Insolvency for employees
- Am I an employee?
- Is my employer in financial trouble?
- What are my options if my employer is in financial trouble?
- What are my options if my employer has abandoned the company and I’m owed employee entitlements?
- More information
- Quick links
- Information sheets
You are likely to be classified as an employee if you are:
- engaged by a company under an award, enterprise agreement, agreement-based transitional instruments (which are agreements that were in force before the commencement of the Fair Work Act 2009), or a contract of employment, and
- paid a salary, wages or commission.
Contractors are not employees. They are ordinary unsecured creditors of the company. An unsecured creditor is a person or company who is owed money and does not hold security over the company's property. If you are an employee who is owed money for unpaid wages, superannuation, annual leave, sick leave, long service leave, retrenchment pay or other benefits, you are a creditor of the company. You may be entitled to some or all of what you are owed in priority to the company’s other creditors.
Signs that may indicate that your employer is in financial trouble include late payment of your wages or unpaid wages and unpaid superannuation to your nominated superannuation fund.
If you suspect that your employer is in financial difficulty, you should first raise your concerns with your employer. If this fails to resolve your concerns, your options can include:
- seeking legal advice
- lodging a complaint with the ATO regarding unpaid superannuation (link below)
- contacting your local union member (if relevant)
- lodging a complaint with ASIC (link below)
Employees who are owed certain employee entitlements after losing their job because their employer went bankrupt or into liquidation may be able to get financial help from the Australian Government. This help is available through the General Employee Entitlements and Redundancy Scheme (GEERS) if their employer went bankrupt or entered liquidation before 5 December 2012, or through the Fair Entitlements Guarantee (FEG) if their employer went bankrupt or entered liquidation on or after 5 December 2012.
GEERS will continue to operate in relation to claims for assistance for unpaid employee entitlements for employer insolvency events that occurred before 5 December 2012. For more information about GEERS visit the Attorney-General’s Department’s GEERS webpage, call the GEERS Hotline on 1300 135 040 or email email@example.com.
ASIC can help employees owed employee entitlements by companies, abandoned by directors, and are not yet in liquidation.
To access this help, employees must lodge a request with ASIC to wind up the company by following the link at para 242.9 in the following document Regulatory Guide 242: ASIC’s power to wind up abandoned companies (RG242). RG242 also contains useful information about what information you should provide and the factors ASIC considers when deciding whether to exercise the power.
To assist with assessing an employee’s request for ASIC to wind up an abandoned company, you will be asked to provide ASIC with supporting information and documents such as:
- confirmation that you are an Australian citizen or permanent resident, or a citizen of New Zealand
- your employment agreement/contract with the company
- documents which may show your employee entitlements such as your payslips, separation certificate, group certificate, and bank statements (to show missed wages)
- an estimate of the number of people employed by the company; and
- why you believe that the company has been abandoned.
ASIC will generally not wind up an abandoned company where the total amount of outstanding employee entitlements is less than $15,000. Therefore, you should encourage other employees to lodge requests with ASIC.
ASIC helps employees by using its discretionary power to wind up an abandoned company in certain circumstances under section 489EA of the Corporations Act 2001. We will exercise this power to help employees of abandoned companies who are owed employee entitlements (excluding superannuation). In deciding whether to exercise our power to wind up an abandoned company, we will consider a number of factors which are set out in Regulatory Guide 242: ASIC’s power to wind up abandoned companies.
So we can make the appointments, ASIC has established the ASIC Abandoned Company Liquidator Panel of 39 suitably qualified and experienced registered liquidators. Once appointed by ASIC under section 489EA of the Corporations Act 2001, the liquidator is required to wind up the company’s affairs, distribute its property and assist employees access unpaid employee entitlements under the Fair Entitlements Guarantee Act 2012.
ASIC appointing a liquidator in these circumstances does not guarantee that Fair Entitlements Guarantee (FEG) will pay claims lodged with it.
The appointment of liquidators helps with a full and proper investigation into the reasons why the company failed. It also allows the recovery of money or assets which were transferred from the company to a third party that either occurred at a time when the company was insolvent or causes a detriment to the company (the particular transactions are specified under the Corporations Act 2001).
ASIC pays the liquidator from the Assetless Administration Fund which we administer.
- ATO website for superannuation
- Employee Entitlements – FEG and GEERS
- Centrelink website
- Ask us a question
- Queries and complaints - How to complain
- Insolvency: a glossary of terms (INFO 41)
- Voluntary Administration: a guide for employees (INFO 75)
- Liquidation: a guide for employees (INFO 46)
- Receivership: a guide for employees (INFO 55)