Employer collective procedure: what rights for employees?

When a company is placed under safeguard proceedings, receivership, or liquidation, employees benefit from special protection. Their employment contracts are not automatically terminated, and the payment of their wages can, under certain conditions, be guaranteed by the AGS (Wage Guarantee Fund).

Insolvency proceedings can nevertheless lead to reorganization, the sale of the company, or redundancies. The employee must then understand the role of the various parties involved, verify the amounts owed to them, and comply with the applicable deadlines in the event of a dispute.

What happens to the employment contract? Who pays the unpaid wages? What amounts are guaranteed by the AGS in 2026? What happens in the event of a takeover or judicial liquidation?

What is a collective procedure?

A collective procedure is opened when a company encounters economic or financial difficulties requiring the intervention of the court.

Depending on the company's situation, it could be:

• of a safeguard procedure, when the company is not yet in default of payments but is encountering difficulties that it cannot overcome alone;
• of a judicial reorganization, when the company is in default of payments but a reorganization remains possible;
• of a judicial liquidation, when the company is in default of payments and its recovery appears manifestly impossible.

The opening of the procedure entails the appointment of various stakeholders: judicial administrator, judicial representative or liquidator, supervising judge and employee representative.

The situation of employees then depends on the procedure opened, whether or not the activity continues, the existence of a restructuring project and a possible sale of the company.

Does the opening of insolvency proceedings terminate employment contracts?

No. The opening of safeguard proceedings, receivership or liquidation proceedings does not, in itself, lead to the termination of employment contracts.

In principle, contracts continue under the previous conditions:

• functions and qualifications;
• remuneration;
• seniority ;
• working hours;
• contractual advantages;
• accrued paid leave.

The employee must therefore continue to perform his contract until it has been properly terminated or transferred.

In receivership proceedings, the business is generally continued during an observation period in order to assess the possibilities of recovery or sale.

In the event of judicial liquidation, the continuation of business operations may exceptionally be authorized for a limited period. Otherwise, redundancies are generally initiated quickly.

Are employees required to declare their claims?

Unlike ordinary creditors, employees do not have to send a statement of claim to the judicial representative themselves.

The court-appointed administrator prepares a statement of wage claims based on:

• documents provided by the employer;
• pay slips;
• of the employment contract and its amendments;
• information provided by the employee;
• checks carried out with the employee representative.

The statement may include, in particular:

• unpaid wages;
• overtime;
• bonuses and commissions;
• paid leave allowances;
• reimbursements of professional expenses;
• notice period compensation;
• severance pay;
• certain sums owed in execution of a court decision.

The absence of an individual declaration does not exempt the employee from being vigilant. They must verify that all their claims have been correctly identified and calculated.

It is therefore recommended to keep:

• the employment contract and its amendments;
• payslips;
• time sheets;
• objectives and documents relating to variable remuneration;
• supporting documents for bonuses and expenses;
• emails relating to remuneration;
• any court decisions that may have been obtained;
• documents relating to the termination of the contract.

What is the super-privilege of salaries?

Certain wage claims benefit from a super-priority allowing them to be paid in priority over most other claims.

This super-priority, however, does not cover all sums that may be owed to the employee without limit. Its application depends in particular on the nature and the period in which the debt arose.

When the company does not have the necessary funds to pay wage claims, the wage guarantee scheme can intervene.

What is the role of the AGS?

The Association for the Management of the Wage Guarantee Scheme, or AGS, guarantees under certain conditions the payment of sums owed to employees when a company is subject to collective proceedings.

Its intervention is provided for by articles L. 3253-6 et seq. of the Labour Code.

The AGS does not pay the sums directly to the employee. The procedure is normally as follows:

1. The court-appointed administrator verifies the wage claims.
2. He prepares a statement of receivables.
3. When the company does not have the necessary funds, it requests an advance from the relevant CGEA.
4. The CGEA, acting on behalf of the AGS, pays the funds to the agent.
5. The agent then distributes the funds to the employees.

