Fair Entitlements Guarantee

The Fair Entitlements Guarantee, which the department administers, provides a safety net for workers who have lost their jobs and entitlements through their employer’s liquidation or bankruptcy.

It covers five employment entitlements: unpaid wages (up to 13 weeks), annual leave, long service leave, payment in lieu of notice (up to five weeks) and redundancy pay (up to four weeks for each year of service). Payments are subject to a maximum weekly wage cap, which was $2,451 in 2018–19.

Achievements in delivering the Fair Entitlements Guarantee in 2018–19 include:

• improving average processing time to 8.0 weeks, in a year when the number of claims increased by 13 per cent
• advancing $174.8 million in claim payments to 11,207 people
• recovering $47.1 million from liquidated companies on behalf of the Commonwealth through creditor dividends
• responding to 21,014 telephone calls and 13,646 emails received through the Fair Entitlements Guarantee hotline and mailbox
• initiating internal review of 1,404 claim decisions (10.3 per cent of the total number claiming assistance)
• finalising 803 requests from people seeking a review of their claim (5.9 per cent of the total number claiming assistance).

Administrative Appeals Tribunal

Fair Entitlements Guarantee claimants who are dissatisfied with the outcome of a departmental review can apply to the Administrative Appeals Tribunal for further review. In 2018–19, 17 applications for review were lodged with the tribunal. This represents 2.0 per cent of all claimant-initiated review decisions made during the year. The tribunal finalised 34 Fair Entitlements Guarantee matters in 2018–19. Of these:

• the department and the claimant reached an agreed outcome in seven matters
• the tribunal affirmed the department’s decision, or dismissed the claimant’s application, in nine matters
• the claimant withdrew their application in 11 matters
• the tribunal set aside the department’s decision in seven matters.

Business improvements

The department continued to improve the administration of the Fair Entitlements Guarantee to ensure that it delivers quick and accurate outcomes for redundant workers, and that insolvency practitioners can easily engage with the program.

Business improvements implemented in 2018–19 include:

• developing a new web-based claim form that makes it easier for people who have lost their jobs to access assistance
• launching a resource centre for insolvency practitioners, through their online portal, to help them provide employee entitlement information needed by the department to administer the Fair Entitlements Guarantee
• expanding compliance-checking mechanisms within the business system used to administer the Fair Entitlements Guarantee.

Program assurance and compliance

The department continued to provide assurance on the integrity of claim decisions under the Fair Entitlements Guarantee, including by:

• assessing a random sample of claim decisions for accuracy
• assessing a random sample of taxation calculations for payments
• undertaking data analytics to identify and respond to ‘red flags’ indicating possible non-compliance and fraud.

The department also undertook other safeguard measures such as program-specific fraud detection training for all staff in the program, business system controls, and mechanisms for receiving and responding to tip-offs.

An internal assurance forum ensures the department identifies and addresses emerging issues through compliance and review processes.

FSG Australia

The department hosts Fair Entitlements Guarantee claim drop-in centres on a case-by-case basis to improve service delivery and provide additional support to claimants. Drop-in centres are established where it is apparent that:

• a large number of employees will be lodging claims, and a targeted approach will enable them to do so more quickly
• a large group of employees with particular needs will be lodging claims, and targeted assistance will help them do so more easily.

The department resources these centres with laptops and scanners so that people can lodge their claims and supporting documents on the spot.

FSG Australia was a disability support provider primarily based in south-east Queensland and northern New South Wales. It had over 900 employees, approximately 600 of whom were casual. On 3 August 2018, FSG Australia entered liquidation.

From 14 August 2018 to 17 August 2018, Fair Entitlements Guarantee staff provided a claims drop-in centre at the Southport RSL Club for former FSG Australia workers. The centre helped 111 former employees to prepare and lodge their claims for unpaid employee entitlements under the Fair Entitlements Guarantee.

The department paid $7.5 million to 356 eligible employees under the Fair Entitlements Guarantee, making the first payments less than one month after the company entered liquidation. Half of all the claims were finalised by the end of October, and 90 per cent by the end of November.

