The department administers the Fair Entitlements Guarantee and the General Employee Entitlements and Redundancy Scheme, which provide a safety net to protect the entitlements of workers who have lost their jobs as a result of bankruptcy or liquidation of their employer where the employer has not made arrangements to cover employee entitlements. The Fair Entitlements Guarantee is a legislative scheme that provides assistance to employees whose employers went bankrupt or entered liquidation on or after 5 December 2012. The General Employee Entitlements and Redundancy Scheme applies to employer bankruptcies and liquidations that occurred before 5 December 2012.
During 2014–15 the department advanced approximately $301.04 million under the Fair Entitlements Guarantee and $11.39 million under the General Employee Entitlements and Redundancy Scheme to 19,074 Australian workers after they lost their jobs as a result of their employers’ insolvency and had unpaid employment entitlements.
The schemes cover five employment entitlements: unpaid wages (up to 13 weeks); unpaid annual leave; unpaid long service leave; unpaid payment in lieu of notice (up to five weeks); and unpaid redundancy (up to four weeks for each full year of service). Payments are subject to a maximum weekly wage cap, which for 2014–15 was $2451.00.
- more than $23.29 million was recovered from liquidated companies on behalf of the Commonwealth through creditor dividends in the winding-up process
- $301.04 million was paid to 18,849 claimants under the Fair Entitlements Guarantee
- $11.39 million was paid to 225 claimants under the General Employee Entitlements and Redundancy Scheme
- the Fair Entitlements Guarantee hotline handled 38,230 telephone calls and responded to 19,408 emails about the operation of the schemes
- the department initiated an internal review of 1347 Fair Entitlements Guarantee claim decisions under section 37 of the Fair Entitlements Guarantee Act 2012 (8.3 per cent of the total number claiming assistance)
- claimants made formal requests for review of 944 Fair Entitlements Guarantee decisions under section 38 of the Fair Entitlements Guarantee Act (5.8 per cent of the total number claiming assistance).
Twenty-one appeals to the Administrative Appeals Tribunal were lodged by Fair Entitlements Guarantee claimants who were dissatisfied with the outcomes of their claims following the department’s review (2.2 per cent of the total number of employees seeking a section 38 review). Twelve appeals were finalised without adverse findings. Two decisions were affirmed, three decisions were set aside with the department’s agreement and seven matters were either dismissed, withdrawn or did not proceed because the tribunal judged that they were not able to succeed.
The department responded to one matter from the Commonwealth Ombudsman relating to Fair Entitlements Guarantee assistance. The Commonwealth Ombudsman closed its inquiry without making any adverse findings about the department’s administration of the scheme.
In administering the Fair Entitlements Guarantee and the General Employee Entitlements and Redundancy Scheme, the department works closely with insolvency practitioners to verify unpaid employment entitlements and distribute approved payments. In 2014–15, $6.07 million was paid to insolvency practitioners for verification and distribution services.
The Australian National Audit Office completed a performance audit of the administration of the programme and tabled its report in parliament in April 2015. The report contained one recommendation designed to strengthen the department’s management of fraud risk by increasing the focus on prevention and detection. The department accepted the recommendation and is working to strengthen fraud control and compliance. The department is also actioning other areas to strengthen programme performance. These relate to managing risk and non-compliance, maintaining working relationships with insolvency practitioners, developing stronger mechanisms to measure claimant satisfaction, and conducting programme evaluations.
The department completed research on the influences on company creation and destruction in Australia (the rates of start-ups, insolvencies and other wind-ups) to gain a better understanding of the drivers of spending on the Fair Entitlements Guarantee.
The Fair Entitlements Guarantee at work
On 5 September 2014, Chassis Brakes International Castings Pty Ltd, a company involved in transport equipment manufacturing, entered liquidation. Most of the 79 permanent and casual employees made redundant were left with unpaid employment entitlements on termination and applied for financial assistance under the Fair Entitlements Guarantee.
The department advanced more than $8.3 million to eligible redundant workers.
Chassis Brakes International is one of the 2630 company insolvencies in 2014–15 where assistance was provided to redundant workers under either the Fair Entitlements Guarantee or the General Employee Entitlements and Redundancy Scheme.