Protection of Workers' Claims (Employer's Insolvency) Convention, 1992 (No. 173) - Australia (Ratification: 1994)

Replies received to the issues raised in a direct request which do not give rise to further comments (CEACR) - adopted 2019, published 109th ILC session (2021)

The Committee notes the information provided by the Government, which answers the points raised in its previous direct request and has no further matters to raise in this regard.

Direct Request (CEACR) - adopted 2011, published 101st ILC session (2012)

Article 3(2) of the Convention. Extension of acceptance to Part III. The Committee notes the information provided by the Government concerning the changes to the General Employee Entitlements and Redundancy Scheme (GEERS) introduced in 2006, 2008 and 2011, particularly as regards the increase of GEERS assistance for redundancy entitlements, and the exclusion of company directors and their relatives. In this connection, it also notes the observations made by the Australian Council of Trade Unions (ACTU) which welcomed the improvements to GEERS implemented by the Government as from January 2011. Noting that GEERS is for all practical purposes a guarantee institution within the meaning of Article 9 of the Convention, and also noting that the employees' entitlements covered by GEERS advance payment exceeds the scope of protected claims set out in Article 12 of the Convention, the Committee again ventures to suggest that the Government should consider extending the acceptance of the obligations of the Convention to Part III providing for the protection of workers' claims by a guarantee institution.

Article 4(1). Scope of application. The Committee notes the Government’s indication that following changes made in November 2006 with a view to aligning the GEERS Operational Arrangements with the provisions of the social security legislation, the scheme excludes employees who are not Australian citizens or entitled to reside in Australia permanently. Recalling that pursuant to Article 4(1), the Convention applies to all employees and to all branches of economic activity, the Committee requests the Government to provide additional explanations in this respect and clarify how the service-related claims of non-permanent residents (for instance, overseas people under the temporary residence programme and skilled workers with a business entry visa who are authorized to stay up to four years) are protected in the case of the employer’s insolvency.

Part IV of the report form. Practical application. The Committee notes the statistical information provided by the Government according to which in the period 2009–10, 18,655 claims for GEERS assistance were processed, resulting in over 154 million Australian dollars (AU$) in GEERS payments. This brings the total assistance provided since the introduction of the scheme in 2000 to over AU$1 billion helping more than 102,800 Australian workers. The Committee would be grateful if the Government would continue to provide up-to-date information on the manner in which the Convention is applied in practice.

Direct Request (CEACR) - adopted 2006, published 96th ILC session (2007)

The Committee notes the information contained in the Government’s report, in particular the latest developments concerning the operation of the various safety net schemes. It notes that the Employee Entitlements Support Scheme (EESS) was closed on 3 August 2005. It also notes that the air passenger ticket levy under the Special Employee Entitlements Scheme for Ansett group employees (SEESA) ceased to be collected on 30 June 2003, and therefore SEESA payments are expected to come progressively to an end. As regards the General Employee Entitlements and Redundancy Scheme (GEERS), the Committee notes that changes were introduced in November 2005 mainly in terms of improving the access to the scheme and enhancing the eligible entitlements available under the scheme.

Article 3, paragraph 2, of the Convention. The Committee notes the Government’s indication that the acceptance of Part III of the Convention is not envisaged at present. It asks the Government to keep it informed of any developments made in this regard.

Article 7, paragraph 1. The Committee notes the explanation by the Government that the maximum amount distributed in a bankrupt estate to an employee under section 109(1)(e) of the Bankruptcy Act, 1966, currently set at A$3,550, is considered socially acceptable since it covers only claims for unpaid wages. In contrast, the GEERS offers broader coverage, including entitlements for annual leave, long service leave and eight-weeks’ redundancy pay, hence the much higher monetary cap.

Part IV of the report form. The Committee notes the statistical information provided by the Government concerning the number of claims processed in the past year under the GEERS and the total amount of assistance provided since the introduction of the employee entitlement schemes in 2000. It would thank the Government if it continued supplying information on these matters.

Finally, the Committee notes that a major labour legislation reform, the Work Choices Act, has come into effect on 27 March 2006. It requests the Government to explain whether the new workplace relations system has any implications on the scope, content and operation of employee entitlement schemes, and, if so, to provide full particulars on the new arrangements.

Direct Request (CEACR) - adopted 2003, published 92nd ILC session (2004)

The Committee notes the information supplied by the Government in its report, in particular the adoption of the Corporations Act, 2001, and wishes to draw attention to the following points.

