The Coalition Government is putting Australian workers and taxpayers first by introducing new legislation to ensure employers properly pay their workers’ entitlements.
Minister for Jobs and Industrial Relations, the Hon Kelly O’Dwyer MP, said the new legislation will address corporate misuse of the taxpayer-funded Fair Entitlements Guarantee (FEG) scheme.
“Employers must pay the entitlements their workers are due. Those employers that do the wrong thing will face the full force of the law,” Minister O’Dwyer said.
“This vital legislation cracks down hard on companies which try to evade their obligations to their workers and shift the burden to the taxpayer.
“Misuse of the Fair Entitlements Guarantee scheme by employers places an unfair burden on Australian taxpayers.
“It also creates an unfair commercial advantage over honest competitor businesses who do the right thing by their employees.”
The FEG is an important safety net for Australian workers which protects employment entitlements when workers lose their job due to their employer’s insolvency.
Whilst the overwhelming majority of companies are doing the right thing, unfortunately, some employers shift employee costs onto the FEG scheme for their own advantage, or just to exploit the scheme. This improper use of FEG contributes to increased costs and is an unfair burden on taxpayers.
Assistant Treasurer, the Hon Stuart Robert MP, said the changes are tightly targeted to deter and punish only those who seek to avoid their employee entitlement obligations and exploit the FEG scheme.
“This Bill will mean we have stronger levers to ensure employers are held accountable for their obligations. Stronger penalties, stronger options to recover entitlements and stronger powers to deal with directors and companies deliberately evading their obligations,” the Assistant Treasurer said.
“We are clamping down on employers who do the wrong thing, in a way that doesn’t create a hassle for those doing the right thing.”
The Bill introduces changes to:
- deter and penalise directors and others who engage in, or facilitate, transactions directed at preventing, avoiding or reducing employer liability for employee entitlements in insolvency
- recover employee entitlements from related entities if that entity benefited from work performed, even if it did not employ the employees directly
- strengthen sanctions for directors and company officers with a track record of corporate contraventions and insolvencies where FEG is repeatedly and inappropriately relied on.
These reforms build on other actions the Government has taken to protect employee entitlements, including:
- amending the Fair Work Act to protect vulnerable workers, including:
- increasing penalties up to 10 fold for serious contraventions of workplace laws
- strengthening the Fair Work Ombudsman’s investigative powers
- making franchisors and holding companies responsible for breaches of the Fair Work Act in certain circumstances.
- providing a $20.1 million increase in funding to the Fair Work Ombudsman over four years
- introducing legislation to tackle non-payment of the Superannuation Guarantee by targeting employers that fail to meet their superannuation obligations
- releasing draft legislation to combat illegal phoenix activities involving the deliberate avoidance of company debts, including employee entitlements, by company operators and pre-insolvency advisers who facilitate this activity
- legislating that a company must pay its employee entitlements when they fall due for its directors to rely on the insolvent trading safe harbour.