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 SDV Longwall Group in Administration) Declaration 01/2015
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, SDV Longwall Pty Ltd, SDV Long Wall Holdings Pty Ltd, SDV Longwall Support Pty Ltd, SDV Longwall Support Pty Ltd ATF The Scott Vella Discretionary Trust and CDENG Pty Ltd (Administrators Appointed) (together called ‘SDV’) 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 SDV 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 SDV 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 SDV.
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 SDV Longwall Group in Administration) Declaration 01/2015 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.
Eric Abetz
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 (Extended operation of the Act in relation to SDV Longwall Group in Administration) Declaration 01/2015 was enacted to address a specific gap in the Fair Entitlements Guarantee Act 2012. The Act was originally established to provide financial assistance for workers who had not been fully paid for work done for insolvent or bankrupt employers. However, it did not cover employees of companies in administration under Part 5.3A of the Corporations Act 2001. This legislative instrument extends the operation of the Fair Entitlements Guarantee Act to such employees, ensuring they can receive an advance if they meet the eligibility criteria. The instrument was issued under the authority of the Minister for Employment and was made in consultation with the relevant insolvency practitioner. The policy objective is to extend the safety net provided by the Act to additional employees, thereby protecting them from loss of work-related income due to their employer’s insolvency or administration.
Scope and Application
The Fair Entitlements Guarantee (Extended operation of the Act in relation to SDV Longwall Group in Administration) Declaration 01/2015 extends the application of the Fair Entitlements Guarantee Act 2012 to cover former employees of SDV Longwall Group, a conglomerate comprising several entities that have entered administration under Part 5.3A of the Corporations Act 2001. This extension is designed to ensure that former employees, who would otherwise not qualify for the Act's provisions due to their employer's status in administration rather than liquidation, can still receive financial assistance for unpaid work-related entitlements. The declaration allows these former employees to make claims and potentially receive advances under the Act, thereby protecting them from loss of income due to their employer's insolvency. The decision to make this declaration was informed by consultations with the relevant insolvency practitioner and aligns with the human rights principle of social security, as it ensures that affected employees can access benefits to mitigate the impact of unemployment caused by their employer's financial difficulties.
Key Provisions
The Fair Entitlements Guarantee (Extended operation of the Act in relation to SDV Longwall Group in Administration) Declaration 01/2015 (the Declaration) extends the operation of the Fair Entitlements Guarantee Act 2012 (the Act) to cover employees of the SDV Longwall Group, which includes SDV Longwall Pty Ltd, SDV Long Wall Holdings Pty Ltd, SDV Longwall Support Pty Ltd, SDV Longwall Support Pty Ltd ATF The Scott Vella Discretionary Trust, and CDENG Pty Ltd (Administrators Appointed) (collectively referred to as ‘SDV’). These entities are under administration under Part 5.3A of the Corporations Act 2001 (the Corporations Act). Ordinarily, the Act applies only to situations where an employer is insolvent or bankrupt, but this Declaration allows it to cover cases where the employer is under administration. Specifically, section 49 of the Act allows the Minister for Employment to make a declaration under certain conditions, which this Declaration does by determining that the Act applies to the former employees of SDV as if an insolvency event had occurred when the administrator was appointed (section 49(1)(a) and (b)). This means that former employees of SDV can now claim under the Act and potentially receive an advance if they meet the eligibility criteria (section 10).
Under the Act, former employees of SDV now have the obligation to apply for an advance if they have not been fully paid for their work. They must meet the eligibility conditions, including the requirement that an ‘insolvency event’ has occurred, which in this case is defined by the Declaration (section 10). The Act imposes on the former employees the responsibility to provide any necessary documentation and information to support their claim. The Act also imposes on the administrators of SDV the obligation to facilitate the claims process and ensure that the Act is administered properly. The Minister for Employment, having made the Declaration, must ensure that the criteria for making such a Declaration have been met and that it is practicable to administer the Act in this context.
Breaches of the obligations or requirements under the Act may lead to civil or criminal consequences. For example, if an administrator fails to facilitate the claims process as required, they may face legal action for breach of statutory duty. Similarly, if a former employee provides false information or documentation in support of their claim, they may face charges of fraud, which could result in substantial fines or imprisonment. The exact penalties would depend on the nature and severity of the breach, but the Act provides for significant penalties to ensure compliance and to protect the integrity of the scheme.