FAIR ENTITLEMENTS GUARANTEE (VERTICAL 4 PTY LTD AND ABACUS 49 PTY LTD IN ADMINISTRATION) DECLARATION 2025
EXPLANATORY STATEMENT
Issued under the Authority of the Minister for Employment and Workplace Relations
under section 49 of the Fair Entitlements Guarantee Act 2012
Purpose and operation of the InstrumenT
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:
- Vertical 4 Pty Ltd (Administrators Appointed) A.C.N. 603 513 604
- Abacus 49 Pty Ltd (Administrators Appointed) A.C.N. 623 000 760
which are entities in 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 to an employer:
- when a liquidator of the employer is appointed (provisionally or otherwise) under the Corporations Act; or
- when the employer becomes a bankrupt under the Bankruptcy Act 1966; or
- if the person is or was employed for a partnership by 2 or more of the partners - at the first time an event described above happens, or has happened, to all of the partners by whom the person is or was employed
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 both Vertical 4 Pty Ltd (Administrators Appointed) A.C.N. 603 513 604 and Abacus 49 Pty Ltd (Administrators Appointed) A.C.N. 623 000 760 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 Vertical 4 Pty Ltd (Administrators Appointed) A.C.N. 603 513 604 and Abacus 49 Pty Ltd (Administrators Appointed) A.C.N. 623 000 760 to make a claim under the Act and have their claims for an advance assessed and paid in accordance with the Act.
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 both Vertical 4 Pty Ltd (Administrators Appointed) A.C.N. 603 513 604 and Abacus 49 Pty Ltd (Administrators Appointed) A.C.N. 623 000 760.
REGULATion IMPACT STATEMENT
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 and is subject to disallowance.
The declaration 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
Fair Entitlements Guarantee (Vertical 4 Pty Ltd and Abacus 49 Pty Ltd in Administration) Declaration 2025
The Fair Entitlements Guarantee (Vertical 4 Pty Ltd and Abacus 49 Pty Ltd in Administration) Declaration 2025 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.
Overview of the Disallowable Legislative Instrument
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:
- Vertical 4 Pty Ltd (Administrators Appointed) A.C.N. 603 513 604
- Abacus 49 Pty Ltd (Administrators Appointed) A.C.N. 623 000 760
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 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.
The effect of the declaration is that the Act applies to former employees of both Vertical 4 Pty Ltd (Administrators Appointed) A.C.N. 603 513 604 and Abacus 49 Pty Ltd (Administrators Appointed) A.C.N. 623 000 760 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 Vertical 4 Pty Ltd (Administrators Appointed) A.C.N. 603 513 604 and Abacus 49 Pty Ltd (Administrators Appointed) A.C.N. 623 000 760 to make a claim under the Act and have their claims for an advance assessed and paid in accordance with the Act.
In the absence of this declaration former employees of Vertical 4 Pty Ltd (Administrators Appointed) A.C.N. 603 513 604 and Abacus 49 Pty Ltd (Administrators Appointed) A.C.N. 623 000 760 would not satisfy a condition of eligibility for an advance prescribed by subsection 10(1) of the Act, specifically paragraph 10(1)(h) which requires an effective claim to have been made under section 14. Paragraph 14(2)(b) of the Act requires that an effective claim is one that is made before the end of 12 months after the later of the following events (a) an insolvency event happens to the employer; (b) the person’s employment by the employer ends. Relevantly, ‘insolvency event’ as defined by subsection 5(a) of the Act provides that an insolvency event happens to an employer when a liquidator is appointed. This means that in the absence of this declaration paragraph 14(2)(a) of the Act would not be satisfied as one of the required events, the ‘insolvency event’ will not have occurred.
Human rights implications
Article 7 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 the enjoyment of just and favourable conditions of work’. The Committee on Economic, Social and Cultural Rights has stated that ‘Workers should not have to pay back part of their wages for work already performed and should receive all wages and benefits legally due upon termination of a contract or in the event of the bankruptcy or judicial liquidation of the employer.’[1]
The Act establishes an assistance scheme that is intended to operate as a safety net for persons whose employment has ended due to the insolvency of their employer. This safety net ensures that employees’ unpaid entitlements are met when their employer enters liquidation or bankruptcy to the extent provided for in the Act.
This declaration expands the operation of the Act to an employer in administration under the Corporations Act. The effect is advances of unpaid employment entitlements can be made to eligible former employees. This supports the right to the enjoyment of just and favourable conditions of work by providing for benefits legally due upon termination in circumstances where the employer is expected to enter liquidation.
Article 9 of 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.[2]
The Act establishes an assistance scheme that is intended to operate as a safety net for persons whose employment has ended due to the insolvency of their employer. This safety net could be characterised as ‘social insurance’ because it ensures that employees’ unpaid entitlements are met when their employer enters liquidation or bankruptcy. 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. 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.
The Hon Amanda Rishworth MP
Minister for Employment and Workplace Relations
Attachment A
NOTES ON SECTIONS
Section 1 – Name
Section 1 provides that the title of the instrument is the Fair Entitlements Guarantee (Vertical 4 Pty Ltd and Abacus 49 Pty Ltd in Administration) Declaration 2025.
Section 2 – Commencement
Section 2 provides that the instrument commences on the day after it is registered on the Federal Register of Legislation.
Section 3 – Authority
Section 3 provides that the instrument is made under section 49 of the Fair Entitlements Guarantee Act 2012.
Section 4 – Declaration
Section 4 declares that the Fair Entitlements Guarantee Act 2012 applies in relation to persons who were employed, but are no longer employed, by Vertical 4 Pty Ltd (Administrators Appointed) A.C.N 603 513 604 and Abacus 49 Pty Ltd (Administrators Appointed) A.C.N. 623 000 760 which are entities in administration under the Corporations Act 2001.
[1] UN Committee on Economic, Social and Cultural Rights (CESCR), General comment No. 23 (2016) on the right to just and favourable conditions of work (article 7 of the International Covenant on Economic, Social and Cultural Rights), E/C.12/GC/23, 7 April 2016, https://www.refworld.org/legal/general/cescr/2016/en/122360
[2] Committee on Economic, Social and Cultural Rights, General Comment 19, The Right to Social Security, U.N. Doc. E/C.12/GC/19 (2008)