Eric Abetz (Tasmania, Liberal Party, Shadow Minister for Employment and Workplace Relations) Share this | Link to this | Hansard source

The Fair Entitlements Guarantee Bill 2012 seeks to enshrine in legislation that which the coalition put forward as the General Employee Entitlements and Redundancy Scheme. This was an initiative of the Howard government. It was an initiative which gave expression to the coalition approach to matters workplace relations—namely, practical solutions for practical problems. What we had, courtesy of the Keating recession that we had to have, was a number of businesses that went broke and did not have appropriate reserves to pay out hard-earned employee entitlements.

We as a coalition at the time believed and we still believe that employees who go through the trauma of losing their employment because of the failure of the business for which they work should not have the double whammy visited upon them by having their entitlements taken away from them as well. That is why the coalition under Mr Howard and, might I say, under Mr Abbott, as the minister for workplace relations at the time, introduced the General Employee Entitlements and Redundancy Scheme. It was a good scheme. It remains a good scheme and it is a scheme that provides protection for Australian workers who have earned and accrued entitlements. As a community, I believe it is appropriate to fund those entitlements in circumstances where people lose their jobs as a result of business failure.

As is the wont with the government, because it was a Howard government initiative, because it is a Howard government success story, what do you have to do? You have to change its name. You have got to obliterate anything that might link it to the Howard era. As a result, you have got to change the name so that, at the next election, Labor will be able to go to the Australian people and say, 'We introduced the Fair Entitlements Guarantee Bill 2012.' Yes, they will be able to say that, but the more discerning punter will know that this is mainly a name change to try to obliterate any of the history which of course is embedded in the coalition's concern for justice for employees who lose their appointment as a result of business failure.

Having said that, there are aspects of this bill which we support and that we can understand, but one thing that we are concerned about—and I will be seeking to move an amendment during the committee stage—is the benefits that are to accrue under this legislation.

The benefits that are being legislated here are, in the view of the coalition, somewhat overgenerous inasmuch as they go beyond the Fair Work Australia standards and they go beyond the Australian Industrial Relations Commission standard in relation to matters redundancy. If the parliament legislates this standard then of course it will make it so much easier for those advocating for more generous redundancy schemes to assert that, if the parliament says that this is a good regime in relation to redundancy, because the parliament has so legislated, it should be part of the relevant modern award or the relevant enterprise bargaining agreement.

It is always, I suppose, the role of the conservatives in politics to sound the warning bell. We regrettably have examples around the world of countries that thought and believed that they could legislate wonderful schemes—for redundancy, retirement et cetera—and when you have a look at those countries today you see them as the PIGS, the Portugals, the Irelands, the Greeces and the Spains. They are the countries where weak leadership of years before were willing to hand out benefits that were unsustainable. And, yes, they made heroes of themselves in the day that they handed out the benefits, but they were the architects, ultimately, of the collapse of these economies by promising too much and by giving too much in circumstances where it was clearly unsustainable. So what I would say to the Senate chamber is: be careful what you ultimately wish for because, by providing overgenerous benefits today, you may well be providing the architecture for more business collapses and ultimately economic collapse in the years to come. It will not be tomorrow. It will not be next year. But it will be some years down the track.

Make no mistake: if this becomes the standard, employers—who are the job creators in this economy—will see the cost of employment increasing even further. They will see that a redundancy scheme that is so generous will be something that their business will have to pay for—something that their business will have to set aside money for. What will those businesses do, especially those in the small manufacturing sectors? They will be looking elsewhere for their manufacturing. We talk about the Asian century. I think we know what is happening to manufacturing in this country. It is going to Asia and it is going elsewhere. It is not actually burgeoning within Australia as we speak.

So I simply ask the government: why would you seek to put forward a further impediment? And make no mistake: this standard, if we legislate it, will trickle through the system and will become the accepted standard, and that accepted standard will mitigate against future employment in Australia. It will mitigate against future employment in Australia because it will mitigate against the future viability of these businesses. That is the harsh reality. That is the reality with this legislation.

