What employees need to know about insolvency

When a company faces liquidation or bankruptcy it can be a tumultuous time for everyone involved, especially for the employees who are often left in a place of limbo without a job and without their wages. Luckily, the Australian Government provides financial assistance to cover certain unpaid entitlements to eligible employees who lose their jobs due to liquidation or bankruptcy of their employer under the safety net of the Fair Entitlements Guarantee (FEG).

Are you eligible?

Within the Fair Entitlements Guarantee Act 2012, there are a number of criteria that must be fulfilled in order to be considered eligible to make a claim under scheme. They are as follows:

  • you have lost your job due to, or less than six months before, your employer’s liquidation or bankruptcy
  • you have lodged claim within 12 months of either the date you lost your job or the date of the liquidation or bankruptcy of your former employer
  • you are owed at least one of the entitlements discussed below
  • you were an Australian citizen or held a permanent visa or special category visa that allowed you to stay and work in Australia at the time your employment ended

Similarly, you won’t be considered eligible if, for example:

  • you were a contractor
  • you were a director of the company or a relative of the director of the company within 12 months before liquidation
  • any other conditions of eligibility aren’t met within the Act

What claims can you make?

As mentioned above in order to be eligible for compensation you must be claiming one of the following items. Under the FEG you may be able to claim:

  • up to 13 weeks of your unpaid wages
  • your unpaid long service and annual leave
  • up to five weeks of payment in lieu of notice
  • up to four weeks per full year of service of redundancy pay

However, you will not be able to claim unpaid Superannuation Guarantee Contributions cannot be claimed. These are to be followed through Australian Taxation Office.

How can you make a claim?

The quickest and easiest way to apply for a claim is online via the FEG Online Services.

This website contains the full FEG fact sheets which are crucial to read and understand before submitting a claim. One critical factor is that you will only have 12 months to lodge your effective claim with specific evidence discussed above.

At the end of the day, it can be a very difficult time to when a company enters liquidation or bankruptcy. Trusted Queensland liquidator Jonathan Paul McLeod recommends seeking advice from a qualified industry professional who will be able to provide you with more information and help during insolvency. For more information please contact us at McLeod and Partners today.

Source: Australian Government Department of Employment