Fair Entitlements Guarantee (Norfolk Island) Rule 2016

The central concept of the rule is the “prescribed modification” of the FEG legislative framework so that it operates in relation to Norfolk Island as if references to mainland insolvency law were replaced or supplemented by references to Norfolk Island’s own company and bankruptcy law. The FEG scheme itself provides advances to employees whose employer has become insolvent and who have not received their full entitlements. Key concepts from the FEG Act that are modified by the Rule include:

• Insolvency event: The event that triggers eligibility for an advance. Under the unmodified FEG Act, an insolvency event can be the winding up of a company under the Corporations Act 2001, the appointment of a liquidator or administrator under that Act, or the bankruptcy of an individual under the Bankruptcy Act 1966. The Rule adds winding up under the Companies Act 1985 (Norfolk Island) and bankruptcy under the Bankruptcy Act 2006 (Norfolk Island) as qualifying events, but only if they happened after 30 June 2016. This temporal distinction is crucial: an insolvency event under mainland law that occurred after 4 December 2012 qualifies; an event under Norfolk Island law must occur after 30 June 2016.

• Bankruptcy trustee: Expanded to include a trustee in bankruptcy appointed under the Bankruptcy Act 2006 (Norfolk Island). This ensures that the FEG scheme can interact with Norfolk Island bankruptcies, including for the purposes of subrogation and recovery.

• Cost: The definition of “cost” in the FEG Act determines what expenses incurred in a winding up or bankruptcy can be treated as costs of the administration for which the FEG scheme may claim priority. The Rule extends this to include expenses that would be costs if the winding up or bankruptcy had occurred under the mainland Acts, thereby aligning the priority treatment of the Commonwealth’s claim.

• Liquidator: Expanded to include a liquidator appointed under the Companies Act 1985 (Norfolk Island), so that the FEG scheme can pay advances to the liquidator for distribution.

• Advance: The payment made by the Commonwealth to the employee (or to the liquidator or trustee for onward distribution) in respect of unpaid entitlements. The Rule modifies the eligibility conditions for advances in section 11 of the FEG Act to include the Norfolk Island laws. The “notional eligibility” test in section 11(1A) and (2A) is a key concept: it asks whether the employee would have been eligible if the insolvency had occurred under mainland law. This means the FEG administrator must effectively compare two legal regimes to determine eligibility.

• Priority of advances: Sections 29 and 30 of the FEG Act deal with the priority of the Commonwealth’s claim when advances are paid to a liquidator or bankruptcy trustee. The Rule adapts these provisions to the Norfolk Island laws. For liquidators appointed under the Companies Act 1985 (Norfolk Island), section 29(2) provides that subsection 29(1) applies as if references to section 560 of the Corporations Act 2001 were references to section 548 of the Companies Act 1985 (Norfolk Island), except that paragraph 29(1)(c) does not apply. This is an important refinement: the Commonwealth’s claim for amounts advanced does not get the same statutory lien as it would under mainland law, because the Norfolk Island Companies Act section 548 may have a different scope.

• Outworker in the textile, clothing and footwear (TCF) industry: Schedule 2 of the Rule extends the modified eligibility rules for TCF outworkers (a special category under the FEG Regulation). The same notional eligibility test applies, and relatives of bankrupt employers are excluded.

• Double modification: A notable conceptual complexity is that Schedule 2 item 1(5) of the Rule states that for the purposes of applying the FEG Regulation to Norfolk Island, the modifications in Schedule 1 of the Rule to sections 10, 11, 19, 29, 30, 31 and 45 of the FEG Act are to be disregarded, because the Regulation’s own Schedule 1 (as modified by Schedule 2 of the Rule) already contains modifications for those sections. This means the practitioner must read the Rule and the Regulation together, with the Regulation’s modifications superseding the Rule’s modifications for those specific sections.

The Rule directly affects four categories of persons and entities, each with distinct interests and obligations.

First, employees of Norfolk Island employers who become insolvent after 30 June 2016 are the intended beneficiaries. These workers gain the right to apply for FEG advances for unpaid wages, annual leave, long service leave, pay in lieu of notice, and redundancy pay, provided they meet the standard eligibility criteria (such as having been employed, the employment ending, and the insolvency event occurring). The rule operates as a safety net for workers on Norfolk Island whose employer’s insolvency is governed by the Norfolk Island Companies Act or Bankruptcy Act. However, the temporal restriction means that workers whose employer became insolvent before 1 July 2016 are left without access to the FEG scheme, even if they suffered losses after that date. This creates a gap in coverage for insolvencies that straddle the commencement date.

