What is Insolvenzgeld?
Insolvenzgeld is a financial compensation paid by the German Federal Employment Agency (Bundesagentur für Arbeit) to protect employees when their employer becomes insolvent or stops paying wages. It covers the outstanding net salary (subject to social contributions) for the last three months before insolvency proceedings legally begin (arbeitsagentur.de).
The employer must have filed for insolvency, or the insolvency petition must have been rejected due to lack of assets, before you can claim Insolvenzgeld (instart.de).
The benefit is paid retroactively for wage claims relating to the last three months before:
the opening of insolvency proceedings, or
the end of the employment relationship, if this occurs earlier.
If wage payments have been outstanding for more than three months prior to this key date, only the last three months are covered by Insolvenzgeld.
Earlier outstanding wages can only be claimed via the insolvency table with the insolvency court or through the insolvency administrator.
In general, the following can claim Insolvenzgeld:
Regular employees with a dependent employment relationship,
persons with outstanding claims, such as maintenance/child support claims processed through the employer.
Also potentially eligible are:
Family members working in the business,
managing directors or owner-managers,
provided that the German pension insurance (Deutsche Rentenversicherung – DRV) or other documentation confirms that a genuine employment relationship subject to social insurance existed. If this is not clearly documented, additional supporting documents must be submitted with the application.
As a rule, Insolvenzgeld reflects the monthly net salary, including all regular pay components such as:
base wage or salary,
overtime pay,
commissions,
Christmas or holiday bonuses, if contractually fixed.
There is a maximum limit based on contribution ceilings and regional regulations.
Insolvenzgeld itself is tax-free, but it is subject to the progression clause (Progressionsvorbehalt), which means:
the payment itself is not taxed,
but it increases the tax rate applied to your other taxable income.
Therefore, it must be declared in your income tax return (vlh.de).
Insolvenzgeld is granted for a maximum of three months, namely for the last three months before:
the opening of insolvency proceedings,
the rejection of the insolvency petition due to lack of assets, or
the termination of the employment contract, if this happens earlier.
In many cases, you may apply for an advance payment (Vorschuss):
typically 50–80 % of the expected Insolvenzgeld,
starting from the date of the insolvency filing or the suspension of wage payments.
Even if the insolvency proceedings are officially opened only later – e.g. up to three months after payment stops – the benefit is still paid retroactively for the relevant three-month period.
You must file your application within two months of:
the opening of insolvency proceedings, or
the rejection of the insolvency petition due to lack of assets.
You have to use the official form provided by the Employment Agency:
online via eServices, or
on paper at the local Agentur für Arbeit (arbeitsagentur.de).
You should attach, among other things:
a certificate of insolvency or confirmation from the insolvency administrator,
your employment contract,
your last three payslips,
the reference number/file number of the insolvency case,
any notice of termination if applicable,
and for family employees or managing directors, additional forms to prove the nature of the employment (arbeitsagentur.de).
For the period covered by Insolvenzgeld (maximum three months),
the responsibility for paying social security contributions (health, nursing care and pension insurance) shifts to the Federal Employment Agency.
Even if the employer has already stopped paying wages,
the agency will pay the social security contributions for these three months retroactively,
so that you do not suffer disadvantages in your health or pension insurance entitlements.
If the application is submitted after the two-month deadline,
the right to Insolvenzgeld is usually lost entirely.
Only in exceptional cases, where you can show an acceptable reason (e.g. a serious illness proven by documentation), may a late application still be considered.
Yes – but not in terms of reducing your entitlement period:
Insolvenzgeld can be combined with unemployment benefit I (Arbeitslosengeld I) or Bürgergeld.
It generally does not shorten the period during which you are entitled to unemployment benefits.
However, you must report Insolvenzgeld as income/benefit to the Employment Agency and include it in your tax return (arbeitsagentur.de).
Insolvenzgeld secures your net salary for the last three months before your employer’s insolvency.
You must apply within two months after the insolvency case is opened or rejected.
It is paid once for this retrospective period; social security contributions are usually paid retroactively as well.
The benefit is tax-free, but subject to the progression clause and must be stated in your tax return.
It can be combined with other income-replacement benefits such as Arbeitslosengeld I or Bürgergeld, generally without reducing your entitlement period.
The editorial team of this website strives to provide accurate information based on thorough research and multiple sources. Nevertheless, errors can occur or some details may be incomplete or not fully verified. Please regard the information in this article as an initial guide and always consult the competent authorities and professional advisers for binding and up-to-date information.
