On 4 September 2014, the Government introduced the Fair
Entitlements Guarantee Amendment Bill 2014 to the House of
Representatives (Bill). The Bill is intended to
amend the Fair Entitlements Guarantee Act 2012 (Cth) so as
to limit the entitlements payable by the Government to those
employees made redundant due to the liquidation or bankruptcy of
In this Alert, Partner Paul Betros and Trainee Solicitor Tim
Edwards discuss the Bill and its proposal to cap those entitlements
at the equivalent of 16 weeks of the eligible employee's
At present, the Fair Entitlements Guarantee Scheme
(FEGS) entitles eligible employees to a maximum
payout that is equivalent to four weeks' pay for each year of
service with the terminating employer. This has been the case since
31 December 2012, before which the General Employee Entitlements
and Redundancy Scheme (GEERS) also operated to
limit Government redundancy payouts to the equivalent of 16
weeks' pay. In short, the Bill proposes to reinstate GEERS.
The Bill also represents a Government initiative to align the
FEGS with the National Employment Standards contained in the
Fair Work Act 2009 (Cth) (NES). The NES
presently requires employers who have terminated employees for
reasons of genuine redundancy to pay entitlements equivalent to a
maximum of 16 weeks' pay. The Bill's assent would therefore
mean that employees who are made redundant because of their
employer's liquidation or bankruptcy will be entitled to the
same payout as employees who are made redundant by solvent
As the Bill only sets an upper limit on payable entitlements,
its greatest visible impact will be on those employees who have
worked for the same employer for more than four years continuously.
As an example, an employee who has served four years with the same
employer will be eligible to maximum entitlements equivalent to 16
weeks' pay under both the current scheme and the amended FEGS.
In contrast, an employee who has served 10 years with one employer
will be eligible for a maximum payout equivalent to 40 weeks'
pay under the current scheme, but only 16 weeks' pay under the
Thus, the Bill would reduce the relevance (and importance) of
how long an employee has continued to work for a single, but now
insolvent employer when calculating that employee's eligibility
for redundancy entitlements.
Given the nature of the issues, it is clear that the Bill will
face fierce opposition from "pro-employee" stakeholders
such as unions and the Federal Opposition. Like all Federal
legislation, its passage through the Senate may prove to be a long
and winding road, subject to compromise with the Opposition and the
minority parties holding the balance of power in the Senate.
Indeed, Nostradamus himself would be hard pressed to predict
whether any future piece of legislation will even remotely resemble
the terms of the original bill! Nonetheless, we will keep you
This Update highlights two recent cases that considered circumstances where liens could take priority over a registered security interest.
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