Safe But Slow: Pros and Cons of the Employee Entitlements Safety Net

When a Director is contemplating putting their company into liquidation, one of their biggest fears is that their loyal and hardworking staff won’t be paid their entitlements.

Fortunately there’s a government safety net that protects employee entitlements in these situations.

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The Fair Entitlements Guarantee (FEG) is available to employees who weren’t paid their entitlements because their employer went bankrupt or liquidated on or after 5 December 2012 (the date the Guarantee came into effect).

Eligible employees can claim:

  • up to 13 weeks unpaid wages

  • unpaid annual leave

  • unpaid long service leave

  • up to 5 weeks unpaid payment in lieu of notice

  • up to 4 weeks unpaid redundancy entitlement per year.

That’s great news for employees. However, the average timeframe for receiving payment after lodging an FEG claim is three to five months (depending on the department’s workload). And the scheme doesn’t extend to unpaid superannuation.

It’s also unavailable for:

  • ‘excluded employees’ (e.g. company directors, principals of bankrupt employers and their relatives, etc.)

  • contractors

  • subcontractors

  • agents

  • shareholders

  • investors

  • volunteers

  • anyone owed money by the employer for reasons other than employee entitlements.

For more information about FEG you can:

If one of your clients is thinking about liquidating their company, and they’re uncertain about the likely outcome for their employees, contact Chad or Mitch who’ll be happy to discuss the situation with you.