Fair Entitlements Guarantee (Tuftex Carpets Pty Ltd in Administration) Declaration 2024

Administered by Department of Employment and Workplace Relations

Legislation au F2024L00400 In force Legislative Instrument

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FAIR ENTITLEMENTS GUARANTEE (TUFTEX CARPETS PTY LTD IN ADMINISTRATION) DECLARATION 2024

 

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, Tuftex Carpets Pty Ltd (Administrators Appointed) (“Tuftex Carpets”) 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 Tuftex Carpets 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 Tuftex Carpets 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 Tuftex Carpets.  

 

Regulation Impact Statement

 

The Office of Impact Analysis was consulted regarding this instrument and indicated that a detailed Impact Analysis was not required (OIA24‑07255).

 

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 (Tuftex Carpets Pty Ltd in Administration) Declaration 2024 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 (Tuftex Carpets Pty Ltd in Administration) Declaration 2024 was enacted to extend the application of the Fair Entitlements Guarantee Act 2012 to former employees of Tuftex Carpets Pty Ltd, a company currently under administration under Part 5.3A of the Corporations Act 2001. This extension addresses a legislative gap where the Act, which provides financial assistance for workers whose employers have become insolvent or bankrupt, did not previously cover employees of companies in administration. The Declaration was issued under section 49 of the Fair Entitlements Guarantee Act 2012 by the Minister for Employment and Workplace Relations, who was satisfied that the creditors of Tuftex Carpets would likely resolve to wind up the company and that administering the Act in this context would be practicable. The objective is to ensure that eligible former employees can claim and receive advances for their unpaid employment entitlements, thereby providing a safety net and supporting the right to social security as recognised in international human rights instruments.

Scope and Application

The Fair Entitlements Guarantee (Tuftex Carpets Pty Ltd in Administration) Declaration 2024 applies specifically to former employees of Tuftex Carpets Pty Ltd, an entity currently under administration under Part 5.3A of the Corporations Act 2001. This declaration extends the application of the Fair Entitlements Guarantee Act 2012 to these former employees, allowing them to claim unpaid employment entitlements as if an insolvency event had occurred, despite the employer not being formally wound up. The declaration is made under section 49 of the Fair Entitlements Guarantee Act 2012, which permits the Minister for Employment and Workplace Relations to apply the Act to employers under administration if certain conditions are met. This includes the expectation that creditors will resolve to wind up the employer and the practicality of administering the Act in this context. The declaration does not alter the general application of the Fair Entitlements Guarantee Act 2012 to other employers in insolvency or bankruptcy but serves as an exception for entities under administration. The scope of this declaration is confined to the Commonwealth jurisdiction and does not affect state or territory laws unless they are expressly amended to align with this federal legislation.

Key Provisions

The Fair Entitlements Guarantee (Tuftex Carpets Pty Ltd in Administration) Declaration 2024 primarily serves to extend the applicability of the Fair Entitlements Guarantee Act 2012 to former employees of Tuftex Carpets Pty Ltd, which is under administration under the Corporations Act 2001 (section 49). This extension allows these former employees to make claims under the Act for unpaid entitlements, which they otherwise might not be eligible for, given the usual exclusion of employers under administration from the Act's purview. The Act provides financial assistance to workers whose employers have become insolvent or bankrupt, ensuring they receive their unpaid wages and other entitlements. The Act imposes several obligations on the entities it governs. Firstly, it requires the Minister for Employment and Workplace Relations to determine whether the conditions specified in section 49(2) of the Act are met before making a declaration. These conditions include the expectation that creditors will resolve to wind up the employer and the practicality of administering the Act in relation to the specified employer. Once the declaration is made, the Act applies as if an insolvency event had occurred, thereby entitling eligible former employees of Tuftex Carpets to claim their unpaid entitlements. The Minister must also consult with relevant parties, such as the insolvency practitioner overseeing the administration of Tuftex Carpets, to ensure that all conditions for the declaration are satisfied. In terms of consequences, the Fair Entitlements Guarantee Act 2012 does not explicitly outline specific offences, penalties, or civil/criminal consequences for non-compliance with its provisions within the declaration itself. However, the Act provides a framework for financial assistance and claims processing, and any failure to adhere to the procedures set forth could potentially lead to disputes or legal challenges regarding the distribution of funds or eligibility of claims. The overarching purpose is to ensure that eligible employees receive their rightful entitlements without undue hardship, thereby upholding their economic and social rights as protected under international human rights instruments, such as the International Covenant on Economic, Social and Cultural Rights. The compatibility of the Declaration with human rights ensures that it supports the right to social security and protection from lack of work-related income due to unemployment.

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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.