This instrument is made under subsections 601QA(1), 765A(2), 926A(2), 992B(1), 994L(2) and 1020F(1) of the Corporations Act 2001.
4 Schedules
Each instrument that is specified in a Schedule to this instrument is amended or repealed as set out in the applicable items in the Schedule concerned, and any other item in a Schedule to this instrument has effect according to its terms.
5 Simplified outline of this instrument
Employee entitlement schemes are schemes to which employers make contributions where the primary objective of the scheme is to fund benefits payable to employees upon termination of employment, or long-service leave entitlements (and may also fund other entitlements that are incidental to employment).
This instrument provides operators of employee entitlement schemes relief from the obligation to register the scheme under Chapter 5C of the Act, as well as from the design and distribution obligations, product disclosure and hawking provisions of the Act. This relief is subject to conditions.
The instrument also provides transitional relief in relation to employee entitlement schemes. This transitional relief is subject to conditions and ceases on 1 September 2026 or, if the operator of an employee entitlement scheme lodges an application for an Australian financial services licence by 1 September 2026, upon the determination (or withdrawal) of that application.
The instrument declares interests in employee entitlement schemes that are, or are operated by a body, established under Commonwealth, State or Territory law (other than a general law of incorporation), as well as specified employee entitlement schemes under Tasmanian and Victorian law, not to be financial products.
This instrument repeals ASIC’s previous instrument dealing with employee redundancy funds.
6 Definitions
In this instrument:
Act means the Corporations Act 2001.
annual financial report for an employee entitlement scheme means an annual financial report that would need to be prepared under Part 2M.3 if:
(a) the employee entitlement scheme were a registered scheme; and
(b) the EES operator of the employee entitlement scheme were the responsible entity of the registered scheme; and
(c) the directors of the EES operator were the directors of the responsible entity; and
(d) the employee entitlement scheme financial year were the financial year of the registered scheme.
associate has the same meaning as in Chapter 7 of the Act and, in relation to an EES operator, also includes:
(a) a shareholder of the EES operator; and
(b) an organisation registered under the Fair Work (Registered Organisations) Act 2009 that is a party to an award or agreement under which employers make contributions to the employee entitlement scheme operated by the EES operator; and
(c) an associate (within the meaning of Chapter 7 of the Act) of a person referred to in paragraph (a) or (b) above.
auditor’s report in relation to an employee entitlement scheme means an auditor’s report that would need to be prepared under Part 2M.3 on an annual financial report for an employee entitlement scheme if the annual financial report were an annual financial report prepared under Part 2M.3.
employee entitlement scheme means a scheme to which employers make contributions where the primary objective of the scheme is to fund any of the following for employees of the employers:
(a) benefits payable upon termination of employment;
(b) long-service leave entitlements;
and which may also fund other entitlements for those employees that are incidental to employment.
employee entitlement scheme financial year means, in relation to an employee entitlement scheme:
(a) the period commencing on:
(i) the later of:
(A) 1 July 2026; and
(B) the day on which an operator of the scheme first relied on an exemption in section 7 or 9 in relation to the scheme; or
(ii) an earlier day determined by the operator;
and lasting for 12 months or the period (not longer than 18 months) determined by the operator; and
(b) subsequent periods of 12 months starting at the end of the previous employee entitlement scheme financial year.
EES operator means, in relation to an employee entitlement scheme, a financial services licensee that:
(a) is authorised to deal in a financial product by issuing, varying and disposing of a financial product in respect of interests in an employee entitlement scheme to retail clients; and
(b) operates the employee entitlement scheme.
scheme property of an employee entitlement scheme means:
(a) contributions of money or money's worth to the scheme; and
(b) money borrowed or raised by an EES operator for the purposes of the scheme; and
(c) property acquired, directly or indirectly, with, or with the proceeds of, contributions or money referred to in paragraph (a) or (b); and
(d) income and property derived, directly or indirectly, from contributions, money or property referred to in paragraph (a), (b) or (c).
statutory employee entitlement scheme means each of the following:
(a) an employee entitlement scheme that is, or is operated by a body, established by or under a law of the Commonwealth, a State or a Territory, other than a general law allowing incorporation as a company or body corporate;
(b) the new scheme as defined in the Construction Industry (Long Service) Act 1997 (Tas);
(c) the fund as defined in the Construction Industry Long Service Leave Act 1997 (Vic).
