When your employer slides into insolvency, German law gives you one of the strongest wage safety nets in Europe — but it only works if you act fast. Insolvenzgeld from the Bundesagentur für Arbeit replaces up to three months of net pay, and the application deadline is a hard two months after the insolvency proceedings open. Beyond the wage guarantee, insolvency changes the rules on notice periods, severance and how your outstanding claims are paid. Employees who understand the mechanics early recover dramatically more.
Warning signs your employer is heading for insolvency
Insolvency rarely arrives without warning. The classic pattern we see in practice:
- Salary paid late — first a few days, then weeks. Late salary is the single most reliable distress signal.
- Social security or pension contributions not forwarded — you may discover this through your health insurer or a pension record gap.
- Expense reimbursements and bonuses frozen, suppliers demanding prepayment, key managers leaving quietly.
- Sudden short-time work (Kurzarbeit) announcements or requests that employees „temporarily” waive salary components.
If two or more of these appear, start documenting your claims — the timing rules below decide how much of your money you will ever see again.
Insolvenzgeld: the three-month wage guarantee
Insolvenzgeld (insolvency benefit) is paid by the Bundesagentur für Arbeit and covers your net remuneration for the last three months of the employment relationship before the insolvency event (§ 165 SGB III). The „insolvency event” is usually the court order opening insolvency proceedings, but it can also be the rejection of the insolvency petition for lack of assets, or the complete cessation of business where no petition was ever filed.
Key features:
- It covers all remuneration components attributable to the three-month window — base salary, overtime, commissions, proportionate bonuses — up to the monthly social-security contribution ceiling (Beitragsbemessungsgrenze).
- It is paid as a lump sum, tax-free (though subject to Progressionsvorbehalt), and the Bundesagentur also pays your social security contributions for the covered period (§ 175 SGB III).
- If your employment ended before the insolvency event, the guarantee covers the last three months of your employment — resigning or being dismissed shortly before the opening does not forfeit it.
What Insolvenzgeld does not cover: anything older than the three-month window. If your employer owes you five months of salary, months four and five are ordinary insolvency claims paid at the quota — often low single digits.
Insolvenzgeld-Vorfinanzierung: getting paid before the opening
The insolvency event often lies months after your employer stopped paying. To bridge the gap, preliminary administrators frequently arrange Insolvenzgeld-Vorfinanzierung: a bank buys the employees’ wage claims and pays out the expected Insolvenzgeld immediately, with the Bundesagentur’s consent (§ 170(4) SGB III). If it is offered, it is usually worth signing — you get your net pay now instead of after the opening — but read the assignment paperwork before signing.
Registering your claims with the insolvency administrator
Everything Insolvenzgeld does not cover has to be pursued against the insolvency estate. Two categories matter:
Insolvenzforderungen (pre-opening claims)
Salary arrears, bonuses, vacation payout and other claims that arose before the proceedings opened are ordinary insolvency claims (§ 38 InsO). You register them in writing with the administrator for entry in the claims table (Insolvenztabelle), stating amount and basis, within the deadline set in the opening order. Late registration is possible but costs a fee. These claims are paid at the final quota — realistically often 0–10%.
Masseverbindlichkeiten (post-opening claims)
If you keep working after the opening — which you normally must, since the employment relationship continues — your salary from that point is a preferential estate liability (§ 55 InsO) that the administrator has to pay in full and on time. Do not let anyone tell you that post-opening work is paid „at the quota” — it is not.
Dismissal by the administrator: § 113 InsO
The insolvency administrator can terminate any employment relationship with a maximum notice period of three months to the month’s end (§ 113 InsO) — regardless of longer contractual, collective or statutory notice periods. If your contract promised six months to the quarter’s end, the difference is compensated only as a damages claim (Verfrühungsschaden), which is itself a mere insolvency claim at the quota.
Crucially, insolvency is not a dismissal ground. The Kündigungsschutzgesetz continues to apply in full: the administrator needs operational grounds, correct social selection and proper works-council consultation like any employer. Two insolvency-specific twists tilt the field somewhat:
- Where the administrator and works council agree an Interessenausgleich with a name list, the operational necessity of the dismissal is presumed and social selection is reviewed only for gross errors (§ 125 InsO).