The AGS's intervention is subsidiary: it presupposes insufficient funds available within the company. The employee therefore cannot directly contact the AGS to obtain payment of their claim.

The operation of the system is also presented on the official AGS website.

What amounts can the AGS guarantee?

The AGS guarantee depends on three elements:

• the nature of the debt;
• the date on which she was born;
• the date of the possible termination of the employment contract.

Subject to legal conditions, the guarantee may notably cover:

• the wages still owed;
• bonuses and salary supplements;
• paid leave allowances;
• the compensation in lieu of notice;
• the statutory or contractual severance pay;
• certain compensation due in respect of the termination of the contract;
• certain sums resulting from profit-sharing or participation;
• certain support measures provided for in an employment protection plan;
• certain claims recognized by a court decision.

However, not all employee claims are automatically guaranteed. Some may be excluded due to their nature, date, or the circumstances under which they were incurred.

Claims prior to the opening judgment

The AGS guarantees, within the limits provided by law, the sums due to the employee on the date of the judgment opening the safeguard, reorganization or liquidation procedure.

This may include, in particular, wages, bonuses, overtime or severance pay already due.

Compensation related to dismissals occurring during the procedure

The guarantee can also cover claims arising from a termination of the employment contract occurring within certain legal periods, including:

• during the observation period;
• within one month of the judgment approving a safeguard, recovery or transfer plan;
• within fifteen days following the judgment of judicial liquidation;
• during the provisional continuation of activity authorized by the liquidation judgment;
• within twenty-one days following the liquidation judgment or the end of the provisional continuation of activity when a job protection plan must be drawn up.

These deadlines are crucial. A dismissal notified outside the covered periods may lead to difficulties in obtaining compensation from the AGS (Wage Guarantee Fund).

Wages owed during certain periods following the judgment

In judicial liquidation, certain remunerations due during the observation period, after the liquidation judgment or during the provisional maintenance of the activity may be guaranteed within the time limits set by the Labor Code.

The handling of claims must therefore be examined on a claim-by-claim basis. It is insufficient to simply note that a company is in judicial liquidation to conclude that all sums owed will be guaranteed.

What are the AGS guarantee limits in 2026?

The AGS guarantee is limited to an overall ceiling applicable to all covered claims of the same employee.

In 2026, the ceilings indicated by the AGS are as follows:

These amounts represent maximum guarantee limits. They do not correspond to a lump-sum payment made to the employee.

The AGS only pays claims that are actually owed, verified, and fall within the scope of its guarantee. The ceiling covers all guaranteed claims, not just unpaid wages or severance pay.

These amounts are linked to the monthly ceiling set by the unemployment insurance scheme and are subject to change. It is therefore advisable to verify them as of the date of the judgment opening the proceedings. The updated ceilings for the guarantee are published by the AGS (Wage Guarantee Fund).

How quickly are employees paid by the AGS?

The employee does not automatically receive the funds upon pronouncement of the opening judgment.

Payment requires prior:

• the identification of the debt;
• its entry on a statement of wage claims;
• the verification and signing of this statement;
• its transmission to the CGEA;
• the lack of sufficient funds in the company;
• acceptance of coverage under the guarantee.

The AGS (Wage Guarantee Fund) states that it processes the statements it receives quickly. However, the actual delay experienced by the employee also depends on the time required by the employer and the court-appointed administrator to gather the information, prepare the statement, and submit it.

Difficulties regarding the existence of the employment contract, the amount of remuneration, the period concerned, or the nature of the debt may delay payment.

What should be done if a wage claim is not shown on the statement?

The employee must be informed of the filing of the statement of wage claims and the procedures for contesting it.

When a claim is omitted or its amount is incorrect, the employee can bring the matter before the labor court. The dispute must be filed within the time limit indicated when the employee was informed, generally set at two months from the date the statement was published.

The procedure may include, in particular:

• a salary not taken into account;
• a reminder of overtime hours;
• a bonus or a commission;
• paid leave compensation;
• the classification of the employment contract;
• seniority taken into account;
• the amount of a severance payment.

