House debates

Thursday, 11 October 2012


Fair Entitlements Guarantee Bill 2012; Second Reading

10:03 am

Photo of Bill ShortenBill Shorten (Maribyrnong, Australian Labor Party, Minister for Financial Services and Superannuation) Share this | | Hansard source

I move:

That this bill be now read a second time.

In 2010 the Gillard Labor government made an election commitment to better protect the entitlements of Australian employees impacted by the insolvency or bankruptcy of their employer.

This commitment, entitled the Protecting Workers’ Entitlements Package, provides the strongest protection of employee entitlements working Australians have ever seen.

We made this commitment because Labor is the party of work and what work provides for us, financially but also for our families and sense of well being in society.

Today, I introduce a bill which embeds our commitment to this package as it relates to the Fair Entitlements Guarantee.

In doing so the Fair Entitlements Guarantee Bill 2012 will replace the existing General Employee Entitlements and Redundancy Scheme (GEERS) and enshrine the Fair Entitlements Guarantee in legislation.

The bill will provide certainty for Australian employees who find themselves without a job and left out of pocket when their employer becomes insolvent or bankrupt and cannot pay them the employment entitlements they are owed.

On this side of the House we know that employees who lose their job through insolvency or bankruptcy of their employer have enough to worry about. They have to worry about where their next mortgage repayment will come from. They have to worry about how to buy the children new clothes or pay school fees. They have to worry about what money will cover unexpected bills or an unexpected emergency. Those of us on this side of the House believe that these individuals should not have to worry about being paid what they have already earned.

It will be a good day for working Australians when this bill passes and they have certainty that their entitlements are protected even if the company they work for enters liquidation and cannot pay them what they are owed.

This bill will protect Australian employees under circumstances which are brought about through no fault or choice of their own.

This bill will ensure that Australian employees who are victims of employer insolvency or bankruptcy, where employment entitlements are owed, are supported by a government that supports Australian workers.

In doing so, this bill also enshrines Labor’s commitment to the Australian sense of a fair go by providing a legislative framework employees can rely on and an entitlement which, unlike the employment entitlements those opposite advocate for, cannot be scrapped with the flick of a pen.

Eligible entitlements

Under this bill, eligible employees will be covered for unpaid entitlements including:

            In the majority of cases, employees will be entitled to an advance for unpaid entitlements as provided for in the relevant industrial instrument under which they are employed.

            The bill will protect redundancy pay, up to a maximum of four weeks per year of service. This will mean that most employees will receive all of the redundancy entitlements they are owed.

            The bill will only enable payment of unpaid wages for up to 13 weeks and will provide payment in lieu of notice at five weeks. The bill also strengthens the recognition of eligible entitlements for employees who continue to be employed following the appointment of an insolvency practitioner. Under current arrangements, some employees lose out if they continue working through the administration of the company and neither the administrator nor GEERS covers their unpaid entitlement.

            From now on, once this bill is passed, if you are an employee in this situation you will be entitled to receive unpaid entitlements accruing right up to your last day of working. No longer will there be a gap in entitlements paid.

            Where an advance for entitlements is made, the Commonwealth is empowered to recover advances from the dividends payable once companies are wound up. In doing so, this bill proposes that the Commonwealth have the same rights as creditors in the winding up or bankruptcy of the business that the employee would have otherwise had. This measure strengthens the government’s commitment to working Australians and the taxpayer. It also makes clear that those companies who enter insolvency or bankruptcy due to irregular business practices can no longer avoid paying the entitlements of hardworking employees.

            Eligible employees

            I wish to make it clear that this bill establishes an important legislative safety net for genuine employee redundancy. It is not a scheme which can be used recklessly by employers seeking to purposely renege on their employer obligations. Under the bill, employees will only be eligible for an advance in genuine cases where they have lost their job as a result of the insolvency or bankruptcy of their employer.

            Some people will not be eligible for advances under the proposed legislation. The bill maintains existing arrangements under GEERS that advances will not be payable to people that are excluded under the Corporations Act—contractors, directors and family members of a director.

            This bill mirrors existing GEERS arrangements that assistance will not be available to support business restructures or where insolvent entities are able to pay employee entitlements within a reasonable period.

            The government has also taken the opportunity to simplify the assessment of transfer-of-business arrangements. To this end, from 1 July 2014, only where a claimant’s entitlements and service are recognised by the new employer will they be ineligible for financial assistance under the bill.

            This measure will overcome operational barriers in assessing claims and reduce unnecessary delays in employees receiving their entitlements.

            To further reduce complexity, this bill will also remove the existing eligibility arrangements for employees affected by a deed of company arrangements (DOCA) or equivalent bankruptcy proceedings. Employees often get very little say in how a DOCA is structured and it simply is not fair that they be disadvantaged when they do not work well enough to save their job.

            The bill maintains existing arrangements under GEERS that a claim for assistance will need to be made within 12 months.

            The bill also clarifies that, to be eligible for assistance under the bill, a claimant must have met the residency requirements as at the date of termination, as this is the most relevant date to assess what level of assistance an employee is entitled to receive.

            The bill also includes three important areas where capacity for flexibility is needed. By outlining the circumstances and conditions that must exist before flexibility can be used, the bill contains the following key areas:

                  Reviews and appeals

                  Ensuring a fair and transparent decision-making process is a key part of this bill. A person that makes a claim for an advance can be confident that their claim will be assessed in a just and transparent way.

                  Where a person does not agree with a decision in relation to their eligibility for an advance or the amount of an advance they are eligible for, they will have the right to apply for a review of the decision. As is currently the practice under GEERS, where a decision is able to be reviewed, the department will review the initial decision and advise the applicant of the review decision and the reasons for the decision.

                  Importantly, under this bill where a person does not agree with a review decision they may apply to the Administrative Appeals Tribunal for an external review. The Administrative Appeals Tribunal will conduct an impartial and timely review. This change to the review process will improve transparency and accountability.


                  I am proud that we are meeting the election commitment to better protect the entitlements of Australian employees impacted by the insolvency or bankruptcy of their employer. The Protecting Workers’ Entitlements Package provides the strongest protection of employee entitlements working Australians have ever seen.

                  Today, Labor delivers on that commitment and with the passing of this bill the government will deliver on its pledge to Australian employees by providing a clear, fair and robust framework to protect the entitlements Australians work so hard for every day.

                  The Fair Entitlements Guarantee Bill I am introducing today is supported by the Labor government and a range of stakeholders. We hope those opposite will also support this bill so as to ensure even stronger protections for working Australians across our nation.

                  Debate adjourned.