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FOR EMPLOYEES

Page updated 26/3/2015

 

PART 1:                  GOVERNMENT ENTITLEMENTS SCHEME

Employees who are owed certain employee entitlements after losing their job because their employer went bankrupt or into liquidation may be able to get financial help from the Australian Government. 

Also, see information supplied by the Department of Education, Employment and Workplace Relations about the Fair Entitlements Guarantee scheme(FEG) and the General Employee Entitlements and Redundancy Scheme (GEERS).  Help is available through the Fair Entitlements Guarantee scheme if the employer went bankrupt or entered liquidation on or after 5 December 2012 or through the General Employee Entitlements and Redundancy Scheme if the employer went bankrupt or entered liquidation before 5 December 2012.

FAIR ENTITLEMENTS GUARANTEE

How do I apply for FEG assistance? (December 2014)

Get your FEG Claim Form here.

See the Fair Entitlements Guarantee Act 2012

FEG Hotline 1300 135 040.   9am to 5pm Canberra time. emailFEG@deewr.gov.au

Postal address: Employee Entitlements Branch, Department of Education, Employment and Workplace Relations, GPO Box 9880, CANBERRA, ACT 2601.

Fax number: 02 6276 8717

Email address: FEG@deewr.gov.au

GENERAL EMPLOYEE ENTITLEMENTS AND REDUNDANCY SCHEME

Checklist - lodging a GEERS claim form:

Before lodging your GEERS Claim Form check that you have provided all the information required to assess your claim. Carefully check that you have completed all the mandatory sections. Have you filled out:

  • your date of birth
  • your day time contact phone number
  • your employer's name, address, trading name and ABN
  • the date you started and the date you finished working with your employer
  • if you were given notice of termination or whether you resigned and the date
  • if you received any payments relating to your employment, the amount, who it was from and what the payment was for.

See also Australian Securities and Investments Commission's information by clicking HERE. 

See also Fair Work Ombudsman's information on bankruptcy & liquidation by clicking HERE

Discussion: "Minter Ellison Alert - Fair Entitlements Guarantee Bill introduced", 25/10/2012

   PART 2:               EMPLOYEES' CLAIMS IN LIQUIDATIONS

Employees as creditors

Employees owed wages, leave or other amounts by a company are unsecured creditors of that company. Accordingly they may, if the company is insolvent, utilise any of the rights and powers bestowed upon unsecured creditors by the insolvency laws.

The only difference between employees and most other unsecured creditors is in the official rank bestowed upon their respective debts or claims. Under the Corporations Law employees debts are payable before the debts of most other unsecured creditors. In fact in certain situations they are even payable before the debts of secured creditors. By contrast the debts of most other unsecured creditors are payable only if funds are available after the debts of employees and secured creditors have been paid in full.
 

The definition of "employee"

Of course, for a debt to receive the priority just mentioned the creditor must be an "employee" of the company. In most cases this will be obvious. For example, the creditor will have been working for the company for a certain number of hours each week, in return for which he or she will have received a regular wage or salary (usually after a deduction for pay-as-you-earn income tax). The company will have supplied the creditor with the necessary equipment and materials for the job, instructed him or her on how to perform the task and exercised some control over the manner in which the work was done.

But sometimes a creditor's status as an employee is not so obvious. What if, for example, he or she works as a "contractor" or a "commissioned agent"? Or what if his or her earnings are paid to a family company or trust?


To answer these questions it is necessary to examine the definition of the word "employee" in more detail. This will be done through a brief study of the employer-employee relationship.
 

The employer-employee relationship

There are many factors to consider in gauging whether a relationship between two parties is one of employment. These include:

♦   the nature and degree of control exercised by the person employing (the "control test");
♦   the powers of dismissal and termination;
♦   the manner in which the reward for service is paid;
♦   the deduction of taxes;
♦   the circumstances under which payment of the reward may be withheld;
♦   the hours of work and provision for holidays;
♦   the provision and maintenance of tools, equipment and vehicles;
♦   the right of the employed person to delegate or assign the work to someone else, or employ assistants to carry out the work;
♦   the right of the employed person to incorporate;
♦   whether the employed person does or may work for others; and
♦   where the real nature of the relationship is ambiguous, specific provisions in the agreement that define the relationship (unless there is reason to believe those provisions are a sham).

Foremost among these factors is the "control test". Put simply this test asks whether, in the performance of the work which the person is required to do, ultimate authority over that person resides in the employer. (The words "ultimate authority" mean the power to tell the worker what work he or she shall do; it is not essential that the employer be able to direct or control in detail how the work is to be done.) If the control test is satisfied, it will be a strong indicator that a relationship of employer-employee exists.

However in any decision other factors will also play an important part. Generally speaking those indicating a relationship of employer and employee - or, as it used to be called, master and servant - are:

»   regular hours of work, or starting and finishing times that are set by the employer;

»   the employer supplies the necessary tools, materials, equipment, vehicles, etc.;

»   remuneration (reward) is based on hours worked;

»   he employer deducts income tax from the remuneration;

»   the worker is entitled to holidays, sick leave, etc.; and

»   the employer has power to dismiss the worker.

On the other hand the absence of such factors, the existence of their opposites or the presence of those mentioned below, would indicate a relationship of, say, employer and independent contractor:

»   the worker is entitled to delegate, assign or sub-contract the work to someone else, or employ assistants to carry out the work;

»   the worker does, or is entitled to do, the same or similar work for other parties; and

»   the worker is entitled to operate as a company or a partnership.

However, as the large number of court cases on the issue attest, it is often extremely difficult to judge the real nature of a particular relationship.
 

TO BE CONTINUED ...