If the court-appointed administrator disputes the existence or amount of a claim, they must inform the employee. The employee must then promptly bring the matter before the competent labor court.

What happens if the AGS refuses its guarantee?

The inclusion of an amount on the statement of wage claims does not necessarily mean that the AGS will agree to advance it.

The AGS may contest its guarantee, particularly when:

• the person in question does not have a genuine employment contract;
• the debt does not fall within the legal scope of the guarantee;
• the debt arose outside the covered periods;
• the guarantee limit has been reached;
• the conditions of the break do not allow for its coverage;
• the debt results from an act that the AGS considers fraudulent or unenforceable.

The employee can then initiate proceedings before the labor court to have their claim against the Wage Guarantee Fund (AGS) recognized. The court-appointed administrator, the employer, and the relevant CGEA (Wage Guarantee Fund) must be involved in the proceedings.

What is the role of the employee representative?

After the commencement of the collective procedure, an employee representative is appointed under the conditions provided for by the Commercial Code.

In particular, it carries out a mission to monitor the statement of wage claims and can assist or represent employees in certain procedures related to the verification of their claims.

The employee representative is not the same as the social and economic committee. The two institutions can coexist and carry out distinct missions.

The employee can send him the documents to justify the amounts still owed to him and point out any omissions.

Can redundancies occur during a judicial reorganization?

During the observation period of a judicial reorganization, economic dismissals may be authorized when they are urgent, unavoidable and essential.

The court-appointed administrator must consult the Works Council (CSE), if one exists, and request authorization from the supervising judge. The order specifies, in particular:

• the number of employees concerned;
• the activities and professional categories concerned;
• the measures already taken to facilitate redeployment and compensation.

The rules relating to the economic grounds, the order of dismissals, redeployment, consultation of the CSE and protected employees remain applicable, subject to the adaptations and specific deadlines resulting from the collective procedure.

When a company with at least fifty employees experiences a dismissal affecting at least ten employees over a thirty-day period, a job protection plan must, in principle, be drawn up. This plan is subject to review by the DREETS, which has replaced the Direccte.

What happens in the event of judicial liquidation?

When judicial liquidation is ordered without continuation of activity, the liquidator usually quickly initiates economic layoffs.

The pronouncement of liquidation does not automatically terminate contracts. Each employee must receive individual notification of their dismissal.

The procedure must, in particular, comply with:

• consultation with the CSE (Works Council) where it exists;
• the rules applicable to protected employees;
• the criteria for the order of dismissals when they are relevant;
• obligations relating to the professional security contract;
• the handover of end-of-contract documents.

The dismissal periods are particularly short, notably to allow for the Wage Guarantee Fund (AGS) to cover severance payments. This speed does not exempt the liquidator from respecting the essential safeguards of the procedure.

Can the employee benefit from the professional security contract?

In companies with fewer than 1,000 employees, as well as in companies in receivership or liquidation, regardless of their size, the professional security contract – CSP – must in principle be offered to employees affected by an economic dismissal.

The CSP allows you to benefit from, among other things:

• enhanced support towards returning to employment;
• training and retraining measures;
• of a professional security allowance, subject to the required conditions.

Acceptance of the CSP (Job Security Plan) results in the termination of the employment contract by mutual agreement upon expiry of the reflection period. It does not, however, preclude the employee from contesting the economic grounds or the dismissal procedure.

The updated rules are presented on the official page dedicated to the professional security contract.

What happens to employment contracts in the event of a sale of the company?

The court may approve a transfer plan covering all or part of the company's business.

When the sale involves the transfer of an autonomous economic entity retaining its identity and continuing its activity, the employment contracts attached to the activity taken over are in principle transferred to the transferee, in accordance with ArticleL. 1224-1 of the Labor Code.

The transfer is automatic. The contract continues with the new owner, and in principle:

• the same seniority;
• the same qualification;
• the same contractual remuneration;
• acquired individual rights;
• the corresponding paid leave.