Second, employers and their directors on Norfolk Island are indirectly affected. The availability of FEG may reduce the incentive for employees to closely monitor the financial health of their employer, since there is a government backstop. Conversely, the existence of the FEG scheme means the Commonwealth will likely seek to recover advances from the employer’s assets in the winding up or bankruptcy, potentially reducing the pool available for unsecured creditors. The modifications treat the Commonwealth as a secured creditor in priority in some circumstances, which may affect the returns to other creditors.

Third, liquidators and bankruptcy trustees appointed under Norfolk Island law are directly affected. The Rule expands the definitions of “liquidator” and “bankruptcy trustee” to include those appointed under the Companies Act 1985 (Norfolk Island) or the Bankruptcy Act 2006 (Norfolk Island). These officeholders may receive advances from the Commonwealth for distribution to employees, and must comply with the modified priority rules set out in sections 29 and 30 of the FEG Act as adapted. For liquidators under Norfolk Island law, the modification in section 29(2) is particularly significant: the Commonwealth’s claim does not enjoy the same automatic statutory priority as it would under section 560 of the Corporations Act 2001; instead, the reference is to section 548 of the Companies Act 1985 (Norfolk Island), and paragraph 29(1)(c) does not apply. This means the liquidator must exercise care in distributing funds, and may need to seek directions from the Commonwealth or the court to ensure compliance.

Fourth, the Commonwealth Department of Employment (now part of the Attorney-General’s Department for these purposes) must administer the FEG scheme for Norfolk Island claims. This involves assessing whether a Norfolk Island insolvency qualifies (checking the temporal condition and the applicable law), determining eligibility using the notional test (i.e., would the employee be eligible if the insolvency were under mainland law), and making payments. The Department must also interact with Norfolk Island insolvency practitioners, who may be less familiar with the FEG scheme. The administrative burden is likely to be small, given the island’s small population and low number of insolvencies, but the complexity of cross-referencing two sets of laws creates a risk of error.

Fifth, legal and accounting professionals advising clients with Norfolk Island connections need to understand the modified framework. A lawyer handling a Norfolk Island company winding up must advise the liquidator on the employee entitlements claim process, and must check that the insolvency event occurred after 30 June 2016. An accountant for a Norfolk Island business in financial distress should factor in that if the business fails, the Commonwealth will likely have a priority claim for any advances paid to employees, which may affect the company’s ability to reorganise or the directors’ liability for insolvent trading.

The Rule does not create new duties or rights of significant substance beyond those already in the FEG Act; it modifies the existing ones so they apply to Norfolk Island. The key substantive right is the right of an employee whose Norfolk Island employer has become insolvent to apply for an advance from the Commonwealth for unpaid entitlements. That right is conditional on the employee meeting the eligibility criteria in section 10 of the FEG Act: the employee must have been employed, the employment must have ended, an insolvency event must have happened to the employer, and the employee must not have been paid the entitlements. The modifications add two further conditions for Norfolk Island insolvencies: first, the insolvency event must have occurred after 30 June 2016; second, the employee must satisfy the notional eligibility test under the mainland regime (section 11(1A) and (2A)). The notional test means that even if the Norfolk Island insolvency laws would give the employee a particular status, the FEG scheme will only pay if the employee would have been eligible under mainland law. This creates a duty on the employee to provide sufficient information to demonstrate that the notional test is satisfied.

For employees who are relatives or former spouses of a bankrupt employer under the Bankruptcy Act 2006 (Norfolk Island), the Rule explicitly excludes them from eligibility for FEG advances (section 11(2A)). This mirrors the mainland exclusion for related parties; the duty on the Department is to identify such relationships and reject claims.

The Rule imposes duties on liquidators and bankruptcy trustees who receive advances from the Commonwealth. Section 16 of Schedule 1 modifies section 29 of the FEG Act to require that a liquidator appointed under the Companies Act 1985 (Norfolk Island) must apply the advance in accordance with the modified priority rules. Specifically, subsection 29(2) provides that the liquidator must treat the Commonwealth’s claim as having the priority that it would have under section 548 of the Companies Act 1985 (Norfolk Island), but without the benefit of paragraph 29(1)(c) of the FEG Act. This effectively means the Commonwealth’s claim does not automatically rank ahead of certain other claims; the liquidator must ascertain the correct priority under Norfolk Island law. The duty is to distribute the funds correctly, and failure to do so could expose the liquidator to personal liability or a claim by the Commonwealth for recovery of misdirected funds.