- Court practice in insolvency cases is settlement-oriented, but the money available is limited (see below).
The three-week deadline for filing a Kündigungsschutzklage applies unchanged. If you do not file within 21 days of receiving notice, the dismissal becomes valid no matter how defective it was.
Severance in insolvency: § 123 InsO caps
Severance expectations must be recalibrated in insolvency. A social plan agreed after the opening is capped at 2.5 monthly gross salaries per employee, and the total social-plan volume may not exceed one third of the estate available for distribution (§ 123 InsO). Individually negotiated severance on top is possible in theory but rare, because the administrator has little to give — unless an acquirer is standing behind the deal. A strong procedural case (defective works-council consultation, flawed social selection) remains your best leverage even here.
What to do in the first week
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Secure your paperwork
Collect your contract, payslips, time records and bank statements, and calculate your arrears month by month, gross and net.
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Apply for Insolvenzgeld
As soon as the insolvency event occurs, file the application with the Agentur für Arbeit — well inside the two-month window. Ask the administrator’s office for the Insolvenzgeldbescheinigung.
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Register as job-seeking
If dismissal is looming, register as job-seeking within three days of learning your end date to protect your ALG I entitlement.
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Register your claims
File your pre-opening claims for the Insolvenztabelle in writing, within the deadline in the opening order.
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Diarise the 21-day deadline
If the administrator dismisses you, the Kündigungsschutzklage must be filed within three weeks — insolvency does not pause this.
Worked example
A logistics coordinator in Bonn earns €4,600 gross / €2,950 net. The employer pays March salary two weeks late, then pays nothing for April and May. On 2 June the employer files for insolvency; proceedings open on 1 August. The administrator terminates on 15 August with three months’ notice under § 113 InsO, although her contract provided six months to the quarter’s end.
- Insolvenzgeld: covers May, June and July — the last three months before the opening — at net value: 3 × €2,950 = €8,850, paid after her application in August.
- April salary: outside the window. Registered in the Insolvenztabelle at €4,600 gross; the final quota years later is 3.2% ≈ €147.
- August–November work: paid in full by the administrator as Masseverbindlichkeit — roughly €13,800 gross for the notice months worked.
- Lost notice months (December–February under the old contract): registered as Verfrühungsschaden of ~€13,800, paid at the quota ≈ €442.
- Kündigungsschutzklage: filed within 21 days; the works-council consultation proves thin, and the case settles at 0.4 monthly salaries per year for her 6 years ≈ €11,000, structured within the social-plan framework.
The lesson: had she escalated when April went unpaid, that salary would have fallen inside the Insolvenzgeld window or been paid before the filing. Waiting cost her ~€2,800 net.
Frequently asked questions
Do I have to keep working after the insolvency filing?
Yes. The employment relationship continues through the filing and the opening. The (preliminary) administrator takes over the employer’s directions. Refusing to work risks a behavioural dismissal. Your post-opening salary is a preferential estate claim.
Are bonuses, overtime and commission covered by Insolvenzgeld?
Yes, to the extent they are attributable to the three-month window and within the contribution ceiling. A quarterly bonus earned partly in the window is covered proportionately.
What happens to my company pension (bAV)?
Vested occupational pension rights are protected by the Pensions-Sicherungs-Verein (PSV), which steps in for insolvency-protected commitments. Ask the administrator for written confirmation of your vested entitlements and report them to the PSV if contacted.
Can the administrator simply cancel my contract without reason?
No. § 113 InsO shortens the notice period, but the dismissal itself needs a valid ground under the KSchG where it applies. Filing the claim within three weeks is essential — most insolvency dismissals contain the same procedural defects as ordinary ones.
I already resigned because I wasn’t being paid. Do I lose Insolvenzgeld?
No. If your employment ended before the insolvency event, Insolvenzgeld covers the last three months of the employment relationship. Unpaid months before that window remain insolvency claims. Resigning for substantial wage arrears also normally avoids a Sperrzeit.
What if the company just disappears and never files for insolvency?
The complete cessation of business activity with obviously insufficient assets is itself an insolvency event (§ 165(1) SGB III) — you can still claim Insolvenzgeld. The Agentur für Arbeit determines the event date; get advice, because the two-month deadline runs from a date you may not recognise.