New laws target FEG rorters

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New laws target FEG rorters

New laws will address corporate misuse of the taxpayer-funded Fair Entitlements Guarantee (FEG) scheme.

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New laws will address corporate misuse of the taxpayer-funded Fair Entitlements Guarantee (FEG) scheme.

The Minister for Jobs and Industrial Relations, Kelly O’Dwyer, said the new laws "crack down on companies which try to evade their obligations to their workers, including through illegal phoenix activities, and shift the burden to the taxpayer.”

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.

While most companies do the right thing, 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, Stuart Robert MP, said the new laws were tightly targeted to deter and punish only those who sought to avoid their employee entitlement obligations and exploit the FEG scheme.

The new laws amend the Corporations Act 2001 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 benefitted from work performed, even if it did not employ the employees directly; and
  • strengthen sanctions for directors and company officers with a track record of corporate contraventions and insolvencies where FEG is repeatedly and inappropriately relied on.
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