In your heart of hearts, would you love this to be possible for everybody? Would you love it to be that we could double the redundancy payments? Of course, we would all like to do it, but the question is: is it actually responsible and is it actually doable? One needs to step back and say, 'We as legislators have a responsibility. Do we want to become popular and claim that we are handing out all these goodies, or do we want to be responsible and say that there are consequences of handing out too many lollies too often?' That is basically the question that has informed the coalition's decision to seek to amend this legislation and, in the absence of the amendment getting through, to oppose this bill.

The history of taxpayer funded redundancy entitlements arose as a result of the Ansett collapse, and most people will recall the unfortunate circumstances surrounding that. The chief executive of the Australian Industry Group and others have warned people about this bill. They are concerned as to the consequences of it, and there is no doubt, in the words of Mr Innes Willox, that the bill quite deliberately has the potential to 'fuel union claims for employers to agree to similar redundancy benefits in enterprise agreements.' That is what we see in this bill and, whilst it may be well intentioned, we know that the good intention of providing these extra benefits will potentially lead to fewer employment opportunities.

The concern we have is that the high bar that this legislation will set is being done outside the Fair Work Act mechanism. This is despite Labor proudly continuing to announce and parrot that the Fair Work Act 'got the balance right'. If the Fair Work Act is as strong and robust as the government claims, and if it is subject to rigorous review as it claims, then why not make the adjustments within the scope of the Fair Work Act? Why do these overgenerous redundancy schemes need to be brought in via a separate piece of legislation? Why can't Fair Work Australia make these determinations, weighing up all the arguments for and against? Why is it that the government is not willing to accept the umpire's decision in relation to these matters?

Indeed, we have been told time and time again, that the National Employment Standards of the Fair Work Act 'got the balance right', 'sets a community standard' and, we are told, is a norm for acceptable community behaviour in relation to redundancy pays. We happen to agree with that. The levels, interestingly enough, put in a schedule would see that, after one year but less than two years of employment, your redundancy payout would be four weeks, and then there is a sliding scale up to at least 10 years where you would get 12 weeks. There is a reduction in redundancy pay from 16 weeks to 12 weeks for employees with at least 10 years continuous service, and this is consistent with a relatively recent—2004—redundancy case decision made by the independent umpire, the Australian Industrial Relations Commission. The coalition supports the community standard in relation to that, as set out, might I add, in the National Employment Standards of the Fair Work Act.

We do not believe that the Labor government should set a new standard, purely for political motivations, of four weeks per year for an unlimited period of time, particularly when this new standard is inconsistent with what is the agreed community standard and which the rest of the community is subject to.

This could also, might I suggest, place the government's much-vaunted but wafer-thin federal budget surplus in some jeopardy as well. As one person submitted in relation to this legislation:

The Bill would lock these very generous benefits into legislation and the insolvency of even one large company with a generous redundancy scheme could be a major hit on the Federal Budget.

I trust Labor do not need to be reminded that their federal budgetary position is in no position to take a major hit.

So why would Labor be introducing this other than for pure political motivations? This is a government that has presided over the four largest budget deficits in history and presides over the largest net debt this country has ever seen—in those circumstances, why would a government bring in a bill that could further plunder the budget and send it spiralling even further into debt?

Somebody has to be fiscally responsible, even if the government does not want to be, in this current climate. The coalition can and will make the tough but fair decisions in the national interest. Indeed, with these generous arrangements I am reminded of a former federal Labor Treasurer, Mr Frank Crean, who wisely said that one man's pay increase is another man's job. If you make employment conditions too generous, such as this bill seeks to do, it will ultimately cut into other people's jobs and the job opportunities that they otherwise may have had. You do not need to listen to somebody from the coalition side as to the unwisdom of this proposal; you can listen to a former Labor Treasurer, Mr Frank Crean, who made that very wise observation whilst he was federal Treasurer.

We have already canvassed the very difficult budgetary position that this country finds itself in. We are spending $20 million a day just to pay the interest on what is already borrowed. In those circumstances the government is bringing in a scheme which seeks to override that which the independent umpire, the Australian Industrial Relations Commission, determined after hearing arguments from all sides of the debate.

