Last Tuesday, 30 October the Gillard government's Fair Entitlements Guarantee Bill was passed in the House of Representatives. This bill will impact the current federal government scheme known as the government's General Employee Entitlements Redundancy Scheme (GEERS), which has been in operation since 2001. It seems that this bill means that instead of covering the current status quo of 16 weeks of redundancy entitlements for workers who are made redundant when businesses become insolvent, it would now pay for an unlimited amount.
To date the federal government has spent about $1 billion on GEERS. The last financial year saw over $15 million worth of entitlements paid, with GEERS working very closely with insolvency practitioners in assessing claims. This new bill has met some criticism not only on the principles of redundancy and enterprise agreements, but ultimately the cost to taxpayers.
We have observed that since the introduction of the scheme that some directors have become more open to external administration with the knowledge that their employees will be covered. We have said previously that such an initiative (as GEERS) should be commended as it provides relief first and foremost to the 'innocent individuals' in our communities and perhaps a more honest and proactive reaction from the directors whom face insolvency. As might be expected there are several requirements and limitations, one of which specifically excludes the payment of outstanding superannuation. It also limits the entitlements of directors or relatives of directors to statutory limits under the Corporations Act.
It is proposed that GEERS will be renamed the Fair Entitlements Guarantee, seemingly to reflect the objective of the scheme. The Sydney Morning Herald reports that the 'scheme has the support of both sides of politics, industry, unions and insolvency practitioners who administer payments to workers.'
To read The Sydney Morning Herald's article 'Redundancy scheme boosted' click here.
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