Minister for Jobs and Industrial Relations Kelly O’Dwyer said the move was necessary to attack abuse of the Fair Entitlements Guarantee (FEG), which is funded by taxpayers, so that employees are not left high and dry when their employer falls into insolvency and is unable to pay out accrued entitlements.
“Employers must pay the entitlements their workers are due. Those employers that do the wrong thing will face the full force of the law. This vital legislation cracks down hard on companies which try to evade their obligations to their workers and shift the burden to the taxpayer,” Ms O’Dwyer said.
The Minister said it was unfair for a minority of employers to not pay their staff properly, and shift that burden onto the public purse.
“Misuse of the Fair Entitlements Guarantee scheme by employers places an unfair burden on Australian taxpayers. It also creates an unfair commercial advantage over honest competitor businesses who do the right thing by their employees,” she said.
Ms O’Dwyer moved to reassure employers who are meeting their obligations that the new rules would not unfairly burden them with more red tape.
“We are clamping down on employers who do the wrong thing, in a way that doesn’t create a hassle for those doing the right thing,” she claimed.
Under the changes, there would be deterrents and penalties put in place for company directors and senior business leaders who facilitate or directly engage in transactions to circumvent liabilities for employee entitlements when a business falls into insolvency.
The government would also be given the ability to recoup lost entitlements from related entities where the entity benefitted from the work performed – even if the employee did not work for them directly.
Additionally, existing powers would be strengthened to track repeat offences.
“This bill will mean we have stronger levers to ensure employers are held accountable for their obligations. Stronger penalties, stronger options to recover entitlements and stronger powers to deal with directors and companies deliberately evading their obligations,” Ms O’Dwyer said.