The Minister for Revenue and Financial Services, the Hon Kelly O’Dwyer MP in a joint media release with the Minister for Employment, Senator Hon Michaelia Cash, has announced that the Government will introduce new laws into Parliament aimed at limiting corporate misuse of the Fair Entitlements Guarantee (FEG) scheme.
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. However, 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.
The proposed changes will:
- penalise company directors and other persons who engage in transactions which are directed at preventing, avoiding or reducing, employer liability for employee entitlements;
- ensure recovery of FEG from other entities in a corporate group where it would be just and equitable and where those other entities have utilised the human resources of the insolvent entity on other than arm’s length terms; and
- strengthen the ability under the law to sanction directors and company officers with a track record of insolvencies where FEG is repeatedly relied upon.
For further background, see also Consultation Paper Reforms to address corporate misuse of the Fair Entitlements Guarantee Scheme dated May 2017.