The Commonwealth itself has rights of subrogation and recovery under the FEG Act, which are preserved by the modifications. Section 45 of the FEG Act as modified by item 19 of Schedule 1 gives the Commonwealth the right to pursue recovery of advances paid from the employer’s assets, and that right now extends to assets administered under the Norfolk Island Companies Act and Bankruptcy Act. The Commonwealth also has the right to be notified of insolvencies by liquidators and trustees, and to provide information to the Department.

The Rule also places a duty on the Department to consider claims fairly and consistently with the modified Act. Because the notional test requires the Department to compare two legal regimes, there is a risk of arbitrary or inconsistent decision-making if the Department is not familiar with Norfolk Island law. The Department must therefore ensure that its officers are trained in the differences between the Companies Act 1985 (Norfolk Island) and the Corporations Act 2001, particularly regarding priority of claims and the definition of “insolvency event”.

The Rule itself does not create any specific penalties. Enforcement mechanisms arise from the underlying FEG Act and the general law. The FEG Act contains offence provisions relating to false or misleading statements in connection with claims for advances (section 44 of the FEG Act, which is not modified by the Rule). A person who knowingly provides false information to obtain an FEG advance may be prosecuted under the Criminal Code, with potential penalties including imprisonment. Similarly, a person who receives an advance to which they are not entitled may be required to repay it, and the Commonwealth may recover the amount as a debt due to the Commonwealth.

Liquidators and bankruptcy trustees who misapply advances may face liability for breach of duty under the Norfolk Island Companies Act or Bankruptcy Act, or under the FEG Act if they disregard the priority rules in section 29 as modified. The Commonwealth may also seek to recover advances from the liquidator personally if the liquidator distributes funds in a manner inconsistent with the FEG Act’s priority rules.

There are no specific enforcement powers granted by the Rule itself. The Commonwealth’s ability to enforce compliance depends on existing mechanisms: contractual conditions attached to the advance payment, statutory recovery rights under the FEG Act, and the general law of restitution. The modifications in section 19 of Schedule 2 expand the definition of “bankruptcy trustee” and “liquidator” but do not confer any new investigative or enforcement powers on the Department.

The lack of specific enforcement mechanisms for Norfolk Island claims could be a practical weakness. The small size of the Norfolk Island community and the limited number of insolvencies may mean that enforcement action is rare, but when it occurs, the Commonwealth may need to rely on Norfolk Island courts to enforce recovery orders. The Norfolk Island legal system may be less familiar with FEG matters, potentially leading to delays or inconsistent outcomes.

The Rule operates at the intersection of Commonwealth workplace relations law (the FEG scheme) and Norfolk Island corporate and bankruptcy law. The primary interaction is with the Companies Act 1985 (Norfolk Island) and the Bankruptcy Act 2006 (Norfolk Island). The FEG scheme is triggered by an insolvency event under those Acts, but the eligibility and priority rules are adapted to refer to concepts in the mainland Corporations Act 2001 and Bankruptcy Act 1966. This creates a complex two-regime mapping: the FEG administrator must read the Norfolk Island statutes to determine if an insolvency event occurred, then apply eligibility rules that effectively ask “what would happen if this were a mainland insolvency?”

The Rule also interacts with the FEG Regulation 2012, specifically Schedule 1 of that Regulation, which itself modifies the FEG Act for all Australian applications, not just Norfolk Island. The Note in Schedule 2 item 1(5) of the Rule warns that the modifications in Schedule 1 of the Rule to sections 10, 11, 19, 29, 30, 31 and 45 are superseded by modifications made by the Regulation. This means the practitioner cannot simply read the Rule’s Schedule 1 in isolation; they must also consult the Regulation’s Schedule 1 as amended by the Rule’s Schedule 2. This stacking of modifications increases the risk of misreading the current law.

The Rule may intersect with the Norfolk Island Continued Governance Ordinances and transitional arrangements for Norfolk Island under the Territories Legislation Amendment Act 2016. The Rule was made when Norfolk Island moved from having its own legislature to being governed by New South Wales law and Commonwealth laws. The effect is that the FEG scheme applies consistently across all of Australia, including Norfolk Island, but using the Norfolk Island insolvency statutes that remain in force until they are replaced by mainland laws. Over time, the Norfolk Island Companies Act and Bankruptcy Act may be amended or repealed, which could render some modifications obsolete. The Rule does not provide for automatic updating; new amendments would be required.

