Fair Entitlements Guarantee Act 2012

Eligible claimants must satisfy section 10. The person's employment by a particular employer must have ended; an insolvency event must have happened to that employer after the commencement of section 10; the end of employment must have been due to the insolvency or have occurred either less than six months before, or on or after, the appointment of an insolvency practitioner; the person must be owed a debt attributable to one or more employment entitlements; the person must have taken reasonable steps to prove the debt in the winding up or bankruptcy; the person must have made a claim before the insolvency event for any wages already owed; the person must have been an Australian citizen, the holder of a permanent visa, or a special category visa under the Migration Act 1958 when employment ended; and an effective claim under section 14 must have been made.

Section 11 excludes people with a personal connection to the employer. Where section 556 of the Corporations Act 2001 applies to the winding up and the person is an "excluded employee" under that section, the FEG advance is not available. For bankrupt employers, relatives (as defined in the Corporations Act 2001), spouses or de facto partners (under the Acts Interpretation Act 1901) within twelve months of the bankruptcy date are also excluded. Section 12 excludes people newly employed after working as a contractor for the same employer in the six months before insolvency, where it was unreasonable to expect the employer to meet the obligations. Section 13 excludes the cohort of the Special Employee Entitlements Scheme for Ansett Group Employees.

The Crown is bound (section 8) and the Act extends to making payments to and recovering from people outside Australia (section 9). Norfolk Island is dealt with through rules the Minister may make under section 9A, which cannot create offences, civil penalties, powers of arrest, taxes, or directly amend the text of the Act.

The claimant must lodge an effective claim under section 14. The form must be approved by the Secretary, accompanied by required documents, and made within twelve months after the later of the insolvency event and the end of the employment. If the employer is or was a bankrupt, the claim must be made before discharge of the bankruptcy. The form may require statutory declaration verification of statements (section 14(6)). A claim is not effective if a claim was previously made under the General Employee Entitlements and Redundancy Scheme (the predecessor scheme) connected with the same employment, unless the earlier claim was rejected because no insolvency event had yet happened.

The Secretary must decide an effective claim under section 15 and, if the person is eligible, must work out the amount under Part 3. The amount is the sum of the section 19 amounts for each of the five employment entitlements. Each entitlement has a "basic amount": for annual leave (section 20) and long service leave (section 21), so much of the entitlement as is not a cost of the winding up or bankruptcy; for payment in lieu of notice (section 22), capped at five weeks' pay at the relevant rate; for redundancy pay (section 23), capped at four weeks' pay for each full year of service for which the governing instrument required redundancy pay (with proportional treatment for partial years); for wages (section 24), the wages entitlement less PAYG withholding under Part 2-5 of Schedule 1 to the Taxation Administration Act 1953.

Section 19 reduces the basic amount by amounts already paid that are "attributable to" the entitlement and amounts payable but not yet paid (other than amounts payable in the winding up or bankruptcy or under the FEG Act itself). Section 25 disregards favourable changes to terms and conditions made within six months of the end of employment if it was not reasonable to expect the employer could meet them. Sections 26 and 27 apply the maximum weekly wage rate cap to all entitlements and, for the wages entitlement, run an averaging test where the governing instrument did not provide for a regular rate.

The Secretary may reduce the advance by the amount of the worker's debts to the employer (section 17). Section 18 lets the Secretary reduce the advance to nil where the liquidator or trustee expects to have enough money in the next 112 days to pay the worker in full. Section 32 sets out how reductions for debts are attributed across the five entitlements via a table that maps the thing the debt relates to (annual leave, long service leave, payment in lieu of notice, redundancy pay, or wages) to the corresponding entitlement, with proportional allocation for residual debts.

Payment options are set out in section 28: the Secretary must pay the advance to the eligible person, to the liquidator or trustee for onward payment (subject to lawful withholdings), or to a contracted intermediary. Instalments are permitted under section 28(2) where the worker would receive money sooner; the Minister may also direct payment in instalments under section 28(3).

Section 49 lets the Minister, by legislative instrument, declare that the Act applies to former employees of an employer that is in administration under Part 5.3A of the Corporations Act, where creditors are expected to resolve at a section 439A meeting that the employer be wound up and where it will be practicable to administer the Act on that basis. While the declaration is in force, the administrator is treated as a liquidator appointed when the administrator was appointed, and section 14(2)(a)'s deadline runs from the declaration date instead of an insolvency event.

Section 50 lets regulations create schemes for individuals who worked for an insolvent person otherwise than as employees, with eligibility, amount, claim and review machinery; the regulation does not take effect until after the disallowance period in either House of the Parliament. Section 51 appropriates the Consolidated Revenue Fund for payments under the Act and any section 50 regulation.

The Act does not create criminal offences or civil penalties. Enforcement runs through debt recovery in two ways. Under section 34, if the Commonwealth pays an advance and the worker later receives an amount for the same entitlement from someone other than the Commonwealth, the liquidator or trustee, or the payee, the lesser of that later amount or the residual exposure becomes a debt due to the Commonwealth, recoverable by the Secretary in a court of competent jurisdiction. Under section 52, payments made where the Commonwealth lacked power can also be recovered as a debt. Section 53 forces the Secretary to publish reports during the applicable publication period for each reporting period setting out the number and total amount of recoverable payments under section 52(1), with deferred reporting if the Department only later becomes aware of a payment.

Section 54 confirms that the right to financial assistance is granted on the basis that it can be reduced under Part 3, cancelled, revoked, terminated or varied by later legislation, and that no compensation is payable for those changes.