Fair Entitlements Guarantee Recovery Program

The costs of the Fair Entitlements Guarantee, like those of its predecessor the General Employee Entitlements and Redundancy Scheme, have significantly increased. In 2015–16, the Government responded to these increasing costs by initiating the Fair Entitlements Guarantee Recovery Program to strengthen the integrity and sustainability of the Fair Entitlements Guarantee. The aim of the Fair Entitlements Guarantee Recovery Program is to increase the return of amounts advanced under the Fair Entitlements Guarantee and thereby reduce the overall cost to taxpayers. It does this by funding case investigations and litigation.

Since it began on 1 July 2015, the Fair Entitlements Guarantee Recovery Program has expended approximately $23.2 million of administered funding (excluding funding of the special purpose liquidator of Queensland Nickel Pty Ltd (in liquidation)) to recover approximately $101.49 million of Fair Entitlements Guarantee advances. The recovered amounts are returned to consolidated revenue. The program has also incidentally recovered $8.5 million in additional entitlements for employees.

Enforcing creditor rights to information

People who are owed money by an insolvent company often feel powerless and uncertain, particularly as reporting to creditors is typically limited when the company is under administration. To address this issue, sections 70–45 and 70–55 of the Insolvency Practice Schedule (Corporations) were introduced into the Corporations Act 2001 in September 2017, giving creditors the right to request information from insolvency practitioners at any time during the external administration process.

The department uses these provisions to request information to assess the progress of insolvencies and ensure that the employees’ priority rights to repayment in the liquidation are properly recognised. However, until recently there was uncertainty about the nature of information creditors are entitled to request.

In September 2018, the department, through the Fair Entitlements Guarantee Recovery Program, applied to the Supreme Court of New South Wales to clarify the scope of creditors’ powers to request information under these provisions. The department’s application — the first to consider the new creditor information rights — sought to enforce an information request the department had issued to the liquidators of the 1st Fleet group of companies.

The judgement of the Supreme Court of New South Wales, delivered in January 2019, strongly reinforced the breadth of the powers available to creditors under the information request provisions. In granting the department access to the documents requested, the judgement highlighted the mandatory nature of information requests and confirmed that these provisions were intended to assist creditors to meaningfully participate in external administrations.

This decision has generated significant interest from the insolvency profession, as it provides clear guidance on how insolvency practitioners should approach information requests in future. For employee creditors of an insolvent company, it provides greater confidence and clarity as to the types of information they are entitled to request and receive.

Seasonal Worker Programme

The department is the lead agency for the Seasonal Worker Programme, with support from the Department of Foreign Affairs and Trade, the Department of Home Affairs, the Department of Agriculture, the Australian Taxation Office and the Fair Work Ombudsman.

The program contributes to the economic development of nine Pacific Island countries and Timor-Leste by providing access to work opportunities in Australia’s agriculture sector and, in selected locations, accommodation sector. It also offers Australian employers access to a reliable, returning workforce, subject to local labour market testing.

In 2018–19 the program continued to grow with:

• 12,200 subclass 403 visas issued to seasonal workers by the Department of Home Affairs, a 44 per cent increase compared to 2017–18
• 131 employers approved under the program, a 28 per cent increase since 2017–18.

From 1 July 2018, new measures to support participation by employers and workers in the Seasonal Worker Programme were implemented. These measures included increasing Australian industry engagement and streamlining the administration of the program to reduce red tape.

On 5 November 2018, the Australian Government announced, as part of a package of further measures to support farmers and regional economies, a 24-month trial of changes to the Seasonal Worker Programme to provide additional incentives and opportunities for employers to recruit workers. These included:

• increasing the maximum work period in Australia to nine months for all participating countries (it was previously six months for some countries)
• increasing the validity of labour market testing before recruiting workers from three to six months
• reducing out-of-pocket expenses for employers (workers now repay their full travel costs except for the first $300, a reduction from the previous $500).

The 2019–20 Budget included a new measure to help smaller farmers address agricultural workforce shortages through the Seasonal Worker Programme. The 12-month pilot, introduced on 1 May 2019 in three regions, will give farmers who are not currently participating in the Seasonal Worker Programme access to seasonal workers through labour hire companies and contractors to meet their harvest needs.

