Redundancy pay protected under Fed Govt plan

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Redundancy pay protected under Fed Govt plan

The Federal Government has pledged to protect employee entitlements if a company collapses, providing a maximum of four weeks of pay for every year of service.

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The Federal Government has pledged to protect employee entitlements if a company collapses, providing a maximum of four weeks of pay for every year of service.
 
The three part ‘Protecting Workers’ Entitlements’ package will include:
  • the guaranteed redundancy pay
  • superannuation notification on payslips
  • a strengthening of corporate and taxation law to protect entitlements.
 
Prime Minister Julia Gillard said the package would provide the ‘strongest protection of employee entitlements Australian workers have ever had’.
 
‘Workers who lose their job when their employer goes bust have enough to worry about. They should not have to worry about being paid what they have already earned,’ Gillard said.
 
Fair Entitlements Guarantee
 
The Labor Government will introduce legislation to ensure the Fair Entitlements Guarantee (FEG), which will protect redundancy pay up to a maximum of four weeks for each year of service.
 
The FEG will replace the current General Employee Entitlements and Redundancy Scheme (GEERS). Under GEERS, a worker is entitled to a maximum of 16 weeks of redundancy pay.
 
Gillard said it is estimated that under the FEG around 97% of eligible workers will receive all the redundancy payments they are owed.
 
She said the FEG will cost an additional $60.8 million over four years, fully offset over the forward estimates.
 
Super changes
 
The Prime Minister said employees will receive information on their payslips about the amount of superannuation actually paid into their accounts and notification from their superannuation fund if regular superannuation payments cease.
 
The enforcement powers of the Australian Taxation Office and the Fair Work Ombudsman will also be enhanced, giving them stronger powers to ensure businesses pay their employees’ Superannuation Guarantee entitlements.
 
Corporate and tax law
 
Gillard also announced corporate and taxation law will be ‘strengthened to better protect workers’ entitlements’. 
 
Under the plan, the Australian Securities and Investments Commission (ASIC) will be given stronger powers to place companies into liquidation when they have been abandoned by their directors.
 
‘This will ensure employees get swifter access to their unpaid entitlements through the Fair Entitlements Guarantee,’ Gillard said.
 
The ranking of employee creditors working for unincorporated companies will be improved to bring their ranking into line with the priority given to employee creditors of incorporated companies.
 
A process of public consultation will consider stronger measures to prevent ‘phoenix’ company behaviour, where a business closes down one day and opens up the next day with a different name just to avoid paying its obligations.
 
Directors will be made personally liable for the debts of companies that have deceptively similar names to failed businesses previously run by the same directors.
 
Gillard said this will draw on existing laws in New Zealand and the United Kingdom.
 
Unions give thumbs up
 
The ACTU has given its approval of Labor’s entitlements package.
 
ACTU president Ged Kearney said the government package had ‘widened the gap’ between the two major parties on who was best able to secure jobs and incomes for working Australians.
 
‘There is nothing worse than for a worker to first lose their job, and then discover that their employer has not made provision for their entitlements to redundancy, superannuation, and leave,’ Kearney said.
 
She said the GEERS scheme was never more than a ‘stop-gap response’ with ‘major flaws’.
 
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