An employee cannot normally refuse the transfer of their contract when the conditions of Article L. 1224-1 are met. A refusal may be considered a breach of contract attributable to the employee.

However, the court may authorize redundancies for economic reasons in the judgment approving the transfer plan. The judgment must then specify the activities, job categories, and number of employees affected.

The takeover bid must specify employment forecasts, social guarantees, and the project's prospects. Maintaining as many jobs as possible is one of the criteria considered by the court, along with the long-term viability of the business and the settlement of liabilities.

The social consequences of a takeover must be examined alongside other aspects of the transaction. ARST Avocats ' Mergers & Acquisitions Litigation team specializes in analyzing and securing takeover projects and addressing the challenges associated with their execution.

Do collective agreements continue to apply after a transfer of ownership?

The answer depends on the structure of the operation and the conventions or agreements applicable before and after the transfer.

When a transfer calls into question a collective agreement or convention, its provisions may continue to produce temporary effects during the period provided for by the Labour Code, in order to allow the negotiation of a replacement agreement.

In the absence of a replacement agreement, employees may retain a guarantee of remuneration under the conditions set out in Article L. 2261-14 of the Labour Code.

The transfer may therefore lead, in the long term, to a change in collective status, without all the rights arising from the old agreements being immediately eliminated.

What reflexes should the employee adopt?

When an employee learns of the opening of insolvency proceedings, it is in their interest to:

1. Keep all contractual and salary documents immediately.
2. Establish an accurate accounting of wages, overtime, bonuses and expenses still owed.
3. Identify the court-appointed representative, administrator, or liquidator.
4. Contact the employee representative.
5. Check the statement of wage claims.
6. Respect the appeal deadlines.
7. Carefully examine any proposal for modification, reclassification, CSP or transfer.
8. Check the documents given at the time of termination: work certificate, receipt for final settlement and certificate intended for France Travail.
9. Consult a lawyer promptly in case of omission, refusal of guarantee or dispute regarding dismissal.

Frequently asked questions about employees and collective procedures

Are wages still paid by the AGS?

No. The AGS only intervenes if available funds are insufficient and within the limits of its guarantee. The nature of the claim, its date, and the applicable ceiling must be verified.

Does the employee have to declare their unpaid wages?

He does not have to file the declaration of claim applicable to ordinary creditors. He must, however, submit his supporting documents and verify that his claims are correctly listed on the statement prepared by the court-appointed administrator.

Does the AGS pay wages directly?

No. The advances are paid to the court-appointed administrator or liquidator, who then distributes them to the employees.

Do all employees benefit from the €96,120 ceiling?

No. This is the maximum limit applicable in 2026 to contracts concluded at least two years before the commencement of insolvency proceedings. The AGS only pays out claims that are actually owed and legally guaranteed.

Does the judicial liquidation immediately terminate the contract?

No. A dismissal procedure must be initiated and the dismissal must be notified to the employee, unless the contract is transferred as part of a takeover.

Can the buyer freely choose which employees to retain?

The takeover offer may include a certain level of employment, but the court order approving the plan determines the authorized layoffs by activity and job category. The individual designation of laid-off employees must comply with the rules regarding the order of layoffs.

Support at the intersection of social law and companies in difficulty

The situation of employees in insolvency proceedings cannot be addressed solely from the perspective of labor law. It requires coordination of:

• the rules of social law;
• the law of companies in difficulty;
• the AGS guarantee;
• restructuring or disposal operations;
• potential employment disputes.

The Social Law and Labour Law department of ARST Avocats assists companies, managers and bodies involved in the procedure in preparing for restructurings, economic dismissals, job protection plans and transfers of employment contracts.

The insolvency law department intervenes in transfer plans, business takeover operations and disputes that may arise from their preparation or execution.

This cross-cutting approach makes it possible to anticipate the social consequences of the collective procedure and to coordinate employment-related decisions with the strategy for safeguarding, restructuring, liquidating or selling the company.

Article written by Chaouki Gaddada and Morgan Jamet, partner lawyers.