There is also potential interaction with the Protection of Wages provisions in the Fair Work Act 2009, but the Rule itself does not modify that Act. The FEG scheme is a separate safety net, but if an employee receives an advance for unpaid wages, the employee’s right to recover those wages from the employer may be subrogated to the Commonwealth. The interaction with the Fair Work Act’s general protections provisions is indirect: an employee cannot be discriminated against for making an FEG claim.

From a private law perspective, the existence of the FEG scheme may affect the negotiating position of employees and employers in Norfolk Island. Employees may be less willing to compromise on unpaid entitlements if they know the Commonwealth will pay them, and employers may face reduced pressure from employees to pay wages promptly if employees expect the safety net. This is a standard moral hazard concern with any government guarantee scheme.

The Fair Entitlements Guarantee (Norfolk Island) Rule 2016 was originally made on 29 June 2016 by the Minister for Employment, Michaelia Cash. It commenced on 1 July 2016 as a single instrument. The text provided shows no amendment history - it is the instrument as originally made. Column 3 of the commencement table states that the information is not part of the instrument, and no later amendments are listed. This suggests the Rule has not been amended since its making, although it is possible that the instrument may have been subject to later amendments that are not reflected in the supplied text. Given the narrow scope and the ongoing transition of Norfolk Island laws, it is plausible that the Rule remains in force unamended.

The authority for the Rule is section 9A of the Fair Entitlements Guarantee Act 2012, which was inserted by the Fair Entitlements Guarantee Amendment (Norfolk Island) Act 2015 (not provided in the source). That amendment gave the Minister power to prescribe modifications to the FEG legislation for Norfolk Island. The Rule is therefore a product of a specific legislative response to the Norfolk Island governance changes announced in 2015. The commencement date of 1 July 2016 aligns with the broader Norfolk Island reforms effective from that date.

If any practitioner needs to verify the current status of the Rule, they must check the Federal Register of Legislation for any subsequent amendments. As of the date of this analysis, the Rule is likely still in force, but the underlying Norfolk Island insolvency laws may have been further amended or overwritten by mainland laws, which could affect the practical operation of the modifications.

The source text does not mention any litigation. Given the limited scope of the Rule and the small population of Norfolk Island, there are likely few, if any, court decisions interpreting the modifications. The FEG scheme generally generates litigation primarily around eligibility disputes, debt recovery, and priority issues. For example, there have been Federal Court cases concerning whether certain payments qualify as entitlements under the FEG Act, but none specifically addressing the Norfolk Island modifications have been identified.

If litigation were to arise, it would likely involve disputes over whether an insolvency event occurred after 30 June 2016, or whether the notional eligibility test under section 11(1A) and (2A) is correctly applied. The notional test requires the court to compare the Norfolk Island regime with the mainland regime, which may involve complex comparisons of priority rules in two different Acts. A court might need to determine whether a particular expense that is a cost in the Norfolk Island winding up would also be a cost in a mainland winding up. The modifications create a statutory fiction that may be challenged on the basis that the assumption is not workable (e.g., if the Norfolk Island Companies Act has no equivalent provision to a particular Corporations Act provision). There is also potential for litigation about the priority of the Commonwealth’s claim in a Norfolk Island winding up, given that section 29(2) of the Rule modifies the priority rules but excludes paragraph 29(1)(c). A liquidator might argue that the Commonwealth’s claim ranks lower, while the Commonwealth might argue for a different result. Without case law, the application remains uncertain.

Given the absence of litigation history, practitioners should treat the Rule as a clean but untested instrument. Any dispute would be determined in the Federal Court of Australia, which has jurisdiction over matters arising under Commonwealth laws. The Norfolk Island Supreme Court may also have concurrent jurisdiction, but as the FEG scheme is a Commonwealth law, the Federal Court is the natural forum.

The Rule contains several pitfalls for the unwary, most arising from the temporal restrictions and the cross-referencing structure.

First, the temporal trap under section 10(1)(b): an insolvency event under Norfolk Island law must occur after 30 June 2016 to trigger eligibility, whereas an event under mainland law can be after 4 December 2012. This means that if a Norfolk Island employer becomes insolvent before 1 July 2016, the employees cannot access FEG even if the employment ended after that date. Conversely, if the employer’s insolvency is under mainland law (e.g., a company registered on the mainland but employing workers on Norfolk Island), the earlier date applies. Practitioners must carefully ascertain which insolvency law applies to the employer.

