Australian Treasury have just now released for consultation proposed new legislation to “address corporate misuse of the FEG employee scheme” in a liquidation scenario.
For those unaware, the FEG scheme is a government fund setup to protect certain employee entitlements when a company goes into Liquidation.
Over the last 4 years, the funds used in the FEG scheme have tripled to $243.6m.
Treasury are seeking feedback on 4 key new proposals:
(1) strengthen civil and criminal actions against persons who engage in transactions designed to “prevent, avoid or reduce” employer liabilities;
(2) where it is ‘just and equitable’, allow for recovery against corporate related group companies that have benefited from the insolvent entities ‘work’ (…whatever that means?)
(3) allow employees, the ATO, Department of Jobs and Small Business (“DJSB”) and the Fair Work Ombudsman (“FWO”) to pursue claims associated with (1) & (2); and
(4) new (up to) 10 year disqualification powers to be given to ASIC and the Courts, where you are a director of 2 or more insolvent entities, have contravened your director duties and FEG (via the DJSB) have received no or minimal return in the liquidation process.
Let me know what you think in the comments.