The twelve month claim window in section 14(2) runs from the later of the insolvency event and the end of employment, with the bankruptcy discharge cutoff in section 14(3). After the Secretary decides under section 15, written notice setting out the terms, written reasons and review rights must be given (section 36). Decisions can be reviewed three ways. Subdivision A of Division 2 of Part 6 lets the Secretary review on the Secretary's own initiative under section 37. Subdivision B is internal review on application: the worker has 28 days from the notice (or longer if allowed) under section 38, and section 39 requires the Secretary to affirm, vary, or substitute and to give written reasons. Subdivision C is review by the Administrative Review Tribunal under section 40, with section 41 cutting the Tribunal out of any review of the section 17 power to reduce for debts owed to the employer (the Tribunal cannot exercise that power either, despite section 54 of the Administrative Review Tribunal Act 2024). Sections 37(2A) and the references to the guidance and appeals panel reflect the integration with that Act, including section 31 (decision cannot be altered outside Tribunal process), section 122 (referral to the panel) and section 128 (referral of the Tribunal's review decision).

Sections 42 to 45 govern personal information. The Department may use and disclose personal information about employers and current or former employees for administering the Act, and may disclose to insolvency practitioners, contracted intermediaries, and persons making related payments. Insolvency practitioners and intermediaries can give the Department personal information for administration purposes. Section 45 lets the Department share personal information with agencies as defined in the Privacy Act 1988 for purposes connected with the Corporations Act 2001, the Bankruptcy Act 1966, or employee entitlements.

Section 46 authorises the Secretary to enter information and payment arrangements on behalf of the Commonwealth without limiting executive power. Section 47 sets the delegation framework: APS employees in the Department generally, with sections 25, 28(2) and 38(5) reserved for SES officers (or, for section 28(2), Executive Level 2 officers and above), and delegates must comply with directions of the Secretary. Section 48 lets the Minister delegate the section 49 administration declaration power to the Secretary or to an SES employee at or acting at Band 3 level.

The FEG Act is heavily wired into insolvency law. The "advance" interacts with section 556 of the Corporations Act 2001 (priority of debts in winding up) for personal-connection exclusions, and with sections 109 and 109A of the Bankruptcy Act 1966 for cost definitions. Recovery hooks into section 560 of the Corporations Act (so much of the advance as covers wages, leave or termination is treated as a Commonwealth advance for those purposes) and into subsections 109(2) and (3) of the Bankruptcy Act 1966 for wages, annual leave, and long service leave components paid through a bankruptcy trustee.

For other components, section 31 directly substitutes the Commonwealth into the worker's priority position. The Personal Property Securities Act 2009 frames who counts as an insolvency practitioner enforcing a security interest. The Fair Work Act 2009, the Migration Act 1958, the Acts Interpretation Act 1901, the Privacy Act 1988, the Public Governance, Performance and Accountability Act 2013 (used to identify the Finance Minister), the Administrative Review Tribunal Act 2024 (review pathway, guidance and appeals panel) and the Taxation Administration Act 1953 Schedule 1 (PAYG withholding under section 24) are all named in the source. Part 5.3A of the Corporations Act feeds into the section 49 declaration power.

The visa rule in section 10(1)(g) is strict: temporary visa holders are not eligible. The "started as a contractor" exclusion in section 12 catches sham conversions, but only where the worker started employment within six months of the end or appointment of an insolvency practitioner and where it was unreasonable to expect the employer could meet the obligations.

Casual loadings paid in lieu of leave are a live issue. Section 19(2) reduces the basic amount by amounts already paid that are "attributable to" the entitlement, regardless of whether the contract was lawful or whether the payment discharged the obligation. The result is that money labelled as a casual loading can be set off against the FEG advance for annual leave or redundancy if it was attributable to that entitlement, even where the worker was misclassified.

Section 16(2) excludes payment in lieu of notice and redundancy pay from the advance where, within 14 days of the end of employment, a transferee of the business offers comparable work on substantially similar terms. Section 16(3) reverses that exclusion if the transferee terminates the worker for redundancy or itself becomes insolvent. Section 16(4) switches the carve-out off entirely for insolvency events on or after 1 July 2014.

Section 41 cordons off the section 17 reduction for debts owed to the employer from Tribunal review. The Secretary's exercise of that power cannot be remade by the Tribunal; it must be challenged through judicial review or section 37 own-initiative review.

The wages entitlement period is calculated from the earlier of the end of employment or the first date an insolvency practitioner (other than a restructuring practitioner) had power to control or manage employment. Restructuring practitioners under the Corporations Act do not start the clock, so workers in a small business restructure may still have a longer reference period than they expect.

A baker employed for five years finds out the company has been placed into liquidation. Five years of redundancy pay is payable under the modern award. Section 23 caps the basic amount at four weeks per full year, so the FEG redundancy basic amount is twenty weeks, capped at the maximum weekly wage rate under section 26. Annual leave accrued and untaken is recoverable under sections 6(2) and 20 with no separate cap (but still subject to the maximum weekly wage rate). The wages entitlement under sections 6(6) and 24 is the unpaid wages for the 13 weeks ending at the earlier of end of employment or appointment of the liquidator.

A manager whose spouse owns the bankrupt employer is excluded from any advance under section 11(2)(b) if they were a spouse or de facto partner within twelve months of the date of bankruptcy.

A worker who held a temporary work visa at the end of employment is ineligible under section 10(1)(g), even if every other requirement is met.

A liquidator who later receives proceeds from the winding up sufficient to pay employee entitlements in full does not trigger a clawback of the advance under section 18 once the advance has been paid; section 18 is a threshold filter at the time of the section 15 decision (it lets the Secretary reduce to nil if the liquidator or trustee expects to have enough money in the next 112 days). Once the worker is paid that money later, section 34 turns it into a debt to the Commonwealth, recoverable under section 34(3).