We will be moving amendments to this legislation to cap the entitlements that employees may receive in these unfortunate circumstances of job loss at 16 weeks in line with the accepted community standard, and to bring the scheme in line with the redundancy provisions of the Fair Work Act—which, Labor still says, got the balance right. Labor has to make up its mind. Did it get the balance right or did it not get the balance right? You cannot say out of one corner of your mouth that the balance is right and the national employment standards are all good, and then out of the other side of your mouth argue that you are some great reforming party making these changes.

The entitlements of workers is an issue that is vitally important to many people, especially in the current, uncertain times. People are under huge cost-of-living pressures courtesy of the carbon tax and the wasteful spending of this government. Job security is a huge issue for many Australians. In that context you can see that it is a purely political motivation of the government to try to move this type of legislation. What it actually does is undermine job security and, more importantly, future jobs within this country.

Having said that, a reasonable scheme and a proper scheme as determined by the independent umpire, the Australian Industrial Relations Commission, is the scheme that we as a coalition adopt. This is what we adopted when we set up this scheme in the first place; it was a good scheme, it was a workable scheme and it had overwhelming community support. Whilst Labor will continually tell us about the things it has done after 11 years of a coalition government, I simply remind these opposite that the coalition brought in this scheme; we were the architects of this scheme after 13 years of Labor government not doing anything in this space. So we are in fact the authors of this scheme. We were the architects of this scheme. We introduced this scheme. We implemented the scheme. And we administered it in a way that was fair and reasonable to all Australian workers.

What Labor are seeking to do with this bill is get rid of any identifiers that would mark it as a coalition initiative; change the name and make it more generous, but we know what happens with Labor generosity. We have seen it with the National Disability Insurance Scheme; we have seen it with the dental scheme; we have seen it with Gonski. The big promises are always unfunded. Then they scratch their heads and wonder why their budgets blow out from $12 billion to $20 billion to $40 billion deficits. They then wonder why the economy is not going as well as it could be and as it should be.

What this country needs is sound, stable, secure government, willing to make the right decisions, the right calls, the balanced calls. In doing so, government sometimes have to take off the populous hat and put on the responsible hat. As the coalition seeks to prepare itself for government, in the event that the Australian people give us that privilege at the next election, we want to place firmly on the record that we will be responsible as opposed to populist. (Time expired)

Penny Wright (SA, Australian Greens) Share this | Link to this | Hansard source

I rise today to make some brief remarks in support of the Fair Entitlements Guarantee Bill 2012. This bill will replace the existing General Employee Entitlements and Redundancy Scheme, also known as GEERS, and enshrine the entitlements guarantee in legislation. Those employees who are unfortunate enough to lose their job, when their employer becomes insolvent or bankrupt, should not lose their entitlements as well. They have enough to worry about. In addition to the trauma of unemployment, they should not be concerned about being paid what they have already earned and are justly entitled to.

The Australian Greens support this bill to protect employees' entitlements where they may be at risk through no fault or risk of their own. It is only fair; it is only right. Legislating to protect unpaid entitlements—including redundancy, annual leave, long-service leave, wages, and payment in lieu of notice—is something that we welcome and something many Australians may be surprised to know does not already exist. The bill closes this gap and ensures that redundancy entitlements are paid up to four weeks per year of service.

We understand that there are some changes required to ensure that outworkers are covered and to ensure that claims can be made when there is a long contracting chain; however, we understand that these will be addressed through regulations and amendments at a later date.

I note that the bill has broad support from the union movement and the Greens are happy to facilitate its passage this year. I commend this bill to the Senate.

Catryna Bilyk (Tasmania, Australian Labor Party) Share this | Link to this | Hansard source

I rise to speak on the Fair Entitlements Guarantee Bill 2012. The Gillard government made an election commitment in 2010 to better protect the entitlements of Australian employees impacted by the insolvency or bankruptcy of their employer. I am disappointed that the opposition voted against this bill in the other place and that it is their intention to vote against it here. It just goes to show that the opposition care little about Australian workers who are affected by the failure of the free market system.

