The Fair Entitlements Guarantee
The department administers the Fair Entitlements Guarantee. This provides a safety net to workers who have lost their jobs and entitlements through their employer’s liquidation or bankruptcy.
The Fair Entitlements Guarantee covers five employment entitlements—unpaid wages (up to 13 weeks), annual leave, long service leave, payment in lieu of notice (up to five weeks) and redundancy pay (up to four weeks for each year of service). Payments are subject to a maximum weekly wage cap, which for 2017–18 was $2,451.00.
The department has been working on implementing reforms to address corporate misuse of the Fair Entitlements Guarantee. In a few instances over the last few years, more than $100 million in payments under the guarantee related to entities attempting to avoid their employee entitlements by using sharp corporate practice. Legislative amendments to address corporate misuse of the Fair Entitlements Guarantee are scheduled for introduction into Parliament in 2018–19.
Achievements in the Fair Entitlements Guarantee over 2017–18 include:
- The time taken to finalise claims continues to improve, and reduced from an average of 10.1 weeks in 2016–17 to 8.3 weeks in 2017–18.
- A total of $164.9 million was paid to 10,822 claimants under the Fair Entitlements Guarantee ($18,289 was paid under the legacy General Employee Entitlements Redundancy Scheme).
- A total of $39 million in payments under the Fair Entitlements Guarantee (and the legacy General Employee Entitlements Redundancy Scheme) were recovered from liquidated companies through creditor dividends in the winding-up process.
- The Fair Entitlements Guarantee hotline handled 19,813 telephone calls and responded to 11,328 emails about the operation of the Fair Entitlements Guarantee.
- The department initiated an internal review of 1,059 Fair Entitlements Guarantee claim decisions under section 37 of the Fair Entitlements Guarantee Act 2012 (8.8 per cent of the total number claiming assistance).
- A total of 561 requests for review were received from people under section 38 of the Fair Entitlements Guarantee Act 2012 (4.7 per cent of the total number claiming assistance).
Section 38 of the Fair Entitlements Guarantee Act 2012 allows redundant workers to seek a departmental review of the decision on their claim. If they remain dissatisfied, they can apply to the Administrative Appeals Tribunal for further review. In 2017–18, 24 applications were lodged with the Administrative Appeals Tribunal, representing 3.6 per cent of all section 38 review decisions made during the year. Of 13 matters finalised by the tribunal in 2017–18; the:
- department and the claimant reached an agreed outcome in two months
- department’s decision was affirmed or the claimant’s application was dismissed by the tribunal in three months
- The claimant withdrew their application in eight matters; and
- No matters set aside the department’s decision.
The Commonwealth Ombudsman
No inquiries were raised by the Commonwealth Ombudsman in relation to the Fair Entitlements Guarantee.
The department is focused on continuous improvement in the administration of the Fair Entitlements Guarantee. This continued focus ensures the program delivers quick and accurate outcomes for redundant workers, and that insolvency practitioners can easily engage with the program.
Several business improvements were delivered during the year to further streamline internal processes and enhance system functionality. During the year, the department:
- improved processes to identify where entitlements cannot be verified so alternative assessment approaches can be implemented
- improved access to Australian Taxation Office data to make claim assessments faster where employer records are incomplete
- streamlined processes for resolving discrepancies, which saved up to a week in the claim assessment process, and
- implemented system enhancements, including a pre-population function for claim assessors, exportable reports for insolvency practitioners, and better data uploads from insolvency practitioners.
Program assurance and compliance
The department is continuing quality assurance activities to ensure the integrity of claim decisions under the Fair Entitlements Guarantee. A compliance random sample process examines initial claim decisions— and those under review—for accuracy, which helps internal quality control and ongoing assurance. A range of other assurance measures are also in place including a random-sample assurance of taxation calculations for payments.
To supplement these quality assurance activities, the department also undertakes red flag data analysis to identify potential non-compliance and fraud. Other safeguard measures are also maintained, such as program specific fraud detection training, business system controls and mechanisms for receiving and responding to tip-offs.
An internal assurance forum ensures that issues emerging through compliance and review processes are identified and addressed, and that the operation and performance of the Fair Entitlements Guarantee is assured.
