ASIC is seeking feedback on our proposal to extend the relief currently provided to employee redundancy funds from the AFS licensing and managed investment provisions of the Corporations Act. The relief is due to expire on 1 October 2024.

The proposal involves remaking ASIC Corporations (Employee redundancy funds relief) Instrument 2015/1150 and extending the relief for a period of five years.

ASIC has assessed that the legislative instrument is operating effectively and efficiently, and continues to form a necessary and useful part of the legislative framework.

ASIC invites feedback on our proposal. Stakeholders should send their submissions to rri.consultation@asic.gov.au by 5pm on 23 August 2024 .

Stakeholders can provide feedback anonymously or using an alias. However, ASIC will not be able to contact stakeholders to discuss feedback if submitted in this manner.

Stakeholder feedback will not be treated as confidential unless specifically requested that we treat the whole or part of it (such as any personal or financial information) as confidential.

Please see ASIC's privacy policy for more information about how we handle personal information, stakeholder rights to seek access to and correct personal information, and the right to complain about breaches of privacy by ASIC.

Background

Employee redundancy funds are entities established to accept contributions from employers in construction and allied industries on behalf of their employees. The contributions represent redundancy benefits, which will be payable to the employee upon termination or cessation of employment, generally for any reason other than misconduct.

ASIC considers that employee redundancy funds are likely to meet the definition of a managed investment scheme and a financial product, and that the operator of an employee redundancy fund would likely be subject to the requirements to hold an AFS licence, register the employee redundancy fund as a managed investment scheme, and comply with the managed investment provisions of the Corporations Act 2001.

It is unclear whether Parliament intended employee redundancy funds to be subject to the managed investment and associated provisions. Compliance with these provisions carries significant regulatory burdens for employee redundancy funds.

ASIC has provided relief to operators of employee redundancy funds since 25 May 2000. Current relief is under ASIC Corporations (Employee Redundancy Funds Relief) Instrument 2015/1150. This relief is due to expire on 1 October 2024.

It will be a matter for Government as to whether legislation, either standalone or amending the Corporations Act, be enacted to deal comprehensively with the governance, financial reporting and financial disclosures required by employee redundancy funds.

ASIC is Australia’s corporate, markets and financial services regulator.