GUARANTEE FUND _g S.L.452.84 1
SUBSIDIARY LEGISLATION 452.84
GUARANTEE FUND REGULATIONS
1st January, 2003
LEGAL NOTICE 432 of 2002.
Title.
Regulations.
Definition.
Cap. 452.
(2) Subject to the provisions of subregulation (1), terms and
expressions used in these regulations shall, unless the context
otherwise requires, have the meaning assigned to them in the Act.
Applicability.
unpaid wages arising out of contracts of service and existing
against employers who are in a state of insolvency as defined in
regulation 4, but shall not apply to:
( a ) outworkers, unless they have a written contract of
employment;
( b ) private domestic servants;
( c ) relatives of the employer, without a written contract of
employment;
( d ) the spouse of the employer;
( e ) persons who normally work for less than eighteen
hours a week for one or more employers;
( f ) the crews of sea-going vessels;
( g ) an employee who on his own or together with the
spouse or the children, was the owner or part owner of
the employer’s undertaking or business in the last five
years prior to the insolvency.
Insolvency.
deemed to be in a state of insolvency:
Cap. 13.
Cap. 386.
( a ) where a request has been made for the commencement
of proceedings for bankruptcy under Part III of the
Commercial Code or after the Court has either
appointed a provisional liquidator or administrator, or
a liquidator after a winding up order in terms of the
Companies Act; and; or
( b ) it is established  prima facie  by the Guarantee Fund
Administration Board that the employer’s undertaking
or business has been definitely closed down and that
the available assets are insufficient to cover the
payment of the claims in accordance with regulation 6:
Provided that the Guarantee Fund Administration Board
2 _g S.L.452.84 GUARANTEE FUND
shall have the power to appoint experts to assist it in any matter
under its consideration if required.
Endowment. 5. The Guarantee Fund (hereinafter referred to as "the Fund")
established by virtue of article 21 of the Act is hereby being
endowed with the sum of two hundred and fifty thousand liri (Lm
250,000) which shall be paid out of the Consolidated Fund over a
maximum period of five years, at a minimum rate of fifty thousand
liri (Lm 50,000) annually.
Utilisation of 
Guarantee Funds.
6. The Fund shall be utilised to guarantee payment of
employees’ outstanding claims for wages resulting from contracts
of service, as defined in the Act, provided that:
( a ) the employee shall register a claim on the Fund by not
later than one month after the onset of the insolvency
of the employer as defined in regulation 4; and
( b ) the employee provides certified evidence that he has
registered a valid claim for the unpaid wages in the
insolvency proceedings of the employer; and
Cap. 318.
( c ) the maximum amount paid out of the Fund for every
individual claim shall not exceed a sum which is
equivalent to thirteen weeks’ national minimum wage
payable at the time of the dismissal or termination, less
any unemployment or social assistance benefits to
which the employee may be entitled in accordance
with the Social Security Act for the period starting
from the date of termination of the employment and
ending on the end of the thirteenth week after such
termination, and
( d ) the claim registered by every individual employee
shall be limited to the unpaid amounts due for unpaid
wages, which, for the purposes of these regulations,
shall consist of the basic wage, any overtime worked
but unpaid, any leave which should have been paid and
any notice money payable in accordance with the
provisions of the Act; and
( e ) the claim registered by every individual employee
refers to unpaid amounts which were due for wages
payable during the last three months of the contract of
service occurring within a period of six months
preceding the date of the onset of insolvency of the
employer or preceding the notice of dismissal, where
such notice of dismissal is given on account of the
employer’s insolvency.
Administration of 
the Guarantee 
Fund.
7. (1) The Fund shall be administered by a Guarantee Fund
Administration Board which shall be composed of:
( a ) the Director of Employment and Industrial Relations
who shall act as Chairperson;
( b ) the four representatives of employees appointed on the
Employment Relations Board in accordance with
article 3(2)( c ) of the Act;
GUARANTEE FUND _g S.L.452.84 3
( c ) the four representatives of employers appointed on the
Employment Relations Board in accordance with
article 3(2)( d ) of the Act;
( d ) a member nominated by the Minister of Finance;
( e ) the Chairperson of the Employment and Training
Corporation; and
( f ) a person appointed by the Minister who shall be a
member of the legal profession.
(2) The Guarantee Fund Administration Board shall regulate its
own procedure.
(3) The Guarantee Fund Administration Board shall keep
proper books of account and records regarding claims registered
and paid out of the Fund as well as any refunds which are obtained
by the Fund as a result of its subrogated rights.
(4) The Guarantee Fund Administration Board shall publish an
annual report of its activities, together with the annual audited
accounts of the Fund.
Subrogation of 
rights.
8. On receipt of payment made by the Guarantee Fund, the
employee shall sign a statement subrogating the Guarantee Fund
into all the employee’s rights for the unpaid amounts due and shall
undertake to provide to the Guarantee Fund any and all evidence,
proof or statements which validate the claim against the employer
and which will allow the Guarantee Fund to proceed with the claim
against the employer, including an undertaking to give evidence in
any proceedings that may take place in connection with the
insolvency of the employer or the liquidation and distribution of
the employer’s assets.
Offence.
for unpaid amounts or who is found guilty of acting in collusion
with an employer or an employee in order to obtain payments from
the Fund, shall be guilty of an offence and shall be liable on
conviction to a fine which is equivalent to ten times the amount
paid out of the Fund, together with any other punishment to which
the offender shall be liable according to any other applicable law.
