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Additional Protections for Fair Entitlements Guarantee Scheme

The Federal Government has announced that it will introduce new laws to stop corporate misuse of the Australian Government’s Fair Entitlements Guarantee (FEG) scheme.

The proposed changes will:

  • penalise company directors and other persons who engage in transactions which are directed at preventing, avoiding or reducing, employer liability for employee entitlements;
  • permit the recovery of FEG from other entities in a corporate group where it would be just and equitable and where those other entities have utilised the human resources of the insolvent entity on other than arm’s length terms; and,
  • strengthen the ability to sanction directors and company officers with a track record of insolvencies where FEG is repeatedly relied upon.

The announcement follows a dramatic increase in costs under the FEG scheme in recent years, with FEG payments totalling more than $1 billion between 2012-13 and 2015-16 – a 75 per cent increase over the preceding four-year period.

In a joint media statement, Minister for Employment Michaelia Cash and Minister for Revenue and Financial Services Kelly O’Dwyer stated: “These changes will be targeted to deter and punish only those who have inappropriately relied on FEG. They will not affect the overwhelming majority of companies who are doing the right thing.”

This announcement, aimed to ensure corporations are meeting their obligations to employees, comes as the Government has also announced plans to preserve and protect employee entitlements where they are held in funds controlled by registered organisations.

In a media statement issued on 12 September 2017, Minster Cash said millions of dollars each year are poured into an opaque network of trusts and other funds controlled by registered organisations who receive payments from them.

“The Government will end the secrecy and lack of accountability of these funds by requiring proper governance, audited reporting and transparency,” Minister Cash said.

In doing so, the Government is taking steps to implement further recommendations of the Royal Commission to protect the benefits of Australian workers and ensure they are held for the benefit of workers and not spent for other purposes.

Please contact the policy team at [email protected] if you would like further details about the proposed changes.

 

 

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