Fair Entitlements Guarantee (Extended operation of the Act in relation to Custom Bus Australia Pty Ltd in Administration) Declaration 01/2018

Administered by Department of Employment and Workplace Relations

Legislation au F2018L00479 In force Legislative Instrument

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EXPLANATORY STATEMENT

(Issued under the Authority of the Minister for Small and Family Business, the Workplace and Deregulation)

Fair Entitlements Guarantee Act 2012

 Fair Entitlements Guarantee
(Extended operation of the Act in relation to Custom Bus Australia Pty Ltd in Administration) Declaration 01/2018

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 Custom Bus Australia Pty Ltd, 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 commenced on 5 December 2012 and 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 being under 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 person that is in 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 Custom Bus Australia Pty Ltd 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 Custom Bus Australia Pty Ltd to make a claim under the Act, and receive an advance if they are eligible.

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 Custom Bus Australia Pty Ltd

The declaration is a legislative instrument subject to 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 (Extended operation of the Act in relation to Custom Bus Australia Pty Ltd in Administration) Declaration 01/2018 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 that the employees whose access to unpaid entitlements would be delayed until such time as a liquidator is appointed, will be able to apply for assistance earlier. 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.

 

 

 

 

Craig Laundy

Minister for Small and Family Business, the Workplace and Deregulation

 

 

[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 (Extended operation of the Act in relation to Custom Bus Australia Pty Ltd in Administration) Declaration 01/2018 was enacted to address a specific gap in the Fair Entitlements Guarantee Act 2012, which was introduced to provide financial assistance to workers who have not been fully paid for work done for insolvent or bankrupt employers. This declaration extends the operation of the Act to include employees of Custom Bus Australia Pty Ltd, which is under administration under the Corporations Act 2001. Typically, the Act does not apply to employees whose former employer is in administration, but this declaration allows them to claim assistance earlier, thereby ensuring they receive protection from lack of work-related income caused by unemployment. The declaration was made under the authority of the Minister for Small and Family Business, the Workplace and Deregulation, and is compatible with human rights as it supports access to benefits without discrimination.

Scope and Application

The Fair Entitlements Guarantee (Extended operation of the Act in relation to Custom Bus Australia Pty Ltd in Administration) Declaration 01/2018 extends the application of the Fair Entitlements Guarantee Act 2012 to employees who were previously employed by Custom Bus Australia Pty Ltd, an entity currently in administration under Part 5.3A of the Corporations Act 2001. The Act, which aims to provide financial assistance for workers who have not been fully paid for their work due to their employer's insolvency or bankruptcy, typically does not apply to employees whose former employer is in administration. However, this declaration allows former employees of Custom Bus Australia Pty Ltd to make claims and receive advances if they are eligible. This extension is contingent on the Minister for Small and Family Business, the Workplace and Deregulation being satisfied that the creditors are expected to resolve to wind up the employer and that it will be practicable to administer the Act in relation to the specified employer. The declaration ensures that affected employees can access the safety net of financial assistance sooner, thereby supporting their right to social security and protection from lack of work-related income due to unemployment.

Key Provisions

The Fair Entitlements Guarantee (Extended operation of the Act in relation to Custom Bus Australia Pty Ltd in Administration) Declaration 01/2018 (the Declaration) extends the Fair Entitlements Guarantee Act 2012 (the Act) to cover employees who were formerly employed by Custom Bus Australia Pty Ltd, a company in administration under Part 5.3A of the Corporations Act 2001 (the Corporations Act). Under the Act, an ‘insolvency event’ is a trigger for the Act's operation, but this is typically when a liquidator is appointed, which does not include an administration under the Corporations Act (sections 5 and 49). The Declaration ensures that the Act applies to Custom Bus Australia Pty Ltd’s former employees as if the administrator were a liquidator, and that the insolvency event is deemed to be the making of the Declaration (sections 49 and 5). The Declaration imposes specific obligations on the parties it governs. For Custom Bus Australia Pty Ltd, it ensures that the Act applies to its former employees, allowing them to make claims for unpaid entitlements sooner than they would under standard provisions. For former employees, it means they can access the safety net provided by the Act more quickly. The Minister for Small and Family Business, the Workplace and Deregulation must consult with the relevant insolvency practitioner and be satisfied that the creditors of Custom Bus Australia Pty Ltd will likely resolve to wind up the company and that it is practicable to administer the Act in relation to the company (section 49). The insolvency practitioner must also cooperate with the Minister in these consultations. There are no direct offences, penalties, or civil/criminal consequences stated for breach of the Declaration itself. However, the Fair Entitlements Guarantee Act 2012, under which the Declaration operates, provides for potential offences and penalties. For instance, section 107 of the Act states that a person who contravenes a provision of the Act is liable to a penalty of up to 10,000 penalty units (currently approximately AUD 1.7 million) for corporations and up to 2,000 penalty units (approximately AUD 340,000) for individuals. The Act also includes provisions for civil penalties and potential criminal offences for fraudulent claims.

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Insolvency Law
Employment & Labour Law
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Sourced from the Federal Register of Legislation at 26 August 2026. For the latest information on Australian Government law please go to https://www.legislation.gov.au.