Selected labour hire employers in the Sunraysia (NSW/Vic), Goulburn/Murray (Vic) and Riverina (NSW) regions will link smaller farms with seasonal workers to meet harvest requirements. Regional coordinators from the department and inspectors from the Fair Work Ombudsman will be on the ground to check on the workers’ welfare through monitoring visits.

Program assurance remains a strong focus of program management to ensure protections and support are in place for seasonal workers. In 2018–19, the department conducted 28 regional visits to 112 placements across Australia for monitoring purposes. In addition, the department has strengthened monitoring of new employers.

Coal Mining Industry (Long Service Leave) Corporation

The department supports the Coal Mining Industry (Long Service Leave) Corporation (Coal LSL), which is responsible for administering the Coal Mining Industry Long Service Leave Fund. Funding provided to Coal LSL is dependent on levies collected from employers under the Coal Mining Industry (Long Service Leave) Payroll Levy Collection Act 1992.

Protected Action Ballots Scheme

Under the Fair Work Act 2009 a ballot of eligible employees is required before protected industrial action can be taken to pursue claims during bargaining for an enterprise agreement, except when the action is in response to industrial action by the other party. During 2018–19 the department met the full cost of 486 ballots, paying $1.159 million under the scheme.

International Labour Organization

Australia has been a member of the International Labour Organization (ILO) since its foundation in 1919. An important part of the department’s international engagement is representing Australian interests at the ILO through Australia’s elected position on the ILO Governing Body. Australian Government delegates play an active role at ILO meetings, contributing an Australian and regional perspective to the ILO’s work and planning.

During 2018–19, the department’s Minister-Counsellor (Employment) continued as Australia’s representative to the ILO and participated in ILO meetings throughout the reporting year. The department also represented the Australian Government at ILO Governing Body meetings in November 2018, March 2019 and June 2019.

ILO Centenary International Labour Conference

From 10 to 21 June 2019 the department represented the Australian Government at the 108th session of the International Labour Conference (ILC), which commemorated the 100th anniversary of the establishment of the ILO. In keeping with the significance of this event, the ILC was attended by 6,300 delegates representing governments, workers and employers from 178 of the ILO’s member states, including over 35 heads of state. Australia was represented by a high-level delegation led by the Minister for Employment, Skills, Small and Family Business, Senator the Hon Michaelia Cash.

As part of Australia’s preparation for the centenary ILC, the department hosted a tripartite national dialogue on the future of work on 1 March 2019. The department, the Australian Chamber of Commerce and Industry and the Australian Council of Trade Unions discussed Australia’s response to the report of the ILO Global Commission on the Future of Work, Work for a Brighter Future, released on 22 January 2019. The report was commissioned for the ILO’s centenary and was used in developing the ILO’s Centenary Declaration. Key themes that emerged from the dialogue were identifying future skill needs, future-proofing worker protections, and the value of continuing tripartite discussions on the future of work.

The Centenary Declaration adopted by the ILC is a highly significant development. It reaffirms the ILO’s mandate in relation to the future of work and sets the ILO’s agenda for its second century.

The ILC also adopted a new ILO convention obliging ILO member states who choose to ratify it to prohibit all forms of violence and harassment in the world of work, including gender-based violence. It includes obligations to ensure monitoring and enforcement of national laws and access to dispute resolution mechanisms, anti-discrimination obligations and protection for vulnerable groups.

As a deputy member of the ILO’s Governing Body, Australia will continue to influence the ILO’s implementation of the Centenary Declaration and the Violence and Harassment Convention at important discussions that will take place at the Governing Body meeting in November 2019.

Regional aid projects

During the reporting period, the department worked with the Department of Foreign Affairs and Trade on regional aid projects, including the ILO’s Better Work program, which the Department of Foreign Affairs and Trade has funded since 1 June 2016. Better Work engages business, civil society and governments to assess workplace conditions in the garment industry and create strategies for improving labour standards and addressing gender issues.