technical, has very concrete consequences for thousands of cross-border workers. The decision of the French Supreme Court of 21 September 2011 (No. 08-41.512) provides a nuanced answer, relying on European law. But be careful: it is not as simple as it seems.

The facts: a story like those that happen every day

Mr X, a resident of Bruz, had been working for several years for a company with its registered office in Belgium. He carried out his activity exclusively in France, from his home. When his employer was declared insolvent, Mr X found himself with unpaid salaries. He then contacted the CGEA (Centre for the Management and Study of the AGS) in Lille to obtain payment of his salary claims. The CGEA refused, considering that the competence lay with the Enterprise Closure Fund of the Belgian National Employment Office (ONEM). Mr X therefore sued the AGS before the employment tribunal, which ruled in his favour. However, the Douai Court of Appeal overturned this judgment, dismissing the employee's claim. According to it, since the employer was established in Belgium and paid contributions there, the Belgian institution alone was competent. Mr X then appealed to the Supreme Court.

The reasoning of the court — analysed

The Supreme Court quashed the Court of Appeal's decision. Why? Because the Court of Appeal had not verified whether French legislation offered more favourable protection than Belgian law. The High Court relied on the case law of the Court of Justice of the European Union (CJEU) relating to Directive 80/987/EEC (which harmonises the protection of employees in the event of the employer's insolvency). In short, European law designates as competent the institution of the State where the employer pays contributions (here, Belgium). But it does not prevent a Member State (France) from providing for additional or substitute guarantees, provided that these are more favourable to the worker. In other words, if the French AGS offers better protection than the Belgian Fund, the employee may benefit from it. The Court of Appeal had not compared the two regimes. It had simply said "it is Belgium", without considering whether the employee would benefit from being guaranteed by the AGS. The Supreme Court therefore referred the case back to another Court of Appeal, with the task of comparing the two protections.

In my practice, I have encountered cases where cross-border workers faced this type of refusal. Many are unaware that they can invoke the French guarantee if it is more favourable. The 2011 decision is therefore a victory for workers, but it requires a concrete demonstration of the superiority of the national protection.

What this changes for you — concretely

If you are a cross-border employee: you can now claim the benefit of the AGS if it offers you better coverage than the foreign institution. For example, if the Belgian guarantee ceiling is lower than the French ceiling, or if the payment deadlines are longer, you can demand the application of French law. However, be careful: you must prove that the French guarantee is more favourable. Keep all documents on ceilings and deadlines.

If you are an employer: note that the place of contribution determines the competent institution in the first instance. However, if you have employees working in another Member State, they may turn to the institution of their country of residence if it is more protective. This may have an impact on your social security contributions.

Let's take a concrete example: in Bruz, an employee lost €15,000 in unpaid salaries. The Belgian Fund caps at €10,000, while the French AGS caps at €82,272 (in 2023). Thanks to this decision, he can obtain the difference of €5,000 from the AGS, provided he demonstrates that the Belgian guarantee is insufficient.

Four tips to avoid this type of dispute

• Check your employment contract: ensure that the usual place of work is clearly mentioned. If you work from France for a foreign employer, your contract should state this. This will facilitate the determination of the competent institution.
• Keep your payslips: they prove the existence of the employment relationship and the amount of unpaid salaries. In case of a dispute, they are essential to calculate your claim.
• Find out about guarantee ceilings: compare the amounts guaranteed by the AGS and by the foreign institution. If the AGS is more favourable, you can invoke it. Do not hesitate to consult a specialist lawyer.
• Act quickly: the deadlines for contacting the AGS are 3 months from the publication of the judgment opening the collective proceedings. If you are late, you risk losing your right to the guarantee.

Further reading: related case law and developments

This decision is part of a line of CJEU rulings, in particular the Robledillo judgment of 15 May 2003 (C-160/01), which had already established the principle of the competence of the institution of the State of contribution. But the Supreme Court goes further by opening the way to an additional national guarantee. Since 2011, Directive 2008/94/EC has replaced the 1980 directive, but the principle remains the same. French courts continue to apply this case law, particularly in cases involving posted workers. The trend is therefore towards enhanced protection for employees, but subject to demonstrating a concrete advantage. In the future, we can expect judges to pay increasing attention to the comparison of regimes.

Summary and next steps

FAQ:

1. Which institution is competent to guarantee my unpaid salaries if I work in France for a foreign employer? In principle, it is the institution of the State where your employer pays contributions. But if the French guarantee is more favourable, you can ask the AGS to pay you.
2. How do I prove that the French guarantee is more favourable? By comparing ceilings, deadlines, and conditions of compensation. For example, the AGS covers salaries for the last 60 days of work, while the Belgian Fund only covers 30 days.
3. What are the deadlines for action? You must declare your claim to the insolvency practitioner within 2 months of the publication of the judgment opening the proceedings, then contact the AGS within 3 months.
4. Can I combine both guarantees? Yes, if the national guarantee is additional and not substitutive. For example, the AGS can pay the balance after the Belgian Fund has intervened.
5. What if the AGS refuses? Contact the employment tribunal by way of summary proceedings to obtain payment. A lawyer will help you demonstrate that the French guarantee is more favourable.

Are you in a similar situation? A first 30-minute consultation with Maître Zakine (€45) can save you months of proceedings — and often much more. Book an appointment →