Fair Entitlements Guarantee Act 2012
In late November 2012, the Fair Entitlements Guarantee Act 2012 was passed by the Federal Parliament. It replaces the administrative “General Employee Entitlement and Redundancy Scheme” (GEERS) which assisted employees who have lost their employment due to the liquidation of their employer and who are owed certain employee entitlements.
The primary objective of the Act is to provide a scheme for the provision of financial assistance (called an “advance”) to former employees where the end of their employment is linked to the insolvency or bankruptcy of their employer. After making an advance, the Commonwealth assumes the individual’s right to recover the amount that was advanced through the winding up or bankruptcy process of their employer.
The causal link between the insolvency of the employer and the end of the person’s employment is a crucial element of the eligibility requirement. The Act assumes that the connection exists where the end of the person’s employment comes after or within 6 months of the appointment of an “insolvency practitioner”. This term is defined broadly to include liquidators, administrators, receivers of property, and persons having possession or control of property of the employer for the purpose of enforcing a charge, lien or a security interest as defined in the Personal Property Securities Act 2009.
Once eligibility has been established, the Act provides for the determination of the amount of an advance that a person is entitled to. A person’s entitlement is comprised of their unpaid entitlements in relation to unused annual leave, unused long service leave, payment in lieu of notice, redundancy pay and wages for a 13-week period. These entitlements are determined in accordance with the person’s governing instrument (as defined in clause 5 of the Act).
An advance may be paid directly to the individual, or to the liquidator or a third party contracted by the Commonwealth for the purpose of passing the advance on to the recipient. Once an advance has been paid, the Commonwealth assumes the person’s recovery rights in the winding up process to the extent of the advance in order to recover some or all of that advance. If the recipient is later paid an amount for a particular entitlement from another source, the Act provides that an amount not exceeding the amount of the original advance becomes a debt owed to the Commonwealth.