Part 2—Exemptions
7 Relief in relation to employee entitlement schemes
Relief for operators of employee entitlement schemes
(1) An EES operator of an employee entitlement scheme does not have to comply with sections 601ED and 992A and Part 7.9 of the Act in relation to:
(a) making offers for the issue of an interest in the scheme; or
(b) making recommendations to acquire an interest in the scheme; or
(c) making offers to arrange the issue of interests in the scheme; or
(d) operating the scheme.
(2) An EES operator of an employee entitlement scheme does not have to comply with regulation 7.8A.10 of the Corporations Regulations 2001 in relation to an interest in the scheme.
8 Conditions
A person who is an EES operator of an employee entitlement scheme and who relies on an exemption in section 7 in relation to the scheme must:
Operation of scheme
(a) do all things necessary to ensure that in operating the scheme it acts efficiently, honestly and fairly; and
(b) perform its obligations in relation to the operation of the scheme with the degree of care and diligence that a reasonable person would exercise if they were in the person’s position; and
(c) have in place adequate arrangements for the management of conflicts of interest that may arise wholly, or partially, in relation to activities undertaken by the person or a representative of the person in the operation of the scheme; and
(d) have adequate resources (including financial, technological and human resources) to operate the scheme and carry out supervisory arrangements in relation to the operation of the scheme; and
(e) maintain the competence to operate the scheme; and
(f) ensure that its representatives are adequately trained, and are competent, to operate the scheme; and
(g) ensure that the internal dispute resolution procedure it has for the purposes of complying with subparagraph 912A(1)(g)(i) of the Act in relation to financial services provided to persons as retail clients also covers complaints (EES complaints) against it in connection with the operation of the scheme; and
(h) comply with the internal dispute resolution procedure in relation to EES complaints; and
(i) ensure the risk management systems it has for the purposes of complying with paragraph 912A(1)(h) of the Act in relation to financial services provided by it are also adequate for the management of risks associated with operating the scheme; and
Note: An EES operator will also need to comply with section 912A of the Act in relation to the financial services covered by its Australian financial services licence.
(j) ensure scheme property of the scheme is:
(i) clearly identified as scheme property; and
(ii) held by the person or a custodian on trust for the persons holding interests in the scheme (whether directly or by holding a beneficial interest in scheme property or assets held by a custodian or sub-custodian); and
(iii) held separately from property of the person and property of any other managed investment scheme; and
(k) treat persons who hold interests in the scheme of the same class equally and persons who hold interests of different classes fairly; and
(l) if there is a conflict between the interests of persons who hold interests in the scheme and its own interests, give priority to the interests of those other persons; and
Website disclosures
(m) within 14 days of first relying on the exemption, include, and after that time maintain as current, a clear and prominent explanation on its website of the following matters in relation to the scheme:
(i) how contributions to the scheme will be used;
(ii) how income derived, directly or indirectly, from contributions or other scheme property will be used;
(iii) the rights of persons holding interests in the scheme to receive payments from scheme property in relation to any of the following:
(A) benefits payable upon termination of employment;
(B) long service leave entitlements;
(C) other entitlements that are incidental to employment;
(iv) the availability, and location, of annual financial reports and auditor’s reports made publicly available under paragraph (q);
(v) any significant risks associated with holding an interest in the scheme;
(vi) any rights of the person or an associate to be paid fees out of scheme property;
(vii) any agreements or arrangements under which a benefit may be given out of scheme property to the person or an associate;
(viii) how complaints made by holders of interests in the scheme in relation to the operation of the scheme will be dealt with; and
Notification to ASIC
(n) notify ASIC in writing of reliance on the exemption and the name of the employee entitlement scheme, within 14 days of first relying on the exemption; and
Annual financial reporting
(o) prepare an annual financial report for the scheme for each employee entitlement scheme financial year; and
(p) have the annual financial report audited by a registered company auditor and obtain an auditor’s report; and
(q) make each annual financial report and auditor’s report publicly available in a prominent position on its website within 4 months after the end of the relevant employee entitlement scheme financial year; and
Record keeping
(r) keep written financial records that:
(i) correctly record and explain the employee entitlement scheme’s transactions and financial position and performance; and
(ii) enable true and fair financial statements for the scheme to be prepared and audited.
