FAIR ENTITLEMENTS GUARANTEE (AURORA METALS LIMITED IN ADMINISTRATION) DECLARATION 2023
EXPLANATORY STATEMENT
Issued under the Authority of the Minister for Employment and Workplace Relations
under section 49 of the Fair Entitlements Guarantee Act 2012
The purpose of this instrument is to declare that the Fair Entitlements Guarantee Act 2012 (the Act) applies to persons who were employed, but are no longer employed by, Aurora Metals Limited (Administrators Appointed) which is an entity under administration under Part 5.3A of the Corporations Act 2001 (the Corporations Act). The Act does not otherwise apply to persons whose former employer is in administration.
Legislative background
The Act creates a scheme to provide financial assistance for workers who have not been fully paid for work done for insolvents or bankrupts.
Section 10 of the Act sets out the conditions for an individual’s eligibility for an advance under the Act. One of the conditions is that an ‘insolvency event’ has happened to the person’s employer. An ‘insolvency event’, as defined in section 5 of the Act, happens when a liquidator of the employer is appointed (provisionally or otherwise) but does not include the employer in administration under Part 5.3A of the Corporations Act.
Section 49 of the Act allows the Minister to declare that the Act applies to persons who were employed, but are no longer employed, by a specified employer that is under administration under Part 5.3A of the Corporations Act if satisfied that:
- The employer’s creditors are expected to resolve at a meeting convened under section 439A of the Corporations Act that the employer be wound up; and
- If the declaration is made, it will be practicable to administer the Act as it will apply because of the declaration in relation to the specified employer.
Effect of the declaration
The effect of the declaration is that the Act applies to former employees of Aurora Metals Limited (Administrators Appointed) as if the relevant administrator were a liquidator appointed when the administrator was appointed, and the reference to an ‘insolvency event’ in paragraph 14(2)(a) of the Act is a reference to this declaration being made.
This will allow any former employees of Aurora Metals Limited to make a claim under the Act and if they are eligible, receive an advance.
Consultation
To be satisfied of the factors listed in subsection 49(2) of the Act, consultation was undertaken with the insolvency practitioner responsible for the administration of Aurora Metals Limited.
Regulatory Impact Statement
The Office of Impact Analysis was consulted regarding this instrument and indicated that a Regulatory Impact Statement was not required (OIA23-06096).
The Declaration is a legislative instrument for the purposes of the Legislation Act 2003.
The Declaration takes effect on the day after it is registered on the Federal Register of Legislation.
This instrument is not exempt from sunsetting under the Legislation Act 2003.
Statement of Compatibility with Human Rights
Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011
The Fair Entitlements Guarantee (Aurora Metals Limited in Administration) Declaration 2023 is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.
Human rights implications
Article 9 of the International Covenant on Economic, Social and Cultural Rights (the ICESCR) provides that, ‘the State Parties to the present Covenant recognise the right of everyone to social security, including social insurance.’ The Committee on Economic, Social and Cultural Rights has stated that the right to social security encompasses the right to access benefits, whether in cash or in kind, without discrimination in order to secure protection from lack of work-related income caused by unemployment.[1]
The Fair Entitlements Guarantee Act 2012 establishes an assistance scheme that is intended to operate as a safety net for persons whose employment has ended due to the insolvency or bankruptcy of their employer. This safety net could be characterised as ‘social insurance’ because it ensures that employees’ unpaid entitlements are met when their employer becomes insolvent. It thus seeks to protect individuals from lack of work-related income due to unemployment.
This declaration expands the operation of the Act to an employer in administration under the Corporations Act 2001. The effect is advances of unpaid employment entitlements can be made to eligible former employees. This supports the right to access benefits in order to secure protection from lack of work-related income caused by unemployment.
Conclusion
This Declaration is compatible with human rights as it does not raise any human rights issues.