The Protecting Workers' Entitlements package is set to provide the strongest protection of employee entitlements working Australians have ever seen, and I am glad that the Senate is debating this today as the Fair Entitlements Guarantee Bill 2012. The changes in this bill will replace the General Employee Entitlements and Redundancy Scheme, GEERS, which is currently in place.

Losing your job is a situation no Australian worker wants to face. It obviously has a devastating impact on your life, on your family, on your self-esteem and on your economic health. It can affect your ability to pay your rent or your mortgage, and it can affect the education of your children. The situation is made worse when the company that you have worked and sweated hard for fails and you lose not only your job but also sickness pay, long service leave, redundancy, payment in lieu of notice, holiday pay and parts of your superannuation, which are all entitlements.

As a former organiser for the Australian Services Union, I have seen this happen. It is unjust and it is plain wrong. I remember that when Ansett collapsed in September 2001 I was working for the ASU, and the ASU represented around 4,500 Ansett employees. I saw how the collapse had a dramatic impact on the lives of those former Ansett employees. They were owed more than $750 million in employment entitlements, and the battle to reclaim these entitlements was very long and very protracted. While Ansett employees eventually received around $727 million of the money they were owed, they only just last year received their final entitlements payments, some 10 years after Ansett collapsed. No Australian workers should have to face that.

It is wrong that here in the 21st century Australian workers have to face this situation, and it is wrong that those on the other side of the chamber refuse to make the guaranteeing of workers' entitlements the priority when a company collapses. This bill seeks to rectify this injustice. The bill will provide certainty for Australian employees who find themselves without a job and left out of pocket when their employer becomes insolvent or bankrupt and cannot pay the workers the employment entitlements they are owed. This bill will protect Australian employees under circumstances which are brought about through no fault or choice of their own, and it will ensure that Australian employees who are victims of employers' insolvency or bankruptcy, where employment entitlements are owed, are supported by a government that actually supports Australian workers.

The Gillard Labor government is introducing a three-part package to enhance the protection of workers' entitlements. This includes the Fair Entitlements Guarantee we are debating today, the Securing Super package and the strengthening of corporate and taxation law. The Fair Entitlements Guarantee will protect redundancy pay up to a maximum of four weeks for each year of service. This will mean that almost all Australian workers will receive all of the redundancy entitlements they are owed.

The Fair Entitlements Guarantee will replace the former coalition governments GEERS scheme, as I have said. The previous speaker said that he thought this was a name change only and that it was being done for political purposes. Can I say that under GEERS a worker is entitled only to a maximum of 16 weeks redundancy pay even if they have worked for the same company for decades. This means that, under the current GEERS arrangements, approximately one in five eligible workers do not receive their full redundancy entitlements. For workers who have been with the same company for many years or even decades, this could be a difference of tens of thousands of dollars—and, of course, not receiving that money means their futures are changed forever. In contrast, it is estimated that under the Fair Entitlements Guarantee about 97 per cent of eligible workers will receive all the redundancy payments they are owed. However, directors, family members of directors and contractors are also excluded from eligibility.

The Fair Entitlements Guarantee will also cover eligible employees for unpaid wages of up to 13 weeks. It is only right that employees should be covered for unpaid wages. They have done the work; they should be paid. Eligible employees will also be eligible for a payment in lieu of notice capped at five weeks. They have rent or mortgage payments, car repayments and electricity, gas and education costs that do not go away just because the company they worked for has gone bust. A guarantee of payment in lieu of notice will allow them to still meet their bills while searching for alternative employment. Eligible employees will also be covered for unpaid annual leave and long service leave. Assistance will not be provided to support any form of business restructure or where it is expected that there will be funds available to pay the person's employment entitlements within 112 days.