9 Transitional relief in relation to employee entitlement schemes
Relief from licensing obligations
(1) A person does not have to comply with subsection 911A(1) of the Act for the provision of financial services in relation to interests in an employee entitlement scheme.
Relief from managed investments, anti-hawking, financial services disclosure and design and distribution provisions
(2) A person who operates or promotes an employee entitlement scheme does not have to comply with sections 601ED and 992A and Part 7.9 of the Act in relation to:
(a) making offers for the issue of an interest in the scheme; or
(b) making recommendations to acquire an interest in the scheme; or
(c) making offers to arrange the issue of interests in the scheme; or
(d) operating the scheme.
(3) A person does not have to comply with regulation 7.8A.10 of the Corporations Regulations 2001 in relation to an interest in an employee entitlement scheme.
Cessation of transitional relief
(4) The exemptions in subsections (1), (2) and (3) cease to apply to a person in relation to an employee entitlement scheme on:
(a) if the operator of the scheme has lodged with ASIC an application for an Australian financial services licence (including an application to vary an existing licence) covering issuing, varying and disposing of interests in an employee entitlement scheme to retail clients and the application is pending on 1 September 2026:
(i) if ASIC notifies the operator in writing that ASIC refuses to receive the application under subsection 1274(8) of the Act—the day on which ASIC gives that notification; and
(ii) if the operator withdraws the application—the day the application is withdrawn; and
(iii) if ASIC refuses to grant the operator the licence or the variation (as applicable)—the day on which ASIC gives the operator notice in writing of the refusal; and
(iv) if ASIC grants the operator the licence or the variation (as applicable)—the day on which the licence is granted or varied; and
(b) otherwise—1 September 2026.
Conditions
(5) A person who is the operator of an employee entitlement scheme and relies on an exemption in subsection (1), (2) or (3) in relation to the scheme must:
(a) comply with the conditions in paragraphs 8(a) to (c) and (j) to (r) as if it were an EES operator in relation to the scheme; and
(b) have an internal dispute resolution system which provides for the handling of complaints made by holders of interests in the scheme in relation to the operation of the scheme; and
(c) if it relies on an exemption on or before 30 June 2026—publish on its website:
(i) a balance sheet, profit and loss statement and cash flow statement for the scheme for:
(A) if the scheme commenced operation before 1 July 2025—a period of 12 months (or a longer period of up to 18 months determined by the person) ending on a date between 1 July 2025 and 30 June 2026; and
(B) otherwise—the period from the date the scheme commenced operation until 30 June 2026; and
(ii) any notes to the statements; and
(iii) any report prepared by an auditor in relation to the statements; and
(d) if it relies on an exemption on or before 30 June 2026—publish the balance sheet, statements, notes and report (if any) referred to in paragraph (c) in a prominent position on its website as soon as practicable after they are all prepared and, in any event, no later than:
(i) if the period to which they relate ends on or before 1 January 2026—1 May 2026; and
(ii) otherwise—4 months after the end of the period to which they relate.
10 Relief in relation to statutory employee entitlement schemes
An interest in a statutory employee entitlement scheme is not a financial product for the purposes of Chapter 7 of the Act.
Part 3—Repeal
11 Repeal
This instrument is repealed at the start of 1 April 2031.