Second, the notional eligibility test in section 11(1A) and (2A) is a trap for simple constructions. The test asks: “if the winding up were under the Corporations Act 2001, and Norfolk Island were included for all purposes in the definition of this jurisdiction in section 9 of that Act, and events occurred for the purposes of that Act when corresponding events occurred under the Norfolk Island Act, would the person be eligible?” This is a counterfactual with multiple assumptions, each of which can be contested. For example, the date of winding up may differ under the two Acts, or the respective definitions of “employee” may differ. The FEG administrator has to construct a hypothetical mainland insolvency, which may be impossible if the Norfolk Island Act uses different concepts. This uncertainty creates a risk of inconsistent decisions.

Third, the double modification in Schedule 2 item 1(5) is a significant headache. The Note warns that the modifications in Schedule 1 of the Rule of sections 10, 11, 19, 29, 30, 31 and 45 are superseded by modifications made by Schedule 1 to the Regulation (as modified by Schedule 2 to the Rule). This means a practitioner cannot simply rely on the text in Schedule 1 of the Rule for those sections; they must also look at the Regulation’s Schedule 1 as modified. Failing to do so will lead to an incomplete understanding of the law. The drafting approach of layering modifications is prone to error, and anyone advising on a Norfolk Island claim must cross-check both schedules meticulously.

Fourth, the priority rules under section 29(2) create an asymmetry. For a liquidator under the Companies Act 1985 (Norfolk Island), the Commonwealth’s claim does not have the same automatic priority as it would under the Corporations Act 2001. Paragraph 29(1)(c) is disapplied. The effect is that the Commonwealth may not rank ahead of other unsecured creditors to the same extent. The liquidator must determine the priority under section 548 of the Companies Act 1985 (Norfolk Island), which may provide a different result. This could lead to the Commonwealth receiving less than it would in a mainland winding up, exposing a gap in recovery. Employees who have received an advance will not be affected, but taxpayers bear the shortfall.

Fifth, the exclusion of relatives of bankrupts under section 11(2A) is broader than it first appears. It applies not only to the spouse or de facto partner at the time of bankruptcy, but also to anyone who was a spouse or de facto partner within 12 months before the date the employer was determined to be a bankrupt. This means a separated spouse could be disqualified. The definition of “relative” is cross-referenced to the Corporations Act 2001 (which includes parents, children, siblings, etc.), not the Norfolk Island Act. This may catch people who would not be excluded under Norfolk Island law. Employees in a family business that goes bankrupt need to check their relationship status carefully.

Sixth, the outworker provisions in Schedule 2 items 4 and 5 create similar exclusions for TCF outworkers who are relatives of a bankrupt employer. The definition of spouse is extended to include former spouses and persons who have been spouses at any time during the 12 months before the bankruptcy or at any time since. This is a trap for a divorced spouse who worked for the bankrupt employer.

Seventh, the lack of transitional provisions for insolvent employers that are undergoing winding up or bankruptcy proceedings that commenced before 1 July 2016 but continue after that date. The Rule does not address whether an employee whose employment ended after 30 June 2016 but whose employer’s insolvency event occurred before that date (e.g., a voluntary administration that began in June 2016) can claim. The text is clear that the insolvency event must occur after 30 June 2016 for Norfolk Island law events. This means pre-commencement insolvencies are excluded, even if the employee lost their job after that date.

Eighth, the risk of misreading the authority section (section 9A of the FEG Act) - the Rule is made under that section, but section 9A may itself have been amended. The Rule does not refer to any other provisions of the FEG Act that may have been subsequently amended. If the FEG Act has been amended since 2016 (e.g., to include new categories of entitlements or to change eligibility criteria), those amendments will apply to Norfolk Island unless the Rule is also amended. Practitioners must check the current version of the FEG Act and cross-reference the Rule’s modifications with any later amendments.

Finally, the definition of “this jurisdiction” in section 9 of the Corporations Act 2001 is critical to the notional test. Section 9 defines “this jurisdiction” to include mainland states and territories. The notional test assumes Norfolk Island is included, but the actual definition does not include it. This creates a pure legal fiction that may be difficult to apply in practice. For example, if the Corporations Act uses a concept that depends on the place of incorporation or location of assets, the fiction may produce absurd results. Courts might refuse to apply the fiction literally if it leads to an outcome that Parliament could not have intended.