This bill will allow the Gillard Labor government to enshrine the Fair Entitlements Guarantee in law, and this will improve on GEERS, which is an administrative scheme that can be amended or abolished with the stroke of a pen. The Fair Entitlements Guarantee will cost an additional $60.8 million over four years, and funding for this commitment will be fully offset over the forward estimates, consistent with the Gillard Labor government's commitment to return the budget to surplus in three years.

Key changes this bill establishes also include removing eligibility requirements associated with deed of company arrangements and mirroring bankruptcy arrangements; extending eligibility for entitlements that crystallise after the appointment of an insolvency practitioner, which is essentially to cover that portion of the entitlement that the insolvency practitioner is not obliged to pay; simplifying transfer of business rules from 1 July 2014; and removing discretion to accept claims that are not made within 12 months of the later of the following events: the end of a person's employment or the appointment of an insolvency practitioner. The bill includes arrangements for ministerial and/or departmental discretion to be used in a number of specific non-routine circumstances where the act of discretion supports the objects of the bill.

Australians work hard and deserve to know that their wages, superannuation and other entitlements are safe. After years—and, quite often, decades—of working for a company, a worker deserves the certainty of knowing that their entitlements are covered in the unfortunate event of that company going bankrupt. This bill provides greater certainty for affected employees than the current General Employee Entitlements and Redundancy Scheme.

As I have said, the opposition have stated that we are doing this for political purposes. I think we have just seen that there will not be any support for workers should the coalition become the government. All they will do is resurrect Work Choices—and I do not think that will be to the benefit of Australian workers. This bill enshrines Labor's commitment to the Australian sense of a fair go, and I commend the bill to the Senate.

Anne Urquhart (Tasmania, Australian Labor Party) Share this | Link to this | Hansard source

Today, Labor moves to enshrine in legislation, through the Fair Entitlements Guarantee Bill 2012, the protection of worker's entitlements when their employment is terminated and their employer cannot meet these obligations, and when people's hard-earned entitlements such as annual leave, redundancy, payment in lieu of notice, unpaid wages and long service leave have been wrongly spent and are gone.

Since 2001 in Australia, workers made redundant whose company could not meet its obligations were covered under the General Employee Entitlements and Redundancy Scheme, GEERS. Initially, GEERS only guaranteed redundancy payments of up to eight weeks pay, depending on an employee's length of service. This was despite many workplace agreements mandating redundancy payments well in excess of this—agreements that workers and management had negotiated in good faith and both sides were expected to deliver upon.

Of course, this initial move was welcomed as it at least provided some compensation to redundant employees of insolvent businesses. But the trade union movement did not let this matter rest. Only in 2006 did the coalition amend GEERS to provide for up to 16 weeks redundancy payment. While once again this improvement was welcomed, it was still an injustice to the many thousands of working Australians whose lives had been up-ended through no fault of their own.

An election commitment from the 2010 federal election titled the 'Protecting Workers Entitlements Package' was released by Prime Minister Gillard in July 2010 at the AMWU national conference. The Prime Minister promised to change GEERS to provide workers' full entitlements as specified in their industrial agreement. In one of their first actions after re-election, the then Workplace Relations Minister, Chris Evans, and parliamentary secretary Jacinta Collins amended GEERS to fix the redundancy pay issue from 1 January 2011. This has meant that, since then, workers made redundant by a company that could not meet its obligations could receive a redundancy payment as specified in their industrial agreement of up to four weeks per year of service.

On this side of the chamber, we believe that redundancy is a tough enough issue to deal with emotionally and economically without the added stress of missing entitlements. Importantly, today's debate is also about making the Fair Entitlements Guarantee a legislative rather than administrative instrument. At the 2010 AMWU conference, Prime Minister Gillard promised to replace GEERS, which is an administrative system—meaning that it can be changed overnight by the minister—to the Fair Entitlements Guarantee, which will be enshrined in legislation to ensure it cannot be easily abolished or watered down.

I have represented working Australians for over 30 years. Through those years my union, the AMWU, and I have campaigned for improvements to Australia's workplace relations system across a range of areas. For a lot of my time representing workers in Australia's manufacturing industry, fighting for the payment of entitlements to redundant workers has been a significant campaign.

