The Albanese Government will crackdown on corporate misuse of the Fair Entitlements Guarantee (FEG), with consultation now underway to ensure the scheme remains as effective as possible.
FEG is a government safety net to ensure workers are paid their employee entitlements should their employment end due to business failure, and no alternative avenue exists to fund their entitlements.
Payments are capped and eligible workers are able to claim up to 13 weeks of unpaid wages, unpaid annual leave and long service leave, payment in lieu of notice (up to five weeks), and some redundancy pay.
The scheme is not intended as a loophole for corporations to shirk their responsibility to pay their workers.
Today, the Government has released a discussion paper on how to tighten the existing legal framework to future-proof FEG from misuse. This includes addressing the deliberate structuring of corporate groups to avoid paying employee entitlements, and directors selling off the assets of their financially distressed company to a related entity at cut price.
The discussion paper is also seeking views on other proposals to better protect employee entitlements from inappropriate corporate practices and reduce the impost on taxpayers.
This includes better protecting employees' entitlements in insolvency, improving access to information held by controllers and increasing director accountability for unpaid employee entitlements in insolvency.
Minister for Employment and Workplace Relations Murray Watt said the FEG scheme was a valuable scheme that was largely used appropriately.
"The FEG Scheme has delivered a crucial safety net for many Australians who have lost their entitlements through no fault of their own," Minister Watt said.
"It's an effective scheme, which has paid out over $2 billion in advances to employees since it was created in 2012.
"But while many use the scheme as it was intended, shonks who engage in phoenixing, or deliberately avoid paying employee entitlements are being put on notice - you will not be allowed to shift the cost of employee entitlements onto taxpayers so you can save a buck."
Assistant Treasurer and Minister for Financial Services, Stephen Jones said the discussion paper seeks views on potential reforms to help develop a fairer, dupe-free scheme.
"This review will ensure workers can continue to receive support when they need it."
"This work will ensure we can make the FEG stronger for workers and stronger for businesses that do the right thing."
Submissions are open until 31 March 2025 at the Department of Employment and Workplace Relations' consultation hub.
