The Federal Government has released draft legislation to address corporate misuse of the Australian Government’s Fair Entitlements Guarantee (FEG) scheme.

The move follows an announcement in October last year to introduce new laws.

The proposed laws aim to provide a significant disincentive for employers that exploit the taxpayer-funded scheme and avoid their responsibilities to their employees.

The exposure draft includes amendments to:

  • strengthen civil recovery action, plus criminal and civil penalties available against company directors and other persons, who engage in transactions that are directed at preventing, avoiding or reducing employer liability for employee entitlements;
  • ensure recovery of outstanding employee entitlements of an insolvent corporate group member, where it would be just and equitable and where other entities in the group have benefited from the work done by the insolvent entity’s employees; and
  • strengthen the ability to sanction directors and company officers with a track record of insolvencies where FEG is repeatedly relied upon.

Minister for Revenue and Financial Services, the Hon Kelly O’Dwyer MP said in addition to hurting Australian workers, corporate misuse of the FEG scheme also “creates unfair commercial advantage over their honest competitor businesses who do the right thing by their employees.”

“These new laws will significantly strengthen the existing provisions, to deter avoidance of employee obligations and hold employers accountable when they seek to exploit the FEG scheme,” Minister for Small and Family Business, the Workplace and Deregulation, the Hon Craig Laundy MP said.

The changes are tightly targeted to deter and punish only those who seek to avoid their employee entitlement obligations and exploit the FEG. In a joint media release, Ms O’Dwyer and Mr Laundy said the laws will not affect the overwhelming majority of companies who are doing the right thing.

Stakeholders are invited to lodge submissions on the exposure draft. Submissions close on 9 July 2018.

AMMA members seeking further information or wishing to provide feedback on the exposure draft are invited to contact [email protected].