So why does this protection need to be legislated? Australians know from the amendment proposed by those opposite that if they were to take office, one of Senator Abetz's first actions as workplace relations minister would be to re-introduce a low cap on redundancy payments under GEERS. What other changes they might make is a scary thought.

The opposition are proposing an amendment to cap redundancy payments at 16 weeks.

As I have already outlined, it was capped at a measly eight weeks when they enacted GEERS in 2001. That is only two months redundancy payment for workers who had negotiated an agreement to provide for a decent payout when the average span of unemployment after being made redundant is much higher than that. In justifying their decision and their desire to penalise workers for the poor decisions of management, the opposition try to take the moral high ground. A coalition talking point used is 'an acceptable community standard for redundancy pay'. In the other place, opposition members were even stooping as low as to claim that the sixteen-week cap under the old administrative arrangements was overly generous and out of step with community standards.

Given their desire to utilise acceptable community standards in this debate, I would like those opposite to recall again the journey of the 105 redundant workers at the ACL factory in Launceston—recall what a sixteen-week cap meant to them. In August 2009 ACL entered into voluntary administration, placing the jobs of up to 300 Tasmanian workers at risk—not to mention the flow-on loss of jobs. However the ACL voluntary administration was unique: as the company was the sole supplier of engine bearings for Ford Australia it sought to continue trading with a receiver manager. Unfortunately, the receiver manager quickly deemed that 105 redundancies were necessary.

As an organiser at this factory for a number of years, I got to know a lot of the workers very well and days like that were terribly disappointing. The shock of redundancies was one thing; discovering that the bank was empty and no funds were available for entitlements was a whole extra shock. ACL's director, Ivan James, had used his employees' entitlements as a high-risk, short-term loan, which the company had no capacity to pay back. This left ACL's redundant staff with nothing from the company.

Most of the people had worked at ACL for many years—some over 40 years. They had collectively gone without pay rises and taken on fewer hours so that they could all keep their jobs and keep the company going. At the same time, Mr James contributed to the issues the company was facing by reducing his income to a dollar a week for a short time, as he advertised on SBS Insight around that time. However, once the company received government assistance, Mr James went back to his voluptuous salary of over $7,000 a week. But that was not enough: he then awarded himself a rise of $2,000 per week, putting his salary around $9,000 a week. Some would say this was to make up for lost time. The workers saw it as a massive kick in the guts.

The government somewhat assisted these workers through GEERS, and I say 'somewhat' because these workers were given a redundancy payout of up to sixteen weeks pay when some of these employees had been with ACL for decades. Their enterprise agreement provided for four weeks pay for every year of service in the event of a redundancy with a cap of 96 weeks for workers who had in excess of 25 years employment. There was one worker, who had over 40 years of service, who would have been owed about $110,000 but, because of the limits of GEERS at the time, got only $28,000—that is a worker whose family missed out on over $80,000, a payment that could have seen this worker enjoy a decent retirement; a payment that would have been a respectful end to his years of commitment and hard work he had given to the factory.

Earlier this year the workplace relations minister, Bill Shorten, made an administrative decision to provide up to an additional eight weeks pay per employee. This extra redundancy payment for almost 100 former ACL workers, some of whom have not had regular full-time work since, means that while they are unlikely ever to recoup their full entitlements, that they received some additional assistance to help with the day-to-day cost of living pressures.

The story of ACL also includes 33 workers made redundant in mid-2011. Thanks to the Gillard Labor government, the federal Labor member for Bass, Geoff Lyons, and the AMWU there was a positive light for these workers. While they were faced with the terrible news that they were being made redundant, the amendments made to the GEERS operational arrangements in January 2011 saw them receive their full redundancy entitlements: four weeks for every year of service up to a cap of 96 weeks.

Given the amendment put forward by the opposition, working Australians should have no doubt that a vote for the coalition means a vote for lower wages and conditions. On this side we seek to empower Australians, to provide opportunities for all Australians. Those opposite are today continuing with their antiworker ways by not only proposing an amendment in the House to reduce entitlements for long serving but no doubt here today voting against the legislation. From today we will finally have a fair redundancy entitlements system in this country enshrined in legislation, a system that is only possible with a Labor government—a government that puts the interests of hardworking Australians at the fore of our being every day. I commend the bill to the Senate.

