THE FEDERAL GOVERNMENT has announced plans to provide an additional $62 million in funding to improve the range of entitlements available to employees under the General Employee Entitlements and Redundancy Scheme (GEERS)
THE FEDERAL GOVERNMENT has announced plans to provide an additional $62 million in funding to improve the range of entitlements available to employees under the General Employee Entitlements and Redundancy Scheme (GEERS).
The changes, which will apply to insolvencies that occur on or after 1 November 2005, include assistance for underpaid wages in the three-month period prior to the date of employer insolvency and coverage for employees who resign or whose employment is terminated up to six months prior to the date of their employer’s insolvency.
Business generally welcomed the move to strengthen insolvency laws in the areas of deeds of administration, personal injury claims and phoenix companies, with the Australian Chamber of Commerce and Industry saying it provided a better policy response than the Government’s earlier and some say ill-conceived 2001 election promise that unsecured employee creditors should have a superannuation priority ranking ahead of secured creditors.
However, workers’ entitlements would remain at risk when a company collapsed if bargaining were transferred to the workplace level in line with the Government’s industrial relations plans, according to general insurance company Assetinsure.
According to Assetinsure’s CEO Peter Wedgwood, “These changes to its operational arrangements actually make it significantly more difficult for redundant workers to access their entitlements because it mandates that a company has to go into liquidation, rather than receivership or administration, before they become eligible.
“Depending on the complexity of the formal administration, this will create delays of anything from three to 12 months before workers receive their entitlements. It will cause their families real hardship.”
Despite strong economic growth, figures from credit rating agency Corporate Scorecard rates 12 per cent of all Australian companies – about 150,000 businesses – as category CCC+ or lower, meaning that their chances of collapsing in the next three years is higher than 44 per cent.
Assetinsure said experience of recent collapses shows the loyal and long-term workforce, together with better paid white-collar workers, are at most risk when there are no assets left to fund employee entitlements.
