Insolvency for employees
Find out what to do if your company has been affected by the COVID-19 pandemic.
Sometimes businesses cease because they have run out of money and can't pay their debts, including wages and other entitlements to employees. Your employer might be in financial trouble if your wages or superannuation are late or unpaid.
If you suspect your employer is in financial difficulty, you should first raise your concerns with them. If this fails, you can:
- seek legal advice
- lodge a complaint with the ATO regarding unpaid superannuation
- contact your local union representative
- lodge a complaint with ASIC.
If your employer has gone into liquidation and you are owed unpaid entitlements, you can get help through the Fair Entitlements Guarantee.
You are an employee if you are:
- engaged by a company under an award, enterprise agreement, agreement-based transitional instrument or contract of employment
- paid a salary, wages or commission.
If you are owed money for unpaid wages, superannuation, annual leave, sick leave (in limited circumstances), long service leave, retrenchment pay or other benefits, you may be entitled to some or all of what you are owed in priority to the company’s other creditors. If your employer has abandoned the company and you are owed employee entitlements, ASIC can help. Find out more.
If you are a contractor, you may be classified as an unsecured creditor, not an employee. You should seek your own legal advice or contact the ATO, Fair Work Ombudsman or your union representative to determine if you are a contractor or an employee.
- Employee rights in company voluntary administration
- Employee rights in company liquidation
- Employee rights in company receivership
ASIC can help employees owed employee entitlements by companies abandoned by directors, but not yet in liquidation.
To access this help, you must lodge a request with ASIC to wind up the company by following the link in Regulatory Guide 242 ASIC’s power to wind up abandoned companies at RG 242.9. RG 242 also contains useful information about the:
- information you should provide
- factors ASIC considers when deciding whether to exercise the power.
You will be asked to provide ASIC with supporting information to assist with our assessment, including:
- confirmation that you are an Australian citizen or permanent resident, or a citizen of New Zealand
- your employment agreement/contract
- documents which may show your employee entitlements (e.g. payslips, separation certificate, group certificate and bank statements)
- an estimate of the number of people employed by the company
- why you believe that the company has been abandoned.
You should encourage other employees to lodge requests with ASIC because ASIC will generally not wind up an abandoned company where the total amount of outstanding employee entitlements is less than $15,000.
In deciding whether to exercise our power to wind up an abandoned company, we will consider the factors set out in RG 242.
The appointment of a liquidator in these circumstances does not guarantee that Fair Entitlements Guarantee 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 transferred from the company to a third party when the company was insolvent, or which caused a detriment to the company.
ASIC pays the liquidator an agreed amount from the Assetless Administration Fund.
- Regulatory Guide 242 ASIC's power to wind up abandoned companies