Matt Thistlethwaite (NSW, Australian Labor Party) Share this | Hansard source

I support the passage of the Fair Entitlements Guarantee Bill 2012. The employment contract is at the heart of any modern market economy. Through this contract the employer agrees with an employee to provide a position and remuneration in exchange for an employee providing their labour and wares in a skilful and diligent manner. Over time, law and tradition in this country have recognised the fact that when an employer can no longer provide that position or remuneration because a role is no longer needed or, indeed, because a company can no longer trade, then the employer is obliged to provide a form of redundancy pay to ensure that the employee is not disadvantaged financially during the period in which they may be seeking other work in the wake of having exclusively provided their labour to a particular employer.

That is the fair system that has developed in this country. Unfortunately, there have been holes in the system. I have sat with employees and their families and met with them on occasions when employers have breached their obligations under that contract. They have betrayed the good faith that has often been entered into between employer and employee by either trading insolvently and not informing the market and the employees before it is too late, or having employees get in the line of creditors and wait for a payout in redundancy and unpaid entitlements. I have seen in the eyes of those employees when these situations occur the sense of hopelessness for how they are going to continue to run a family, to pay school fees, to buy enough food or to pay their mortgage. This bill seeks to ensure that that hopelessness no longer exists in our economy, and in 2010 the Gillard government made an election commitment to better protect the entitlements of Australian employees impacted by the insolvency or bankruptcy of their employer.

This bill will replace the existing General Employee Entitlements and Redundancy Scheme, or GEERS, with a fair entitlements guarantee in legislation. This bill is about giving Australian workers a fair go by providing peace of mind and security when situations of insolvency and redundancy occur. This bill will protect Australian employees under circumstances which are brought about through no fault of their own choice or through their employment contract.

Under this bill eligible employees will be covered for unpaid entitlements, including redundancy, annual leave, long-service leave, wages and payments in lieu of notice. The bill will protect redundancy pay up to a maximum of four weeks per year of service, a rate considered fair by most industrial agreements and awards in this country. This will mean that most employees will receive all the redundancy entitlements that they are owed. The bill will enable payment of unpaid wages for up to only 13 weeks and will provide payment in lieu of notice at five weeks.

The bill also strengthens the recognition of eligible entitlements for employees who continue to be employed following the appointment of an insolvency practitioner. From now on, if you are an employee in this situation you will be entitled to receive unpaid entitlements accruing right up until your last day of working. An important element of this bill is that it does not offer employers an opportunity to shirk their responsibilities to their workforce. Under this bill employees will be eligible for an advance only in genuine cases where they have lost their job or as a result of the insolvency or bankruptcy of their employer.

Importantly, no assistance will be available to support any form of business restructure or where funds will be available to pay entitlements within a reasonable period.

The key changes established under this bill aim to reduce operational barriers and to avoid unnecessary delays. For example, simplifying transfer-of-business arrangements will simplify the assessment process and reduce complexity. Under this bill, the discretion may only be exercised in specific circumstances which relate to non-routine matters that support the objectives of the bill. Key areas where discretionary powers are retained include the ability to make payments in administration and prior to liquidation, the decision to make an early instalment of an advance and a regulation-making power to enable regulations to be made to facilitate payments to people who are not employees. The bill provides enough flexibility to support the objectives of the bill, whilst not undermining the aim of providing greater certainty and continuity in establishing the legislative framework.

This bill is a fair and reasonable response by this government to an election commitment that was made in 2010. It provides security and certainty for employees and for employers, importantly, in circumstances where redundancy, insolvency and liquidation occur. I commend the bill to the Senate.