Fair Entitlements Guarantee Recovery Program
The Australian Government’s Fair Entitlements Guarantee Recovery Program is strengthening the integrity and sustainability of the Fair Entitlements Guarantee Scheme. The program recovered an additional $22.6 million in the first year of operation and improved the overall Fair Entitlements Guarantee recovery rate from an average 11 per cent in the 2010–2015 financial years to 19 per cent for 2015–16, 29 per cent for 2016–17 and 25 per cent for 2017–18.
Based on results delivered by the pilot, the Australian Government made the Fair Entitlements Guarantee Recovery Program an ongoing demand driven measure from 1 January 2017 with increased funding and resources. The Government has committed funding of $47.2 million over four years from 2016–17. The Fair Entitlements Guarantee Recovery Program funds investigations and litigation to recover money to repay advances made under the Fair Entitlements Guarantee scheme.
The Fair Entitlements Guarantee Recovery Program has now recovered Fair Entitlements Guarantee advances totalling $58.8 million. The program has also recovered non-Fair Entitlements Guarantee employee entitlements of $1.7 million and superannuation guarantee contributions of $0.7 million, the benefits of which will flow to the relevant employees.
The Fair Entitlements Guarantee Recovery Program enabled the department to successfully appeal a Supreme Court of Victoria decision that had denied employees of an insolvent corporate trustee the priority payment of their entitlements.
Ordinarily, the Corporations Act 2001 requires employee entitlements to be prioritised over other creditors when a company becomes insolvent and is being wound-up. However the Supreme Court’s original decision, Re Amerind Pty Ltd (receivers and managers appointed) (in liquidation) found that the employees’ priority does not apply to a corporate trustee’s assets.
Had it stood, the original decision would not only have meant that the Amerind employees, along with the Fair Entitlements Guarantee, would receive less of the available company funds, but also the precedent would have continued to disadvantage the priority creditors—usually employees—in future insolvent corporate trustees.
After careful consideration, the department appealed to the Victorian Court of Appeal using Fair Entitlements Guarantee Recovery Program funding.
The appeal was heard in July and August 2017, and in February 2018 the Victorian Court of Appeal unanimously reversed the Supreme Court decision, re-establishing that the priority regime afforded to employees and to Fair Entitlements Guarantee under the Corporations Act does apply to the winding up of a corporate trustee.
Seasonal Worker Programme
The department is the lead agency for the Seasonal Worker Programme. Support to manage the program is provided by the Department of Foreign Affairs and Trade, the Department of Home Affairs, the Department of Agriculture and Water Resources, the Australian Taxation Office, Austrade and the Fair Work Ombudsman.
The program contributes to the economic development of nine Pacific island countries and Timor–Leste. It provides access to work opportunities in the Australian agriculture sector and, in selected locations, the accommodation and tourism sectors. It also offers Australian employers access to a reliable, returning workforce, subject to labour market testing.
There have been over 25,000 placements of seasonal workers since the program started in July 2012, and continued growth in demand since the program was uncapped in 2015–16. In 2017–18:
- 8,459jump to the definition of footnote b visa subclass 403 were issued to seasonal workers by the Department of Home Affairs, a 37 per cent increase compared to 2016–17, and
- 23 employers were approved under the program, a 23 per cent increase since 2016–17.
New employers are vetted before being admitted to the program. This includes checks on compliance with Australian workplace relations and immigration legislation. Before approved employers can employ seasonal workers, they must undertake local labour market testing to confirm there are no Australians available to do the work.
The department ensures that strong protections and supports are in place for seasonal workers. It conducted 50jump to the definition of footnote b regional monitoring site visits across Australia during 2017–18, up from 39 site visits in 2016–17. It continues to receive strong positive feedback about the benefits of the program from employers and workers.
In September 2017, eight measures were announced to support participation by employers and workers in the Seasonal Worker Programme. The department had responsibility for implementing two measures — streamlining the administration of the program (measures implemented on 1 July 2018), and increasing communication and engagement with stakeholders and industry to promote the program’s growth (implemented throughout the 2017–2018 year). The remaining measures sit within the Foreign Affairs and Trade, and Home Affairs portfolios.
Seasonal Worker Programme
The Seasonal Worker Programme not only helps Australian farmers source labour when there is not enough local Australian labour to meet seasonal demand, it also supplements foreign aid in the Pacific – putting money directly in the hands of people who need it most. The program has provided over 25,000 work placements for Pacific islanders such as Jone (pictured above) since 2012, contributing to the economic development of participating countries.