Article 3, paragraph 2 of the Convention. The Committee notes with interest the setting up of two administrative arrangements, or safety net schemes, i.e. the Employee Entitlements Support Scheme (EESS) to apply to claims lodged in respect of terminations of employment due to insolvency from 1 January 2000 up to 11 September 2001, and the General Employee Entitlements and Redundancy Scheme (GEERS) which covers employees whose employment was terminated due to their employer’s insolvency occurring on or after 12 September 2001. Both schemes apply in principle to all employees but exclude shareholding directors, relatives of shareholding directors, workers other than employees (e.g. contractors), employees whose employment was terminated other than as a result of the insolvency, and claims lodged more than 12 months after the termination of employment. Under the operational arrangements of the EESS, protected entitlements include up to four weeks’ unpaid wages, four weeks’ annual leave, four weeks’ redundancy pay, five weeks’ pay in lieu of notice and 12 weeks’ long service leave. In contrast, under the GEERS, there is no maximum limit as regards the period in relation to which wage claims have accrued with the exception of redundancy entitlements which are limited to eight weeks. With respect to monetary limitations, there is a A$20,000 cap on the amount an eligible employee may receive under the EESS, whereas the GEERS sets an income cap currently fixed at A$81,500 but indexed annually, it being understood that employees with higher earnings may receive payments as if they earned a rate equivalent to the scheme’s income cap. The Committee also notes with interest the establishment of a third ad hoc scheme, i.e. the Special Employee Entitlements Scheme for Ansett group employees (SEESA) which was set up following the insolvency of Ansett Airlines and a number of its subsidiaries and which is financed through a passenger ticket levy collected on all flights that originate in Australia. In light of the above developments, the Committee recalls that the Government may wish to consider extending its acceptance to Part III of the Convention dealing with wage guarantee institutions. It therefore requests the Government to inform the International Labour Office in its future reports of any initiative to this end.

Article 4, paragraph 2. The Committee notes the Government’s statement regarding the scope of application of the Corporations Act, 2001, and the Bankruptcy Act 1966 to public employees to the effect that, while these Acts have no application to employees directly working for a government statutory body, bodies that are incorporated under Corporations Act, 2001, in which an Australian Government is a shareholder are generally directly subject to the usual laws of insolvency in the Corporations Act, 2001, including the provisions protecting entitlements of employees.

Article 7, paragraph 1. The Committee notes the Government’s indication that the maximum amount in a bankrupt estate to be distributed to an employee in payment of wages under section 109(1)(e) of the Bankruptcy Act, 1966 is currently set at A$3,300 and that this amount is adjusted as necessary to maintain its value. Bearing in mind, however, the significantly higher monetary and income cap introduced by the EESS and the GEERS respectively, the Committee is bound to renew its request for additional information as to whether the abovementioned maximum amount represents a socially acceptable level within the meaning of this Article of the Convention and also having regard to the variables enumerated in paragraph 4 of the Protection of Workers’ Claims (Employer’s Insolvency) Recommendation, 1992 (No. 180).

Part IV of the report form. The Committee notes that as at December 2001, an estimated 6.1 million employees in the private sector were covered by the measures giving effect to the Convention. The Committee would be grateful to the Government for continuing to provide general information on the practical application of the Convention, especially with regard to the operation of the safety net schemes, including available statistics on the number of applications received, claims settled and debts successfully recovered from insolvent employers.

Direct Request (CEACR) - adopted 1997, published 86th ILC session (1998)

The Committee has noted the Government's first and second reports and requests the Government to supply further information on the following points.

Article 4 of the Convention. The Committee notes that the Government indicates in the report that the provisions of the Corporations Law and the Bankruptcy Act have no application to "employees working directly for a government", since governments are neither corporations nor individuals and the laws of insolvency do not apply to them. It requests the Government to clarify the scope of the term "employees working directly for a government", whether it refers only to the public servants or also to people working for companies owned by the State or a mixed status between the public and the private sector.

Articles 6(a) and 7(1). The Committee notes that the Bankruptcy Act, 1966, provides for a limit called "monetary cap" to the amounts due to an employee in relation to services rendered which is granted privilege in bankruptcy procedures (section 109(1)(e)). According to the Government's second report, the maximum amount is fixed by regulations at AUD$3,100 increased in accordance with the consumer price index (CPI) for the financial year commencing on 1 July 1997, and this amount will be worked out subsequently in accordance with the CPI. The Committee recalls that the Convention requires the protection of claims for wages relating to a prescribed period which should not be less than three months (Article 6(a)), and that it allows limitation of the protection to a prescribed amount, by the national legislation, only where the amount is not below a socially acceptable level (Article 7(1)). It therefore requests the Government to supply further information on the comparison of the above-mentioned maximum amount to the current level of wages.

The Committee requests the Government to continue to supply information on the practical application of the Convention, including the number of workers covered by the relevant national provisions, in accordance with point IV of the report form.