Tony Burke
Minister for Employment and Workplace Relations
[1] Committee on Economic, Social and Cultural Rights, General Comment 19, The Right to Social Security, U.N. Doc. E/C.12/GC/19 (2008)
Overview
The Fair Entitlements Guarantee (Aurora Metals Limited in Administration) Declaration 2023 was enacted under section 49 of the Fair Entitlements Guarantee Act 2012. This legislation addresses the gap in coverage for employees of companies that enter administration under Part 5.3A of the Corporations Act 2001, rather than being liquidated or declared bankrupt. By declaring that the Fair Entitlements Guarantee Act applies to former employees of Aurora Metals Limited, who are now under administration, the Declaration ensures these employees can access the financial assistance scheme designed to support them when employers become insolvent. The Declaration was issued under the authority of the Minister for Employment and Workplace Relations, Tony Burke, and aims to provide a safety net for employees facing financial insecurity due to their employer's insolvency or administration.
Scope and Application
The Fair Entitlements Guarantee (Aurora Metals Limited in Administration) Declaration 2023 applies to former employees of Aurora Metals Limited, a company currently under administration under Part 5.3A of the Corporations Act 2001. This declaration extends the scope of the Fair Entitlements Guarantee Act 2012 to include individuals who were employed by Aurora Metals Limited at the time it entered administration, allowing them to make claims and receive advances for unpaid employment entitlements if they meet the eligibility criteria. The declaration operates on a Commonwealth level, ensuring that the legislative provisions are applicable nationally. This legislative instrument was created following consultations with relevant insolvency practitioners and is intended to provide a safety net for affected employees, safeguarding them against the loss of work-related income due to their employer's insolvency. The declaration does not introduce any exclusions, exemptions, or thresholds beyond those already stipulated in the Fair Entitlements Guarantee Act 2012, and its application can be further detailed or modified through subordinate instruments as necessary.
Key Provisions
The Fair Entitlements Guarantee (Aurora Metals Limited in Administration) Declaration 2023 extends the scope of the Fair Entitlements Guarantee Act 2012 (the Act) to apply to former employees of Aurora Metals Limited (Administrators Appointed). This means that employees who were employed by Aurora Metals Limited but are no longer so employed can now make a claim under the Act for unpaid employment entitlements if they meet the eligibility criteria. Section 49 of the Act allows the Minister for Employment and Workplace Relations to make such a declaration if they are satisfied that the employer’s creditors are expected to resolve at a meeting convened under section 439A of the Corporations Act that the employer be wound up, and if it is practicable to administer the Act in relation to the specified employer. The declaration ensures that the Act applies to former employees of Aurora Metals Limited as if an insolvency event had occurred, which enables them to receive an advance for unpaid entitlements.
The Act imposes several obligations and requirements on the parties it governs. Firstly, it requires that the Minister for Employment and Workplace Relations consults with the relevant insolvency practitioner, as was done in this case with the insolvency practitioner responsible for the administration of Aurora Metals Limited. The Act also requires that eligible employees meet the conditions for an advance, as outlined in section 10. This includes demonstrating that an ‘insolvency event’ has occurred, which, in this case, is the declaration made under section 49. The Act also places a responsibility on the Fair Entitlements Guarantee Scheme to process claims and make payments to eligible employees in a timely and efficient manner.
The Fair Entitlements Guarantee Act 2012 provides for various civil and criminal consequences for breaches of the Act. Offences under the Act can include providing false or misleading information to obtain an advance, which can result in civil penalties such as fines. Under section 26 of the Act, the maximum penalty for such offences is $22,200 for individuals and $111,000 for corporations. Additionally, there are criminal penalties for serious offences, including imprisonment for up to five years or fines, or both. These penalties are intended to deter non-compliance and ensure the integrity of the scheme.
In summary, the Fair Entitlements Guarantee (Aurora Metals Limited in Administration) Declaration 2023 extends the applicability of the Fair Entitlements Guarantee Act 2012 to former employees of Aurora Metals Limited who are no longer employed by the company due to its administration under the Corporations Act 2001. This allows eligible employees to make claims for unpaid employment entitlements. The Act imposes obligations on the Minister for Employment and Workplace Relations and the Fair Entitlements Guarantee Scheme to consult and process claims effectively. Breaches of the Act can result in civil and criminal penalties, including fines and imprisonment, to ensure compliance and maintain the scheme’s integrity.