Claiming unpaid wages through legal action or the pay security system
If the employer does not pay the wages, the employee may claim their unpaid wages by bringing a claim against their employer in a district court. The employee must initiate the legal proceedings themselves. At this stage, it is advisable to contact a law firm or a local legal aid office.
If the employer is insolvent, the employee must contact the TE Services of their domicile in order to file for pay security. The pay security application must be submitted within three months of the due date of the unpaid wages. For more information, see Pay security.
Limitation period of unpaid wage claims
Pursuant to the Employment Contracts Act (Chapter 13, Section 9), employees’ pay claims become statute-barred five years after the due date, unless the period of limitation has been interrupted before that time. The same period of limitation also applies to other claims referred to in the Employment Contracts Act. The period of limitation for base salary is five years. Remuneration payable for overtime becomes statute-barred at the end of the second calendar year following overtime and holiday pay at the end of the second calendar year following the holiday.
However, the limitation period for compensation for personal injury suffered by an employee is ten years.
At the end of the employment relationship, the right to claim unpaid wages is lost if no legal proceedings are initiated within two years of the termination of the employment relationship. However, if the provisions of the collective agreement which the employee’s claim is based on are considered to be open to interpretation, the claim becomes time-barred five years after the due date.
My wages are late or unpaid. What can I do?
If your wages are late or unpaid, contact your employer to ask them why the payment of wages has been delayed. You can also submit an unpaid wages claim form to your employer.
If the non-payment of wages is due to the employer’s lack of funds and insolvency, you must file for pay security within three months of the due date of the unpaid wages. You can read more about filing for pay security here.