One of the many changes to be implemented as part of the Federal
Budget delivered last night was a change to the Fair Entitlements
Guarantee (FEG) (previously known as the General Employee
Entitlements and Redundancy Scheme or GEERS), which guarantees
certain unpaid employee entitlements in the event of insolvency or
bankruptcy of that person's employer.
As result of the change, from 1 January 2015, the maximum
payment for redundancy pay under the FEG scheme will be 16 weeks.
This brings the FEG scheme in line with the maximum set by the
National Employment Standards contained in the Fair Work Act 2009
(Cth). Previously, redundancy pay was capped at a maximum of four
weeks per full year of service.
It is expected that the Government will achieve savings of $87.7
million over four years (beginning with $10 million in 2015-16 and
building to $29.5 million by 2017-18).
From 1 July 2014, indexation of the maximum weekly wage used in
calculating entitlements for claimants earning above the maximum
weekly wage of $2,451 will be paused until 30 June 2018.
The changes will apply only to liquidations and bankruptcies
that occur on or after 1 January 2015.
Employees seeking to claim an entitlement above the maximum set
by the NES will maintain rights as unsecured creditors to recover
any outstanding entitlements through the winding up of their
Clayton Utz communications are intended to provide
commentary and general information. They should not be relied upon
as legal advice. Formal legal advice should be sought in particular
transactions or on matters of interest arising from this bulletin.
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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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