Compliance with the Rule is primarily a matter for Commonwealth administrators, but practitioners advising Norfolk Island employers, liquidators, or employees must also understand the steps.

For a liquidator or bankruptcy trustee under Norfolk Island law, compliance begins with identifying whether the FEG scheme applies. The liquidator should assess the date of the insolvency event: if it occurred before 1 July 2016, the FEG scheme does not apply at all in relation to Norfolk Island law; employees must rely on the employer’s assets or other remedies. If the insolvency event occurred after 30 June 2016, the liquidator must notify the Department of Employment (or its successor) of the winding up or bankruptcy and of the details of employees and their entitlements. The liquidator should also advise employees of their potential right to apply for FEG advances.

When the Commonwealth makes an advance payment - typically the Commonwealth pays the liquidator for distribution to employees - the liquidator must comply with the modified priority rules in section 29 of the FEG Act as adapted by the Rule. For a Norfolk Island winding up, the liquidator must apply the payment in accordance with section 548 of the Companies Act 1985 (Norfolk Island) for priority, and must also comply with the direction of the Commonwealth (if any). The liquidator should not simply follow the default priority in the Corporations Act 2001, as that Act does not apply. The modifications also disapply paragraph 29(1)(c) of the FEG Act, which means the Commonwealth’s claim does not automatically rank above all other creditors; the liquidator must determine the correct ranking under Norfolk Island law. To be safe, the liquidator should seek a direction from the Commonwealth or legal advice, and possibly obtain a court order on priority if the matter is uncertain.

For employees seeking an advance, the first step is to check whether the employer’s insolvency qualifies. If the employer is a company being wound up under the Companies Act 1985 (Norfolk Island) and the winding up commenced after 1 July 2016, the employee can apply. If the employer is a bankrupt individual under the Bankruptcy Act 2006 (Norfolk Island) after that date, the employee can apply. The employee must also check the notional eligibility test: would they be eligible if the insolvency were under mainland law? This might require the employee to provide evidence of employment, dates, and amounts owed. The application is made through the Department’s online portal or paper forms. The employee should be aware that if they are a relative or separated spouse of a bankrupt employer, they may be excluded. They should disclose any such relationship.

For legal practitioners advising a Norfolk Island company in financial distress, the first step is to identify the applicable insolvency law. Some Norfolk Island companies may be incorporated under the Norfolk Island Companies Act 1985, but after the governance reforms, many companies may have migrated to mainland registration. If the company is still under Norfolk Island law, the practitioner must consider the FEG implications. The practitioner should advise the directors that if the company goes into liquidation after 30 June 2016, the Commonwealth will likely provide advances to employees, which will give the Commonwealth a priority claim in the liquidation under section 548 of the Companies Act 1985 (Norfolk Island). This may affect the return to unsecured creditors and the directors’ liability for insolvent trading. Directors considering a voluntary winding up should ensure that employee entitlements are documented and that the employment relationship is clear.

For accountants preparing financial statements or assisting with a business restructuring, the existence of the FEG scheme means that employee entitlements are effectively backed by the Commonwealth in the event of insolvency. This may affect the valuation of liabilities: unpaid entitlements are still a liability of the company, but the company may not have to pay them if the Commonwealth does. On the other hand, the Commonwealth may seek recovery from the company's assets, so the liability remains contingent. Accountants should note that the FEG scheme does not absolve directors of their duties to pay employees in the normal course of business. The scheme only operates when there is an insolvency event.

For the Commonwealth Department, compliance involves training staff to handle Norfolk Island claims. The Department must maintain a list of approved liquidators and trustees under Norfolk Island law, and must have procedures for applying the notional eligibility test. The Department should also monitor whether any Norfolk Island insolvency laws have been amended and whether the Rule needs updating. Given the low volume of claims, the Department should also consider issuing guidance to Norfolk Island employers and employees about how to access the scheme.

Overall, compliance with this instrument is not particularly onerous for any single entity, but the risk of error due to the layered modifications and temporal restrictions is real. The onus falls on liquidators and legal practitioners to be particularly careful, because misapplication of the priority rules could expose them to liability. Employees should be encouraged to apply promptly, because the FEG scheme has time limits for claims that are not modified by the Rule. The underlying FEG Act requires claims to be lodged within 12 months of the insolvency event (in most cases), and that time limit applies equally to Norfolk Island claims.