Matt Thistlethwaite (NSW, Australian Labor Party) Share this | Link to 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.

Don Farrell (SA, Australian Labor Party, Parliamentary Secretary for Sustainability and Urban Water) Share this | Link to this | Hansard source

I take this opportunity to thank all—

Senator Abetz interjecting—

I was just about to wish you well on your recuperation, Senator Abetz, until that comment.

David Fawcett (SA, Liberal Party) Share this | Link to this | Hansard source

Order! Senators will address their remarks through the chair.

Don Farrell (SA, Australian Labor Party, Parliamentary Secretary for Sustainability and Urban Water) Share this | Link to this | Hansard source

I will address remarks through you to Senator Abetz, then, Mr Acting Deputy President. I do wish him well in his recuperation, and it is good to see him back in fine form here in the Senate.

Eric Abetz (Tasmania, Liberal Party, Shadow Minister for Employment and Workplace Relations) Share this | Link to this | Hansard source

Thank you.

Don Farrell (SA, Australian Labor Party, Parliamentary Secretary for Sustainability and Urban Water) Share this | Link to this | Hansard source

I also thank Senators Wright, Bilyk, Urquhart and Thistlethwaite, who also contributed to this debate on the Fair Entitlements Guarantee Bill 2012.

Let me say, though, that the government opposes the opposition amendments. In 2010 we made a commitment to strengthen protections for employee entitlements, and we fully intend to honour that commitment. This government recognises fully the importance of protecting the entitlements of Australian employees who suffer the effects of the insolvency or bankruptcy of their employer. This bill implements the Fair Entitlements Guarantee, one of the key elements of the government's 2010 election commitments: the Protecting Workers' Entitlements package, a package that ensures the strongest protection ever for working Australians whose employers become insolvent and cannot meet their obligations to pay employee entitlements.

Importantly, ensuring the Fair Entitlements Guarantee in legislation means employees can now rest assured that this protection for their entitlements cannot be scrapped on a whim. It provides certainty and some comfort for employees at a time when they are down on their luck and vulnerable through no fault of their own. The bill replaces the existing General Employee Entitlements and Redundancy Scheme and strengthens protection of unpaid entitlements, including redundancy, annual leave, long service leave, wages and payment in lieu of notice.

The bill represents a significant strengthening of the protection of Australian employees—and their entitlements—who are victims of employer insolvency or bankruptcy. Contrary to the views of the opposition, the bill does not create a new community standard for redundancy entitlements nor does it favour unionised workplaces. The bill simply ensures that where an employee's industrial instrument says that they are entitled to redundancy and to four weeks' pay for each year of service, and where their employer becomes insolvent, they will retain that redundancy entitlement. It does not set a new standard and say that every employee should get that level of redundancy pay; it just says that the employees who have that level of entitlement should not be short-changed, thus protecting a working Australian's entitlements. The opposition would like longstanding employees to go without any recognition of their loyalty, and to cap their entitlement at 16 weeks. This government does not treat longstanding employees with that contempt, and it certainly appreciates their loyalty—and I am sure the employers did over many years of employment.

Contrary to other criticisms, the bill does not represent a moral hazard risk. There are strong safeguards within the bill to ensure that people do not take advantage of this scheme of assistance by bumping up entitlements that would otherwise not be sustainable work costs to the employer if they continued in business. There is no more of a financial risk to the government than there is with any other scheme of financial assistance for Australians. It sets reasonable entitlements in place and imposes reasonable caps, such as the maximum wage threshold for payment of entitlements to ensure that the costs incurred under the scheme remain at a reasonable level.

I am pleased to honour the government's election commitment through this bill and to deliver on our promise for a clear and fair legislative framework to provide certainty and protection for all Australian workers. I commend the bill to the Senate.

Question agreed to.

Bill read a second time.