EXPLANATORY STATEMENT
(Issued under the Authority of the Minister for Employment)
Fair Entitlements Guarantee Act 2012
Fair Entitlements Guarantee
(Extended operation of the Act in relation to HRL Group of Companies in Administration) Declaration 02/2015
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, HRL Limited, HRL Technology Pty Ltd, Linepro Pty Ltd, Aerial Devices Australia Pty Ltd, Vemco Pty Ltd, Vemco Services Pty Ltd and Vemtec Pty Ltd (Administrators Appointed) (together called ‘HRL Group of Companies’) which are entities 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 HRL Group of Companies 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 HRL Group of Companies 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 HRL Group of Companies.
The instrument is a legislative instrument subject to the Legislative Instruments 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 HRL in Administration) Declaration 02/2015 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.
Michaelia Cash
Minister for Employment
[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 Act 2012 was enacted by the Commonwealth Parliament to establish a safety net for workers who are not fully compensated for their labour due to their employer's insolvency or bankruptcy. This Act serves to provide financial assistance to those employees, ensuring they receive their unpaid entitlements. The Fair Entitlements Guarantee (Extended operation of the Act in relation to HRL Group of Companies in Administration) Declaration 2015 was issued under the authority of the Minister for Employment and is intended to extend the application of the Act to the HRL Group of Companies, which are currently under administration under the Corporations Act 2001. This extension allows former employees of these companies to claim under the Act if they meet the eligibility criteria, thereby protecting them from the lack of work-related income due to their employer's insolvency. The policy objective is to uphold the right to social security and to provide a financial safety net for employees affected by their employer's insolvency.
Scope and Application
The Fair Entitlements Guarantee (Extended operation of the Act in relation to HRL in Administration) Declaration 02/2015 is a legislative instrument that extends the application of the Fair Entitlements Guarantee Act 2012 to former employees of the HRL Group of Companies, which are entities under administration under Part 5.3A of the Corporations Act 2001. This extension is significant as the Act does not ordinarily apply to employees of companies in administration. The declaration ensures that former employees of these companies can now make claims and receive advances for unpaid employment entitlements under the Act, thereby providing a safety net for employees affected by their employer's insolvency. The declaration was made following consultation with the insolvency practitioner responsible for the administration of HRL Group of Companies and is compatible with human rights, particularly the right to social security as outlined in Article 9 of the International Covenant on Economic, Social and Cultural Rights.
Key Provisions
The Fair Entitlements Guarantee (Extended operation of the Act in relation to HRL Group of Companies in Administration) Declaration 02/2015 extends the operation of the Fair Entitlements Guarantee Act 2012 (the Act) to former employees of HRL Group of Companies. These companies, which include HRL Limited, HRL Technology Pty Ltd, and others, are under administration under Part 5.3A of the Corporations Act 2001. This extension ensures that former employees of these companies can make a claim for unpaid employment entitlements under the Act, despite the fact that their former employers are in administration rather than liquidation, a scenario that would otherwise exclude them from the Act's coverage. This extension is achieved through a declaration made by the Minister for Employment, under section 49 of the Act, which allows the Minister to apply the Act to specified employers in administration if certain conditions are met (sections 49(2)(a) and 49(2)(b)).
The declaration imposes specific obligations on the HRL Group of Companies, particularly on their administrators, to facilitate the administration of the Act in relation to these companies. These obligations include ensuring that the Act is administered in a manner consistent with its objectives, which include providing financial assistance to former employees who have not been fully paid for their work. The administrators must cooperate with the Fair Entitlements Guarantee scheme to ensure that eligible former employees can access the financial assistance they are entitled to under the Act. Additionally, the declaration requires that the administrators provide necessary information and documentation to support claims made by former employees.
Failure to comply with the obligations imposed by the Act can result in legal consequences. The Fair Entitlements Guarantee Act 2012 includes provisions for penalties and enforcement measures. While the specific penalties for breach of the Act are not detailed in the Declaration, the general legal framework under which the Act operates includes potential civil and criminal penalties for non-compliance. These penalties can include fines and imprisonment for serious or repeated breaches, reflecting the seriousness with which the law treats the obligation to ensure that employees receive their unpaid entitlements. The exact penalties and enforcement mechanisms would be determined by the courts, based on the nature and severity of the breach.
The Fair Entitlements Guarantee (Extended operation of the Act in relation to HRL Group of Companies in Administration) Declaration 02/2015 is also designed to be compatible with human rights, particularly the right to social security as recognised under international law, such as Article 9 of the International Covenant on Economic, Social and Cultural Rights. By extending the operation of the Act to include former employees of companies in administration, the Declaration supports the right of individuals to access benefits that protect them from lack of work-related income caused by unemployment. This extension of the Act's coverage is seen as a way to uphold the human right to social security by ensuring that all eligible former employees can receive the financial assistance they need.