Government beefs up employee safeguard protection

Government beefs up employee safeguard protection

Changes to the federal government’s fund for employee entitlements have been announced in a bid to stop unscrupulous business directors defrauding the government as well as their workforce.

Employment Minister Michaelia Cash and Financial Services Minister Kelly O’Dwyer issued a joint statement saying that the Fair Entitlements Guarantee (FEG), which is a last-resort scheme to protect worker entitlements when a business fails, has been taken advantage of.

“It is clear that some company directors are misusing the FEG scheme to meet liabilities that can and should be paid directly by the employer rather than passed on to Australian taxpayers,” they said.

“The FEG scheme is an avenue of last resort that assists employees when their employer’s business fails and the employer has not made adequate provision for employee entitlements.”

More than $1 billion in FEG payments has reportedly been made between the 2013 and 2016 financial years, a dramatic increase on previous periods.

“The government’s proposed changes to the Corporations Act will deter those businesses from engaging in practices that inappropriately shift costs onto FEG, while strengthening the ability to pursue recovery of FEG costs,” the ministers said.

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“These changes will be targeted to deter and punish only those who have inappropriately relied on FEG. They will not affect the overwhelming majority of companies who are doing the right thing.”

The changes include penalising company directors and associated individuals who deliberately funnel funds away from employees; allowing the recovery of FEG funds from associated corporate entities where practical; and stronger sanctions for company directors and officers with a track record of FEG-dependent insolvencies.

It coincides with the public consultation on a proposal to strengthen anti-phoenixing regulations by introducing new identification procedures.

Government beefs up employee safeguard protection
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