Last Tuesday, 30 October the Gillard government's Fair
Entitlements Guarantee Bill was passed in the House of
Representatives. This bill will impact the current federal
government scheme known as the government's General Employee
Entitlements Redundancy Scheme (GEERS), which has been in operation
since 2001. It seems that this bill means that instead of covering
the current status quo of 16 weeks of redundancy entitlements for
workers who are made redundant when businesses become insolvent, it
would now pay for an unlimited amount.
To date the federal government has spent about $1 billion on
GEERS. The last financial year saw over $15 million worth of
entitlements paid, with GEERS working very closely with insolvency
practitioners in assessing claims. This new bill has met some
criticism not only on the principles of redundancy and enterprise
agreements, but ultimately the cost to taxpayers.
We have observed that since the introduction of the scheme that
some directors have become more open to external administration
with the knowledge that their employees will be covered. We have
said previously that such an initiative (as GEERS) should be
commended as it provides relief first and foremost to the
'innocent individuals' in our communities and perhaps a
more honest and proactive reaction from the directors whom face
insolvency. As might be expected there are several requirements and
limitations, one of which specifically excludes the payment of
outstanding superannuation. It also limits the entitlements of
directors or relatives of directors to statutory limits under the
It is proposed that GEERS will be renamed the Fair Entitlements
Guarantee, seemingly to reflect the objective of the scheme. The
Sydney Morning Herald reports that the 'scheme has the support
of both sides of politics, industry, unions and insolvency
practitioners who administer payments to workers.'
To read The Sydney Morning Herald's article 'Redundancy
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Long experience representing many of Australia's leading employers has taught us that in employment litigation the identity of an employee's representative is a major factor in how employee litigation runs.
Australian employees receive certain entitlements (such as annual leave and superannuation) where contractors do not.
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