Entitlements bill passes Reps, but will Senate agree?

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Entitlements bill passes Reps, but will Senate agree?

Legislation to cap redundancy payments paid through the Fair Entitlements Guarantee (FEG) scheme to 16 weeks has passed through the House of Representatives and now faces the Senate, where a committee has recommended passing the bill with no changes.

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Legislation to cap redundancy payments paid through the Fair Entitlements Guarantee (FEG) scheme to 16 weeks has passed through the House of Representatives and now faces the Senate, where a committee has recommended passing the bill with no changes.

The Fair Entitlements Guarantee Amendment Bill 2014 amends the Fair Entitlements Guarantee (FEG) scheme which assists retrenched employees of bankrupt businesses who are owed certain employee entitlements. It was previously known as the General Employment Entitlements & Redundancy Scheme (GEERS).

The government wants to introduce a cap of 16 weeks’ pay on the maximum FEG payment to employees, applying to liquidations and bankruptcies occurring from 1 January 2015. It says the cost of the scheme has grown dramatically from 8,626 claimants paid $73 million in 2006-07 to 16,019 claimants paid $262 million in 2012-13, an increase it says is unsustainable.

Labor opposition


Labor is opposing the bill, arguing in particular about another amendment which will see entitlements paid at the rate of average weekly earnings, instead of at the employee’s average rate of pay.

The bill passed the House of Representatives this week and now faces the Senate. The Coalition-dominated Senate Education and Employment Legislation Committee has recommended it be passed unamended.

It says it “does not agree that a publicly funded scheme should cover all [employee] entitlements when they exceed the NES”.

It also notes that employees who are owed more than 16 weeks in redundancy pay are able to pursue their employer through bankruptcy proceedings to recover this.

Taxpayer burden


The committee also agreed with submissions that the current design of the scheme allows unions and employers to negotiate generous redundancy provisions, secure in the knowledge that if the business fails, the government will pay whatever redundancy provisions have been agreed upon. This, the committee said, was an “unacceptable financial burden on the taxpayer”.

Labor senators, in their dissenting report, said that while the Department of Employment had figures to show the amount of redundancy pay had increased in enterprise agreements since the previous government introduced the more generous redundancy entitlement to the scheme, it considered the committee had failed to show the two were linked.

Greens Senator Lee Rhiannon, in her dissenting report, opposes the bill as “yet another broken promise” from the government, which she says reassured voters in 2013 that it would not change the scheme. She agreed with Labor that the bill would weaken the safety net for retrenched employees.

Whether the bill will now pass the Senate will depend on the cross-benchers, who have shown already they are prepared to vote with the government on employment matters. 

Senate Education and Employment Legislation Committee – Report on Fair Entitlement Guarantee Amendment Bill 2014, September 2014


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