Employee redundancy funds pool contributions from employers for employee redundancy payments. They are currently exempt from the requirements to:
- Hold an Australian financial services (AFS) licence with appropriate authorisations;
- Register the employee redundancy fund as a managed investment scheme; and
- Comply with the managed investment provisions in the Corporations Act 2001 and other associated provisions, including those relating to product disclosure statements, ongoing disclosure requirements and the anti-hawking provisions.
The ASIC relief will provide certainty to affected employee redundancy funds by allowing the existing regulatory framework to continue while the Fair Work Laws Amendment (Proper Use of Worker Benefits) Bill 2019 is before the Parliament (refer Background).
The extension of the relief is effected by ASIC Corporations (Amendment) Instrument 2021/0767, which amends ASIC Corporations (Employee redundancy funds relief) Instrument 2015/1150 to extend the relief from 1 October 2021 to 1 October 2024.
Originally, class order [CO 02/314] Employee redundancy funds: relief, was issued in 2002 and gave relief to employee redundancy funds from the requirement to comply with certain provisions of the Corporations Act 2001. [CO 02/314] had effect until 1 October 2016.
On 4 September 2015, ASIC released Consultation Paper 238 Remaking ASIC class order on employee redundancy funds: [CO 02/314] (CP 238), which outlined the proposal to remake [CO 02/314] with minor changes. After the consultation, ASIC released ASIC Corporations (Employee redundancy funds relief) Instrument 2015/1150, which extended the relief in [CO 02/314] until 1 December 2015. Subsequently, ASIC extended the relief for a further 24 months until 1 October 2018 and then again for three years until 1 October 2021.
Following the Royal Commission into Trade Union Governance, the government proposed legislation to introduce a new regulatory framework for employee redundancy funds. Schedule 2 of the Fair Work Laws Amendment (Proper Use of Worker Benefits) Bill 2019 will introduce a new regulatory framework for employee redundancy funds as worker entitlement funds. At this stage, the bill is still before the Parliament.