I’m an employee and my employer has just gone broke – help!

It is can be a stressful time for employees when their employer closes their business and Liquidators arrive when it may result in them being left without a job and their entitlements unpaid. However, the good news is there is help at hand.

In a liquidation the goal of a Liquidator is to quickly realise the Company assets and distribute the funds realised to the creditors, including employees.  Unfortunately there are at times insufficient assets are available to allow the payment in part or full of what is owed.  Further, the time taken to realise the assets and be in a position to make payment to creditors can take many months or in some cases years.

As a result of the above uncertainties, the Australian Government, via the Fair Entitlements Guarantee (FEG) operated by the Department of Employment, provides financial assistance to cover certain unpaid employment entitlements to eligible employees who lose their job due to the liquidation or bankruptcy of their employer.

FEG is designed to provide a safety net for the protection of certain employee entitlements whose employment has been terminated as a result of their employer’s insolvency.  Unpaid superannuation is not covered by FEG (Superannuation claims should be pursued through the Australian Taxation Office).  FEG Online Services is the easiest way to make a claim and employees are encouraged to lodge their claims online here.

The FEG administration process can span months before funds are advanced to meet the claims of employees and we therefore advise that employees should lodge their claims as soon as their employer has been placed into liquidation with FEG. Depending on the complexity of the liquidation and available assets lodging a claim with, FEG can often be the fastest avenue for employees to be paid.

Entitlements available to be claimed through FEG include:

  • up to 13 weeks of wages
  • unpaid annual leave
  • long service leave
  • payment in lieu of notice (PILN)
  • redundancy pay (if applicable)

It should be noted FEG has limits on how much may be distributed, for example PILN is limited to no more than 5 weeks.

In order to be considered by FEG, claims to FEG must be submitted within 12 months of the liquidation of the Company.

While it can be a difficult time for employees there is assistance available.  Further information can be obtained either from the Liquidators appointed or via the FEG website or the FEG hotline (1300 135 040).

Adrian Hunter
Adrian Hunter

July 31

Adrian Hunter
Adrian Hunter

By actively working with all involved stakeholders, Adrian is able to formulate and deliver on agreed outcomes for the benefit of all parties involved