The World Bank in its 2017 report Maximizing the Development Impacts from Temporary Migration: Recommendations for Australia’s Seasonal Worker Programme found that since 2012 the initiative has delivered approximately $144 million in net income gains to the Pacific region. The study also found that:
- seasonal workers surveyed reported a high level of satisfaction from participation – 8.6 out of 10 with their experience in Australia
- 95 per cent of seasonal workers surveyed said they would look to return in future seasons
- 91 per cent felt the skills they had learnt in Australia would improve their employment prospects on returning home, and
- 91 per cent were willing to recommend the program to others in their village.
The Coal Mining Industry (Long Service Leave) Corporation
The department supported the the Coal Mining Industry (Long Service Leave) Corporation (Coal LSL), which is responsible for administering the Coal Mining Industry Long Service Leave Fund. Funding provided to the corporation is dependent on levies collected from employers under the Coal Mining Industry (Long Service Leave) Payroll Levy Collection Act 1992.
In 2017−18, Coal LSL undertook an actuarial review which recommended a decrease in the levy percentage from 2.7 per cent to 2.0 per cent. This reduction took effect on 1 July 2018. It does not affect employee entitlements which will remain the same.
Protected Action Ballots Scheme
Under the Fair Work Act 2009, a ballot of eligible employees is required before protected industrial action can be taken to pursue claims during bargaining for an enterprise agreement, except when the action is in response to industrial action by the other party. During 2017–18, the department met the full cost of 946 ballots, paying $1.681 million under the scheme.
The International Labour Organization
An important part of the department’s international engagement is representing Australian interests at the International Labour Organization (ILO), and helping to manage the ILO through Australia’s elected position on its Governing Body. The Australian Government plays an active role at ILO meetings, contributing an Australian and regional perspective to the ILO’s work and planning. Delegates also contribute to the regional and economic government groups of which Australia is a member—the Asia Pacific Group of Governments (ASPAG) and the Industrialised Market Economies Group.
During 2017−18, the department’s Minister-Counsellor (Employment) continued as Australia’s delegate to the ILO. They participated in ILO meetings throughout the reporting year, including the ILO-sponsored IVGlobal Conference on the Sustained Eradication of Child Labour.
In September 2017, the delegate also assumed the role of ASPAG Regional Coordinator until the June 2018 International Labour Conference. The Australian Government values the engagement in the Asia–Pacific and used this position to advocate for priority issues in the region.
The department represented the Government at ILO Governing Body meetings in October and November 2017, March 2018 and June 2018.
From May to June 2018, the department represented the Government at the 107th session of the International Labour Conference, which hosted three main technical committees including a:
- standard setting discussion on violence and harassment in the world of work
- discussion on effective development cooperation, and
- a recurrent discussion on social dialogue and tripartism.
The department is working with the Department of Foreign Affairs and Trade on regional aid projects, including the Better Work programme which has been funded by the Department of Foreign Affairs and Trade since 1 June 2016. Better Work engages business, civil society and governments to assess workplace conditions in the garment industry, and to create strategies to improve labour standards and address gender issues.
Women and the Future of Work in Asia and the Pacific
The department funded the ILO to deliver a project on Women and the Future of Work in Asia and the Pacific, consisting of a regional conference and research report. This project was an opportunity to highlight Australia’s support for increasing women’s participation in the workforce and the need preparing women for employment opportunities.
The conference was held in Bangkok from 31 January to 1 February 2018 and attracted around 150 tripartite delegates from 22 countries in the Asia–Pacific. Government, worker and employer representatives examined the opportunities and challenges of women’s future at work. The conference generated evidence-based policy recommendations on where best to invest efforts and resources to capture opportunities for women.
Based on the conference outcomes, the ILO is developing a research report with strategies and actions for developing a more equitable future of work for women in the Asia–Pacific. The report will be released later in 2018. Outcomes from the project will form part of the Asia–Pacific’s contribution to the ILO Future of Work and Women at Work 2019 centenary initiatives.
jump to footnote a in content Correction: the figure of ‘8,459’ has been corrected from ‘8457’ as published in the version tabled in Parliament on 16 October 2018. This correction is due to the Department of Home Affairs advice in October 2018.
jump to footnote b in content Correction: the figure of ‘50’ has been corrected from ‘111’ as published in the version tabled in Parliament on 16 October 2018. This correction is due to an administrative error.