A proposed amendment to the Fair Entitlements Guarantee Act 2012 (Cth) is presently before Federal Parliament.  If this amendment is passed it will cap redundancy payments made to workers of insolvent companies to a maximum of 16 weeks’ pay.

Prior to 31 December 2012, the General Employee Entitlements and Redundancy Scheme (GEERS) provided a means by which employees of insolvent companies could apply to the federal government for payment of their unpaid employee entitlements, including redundancy pay.  GEERS limited redundancy payments to employees to 4 weeks’ pay per year of employment, capped at 16 weeks total.

From 31 December 2012 the Fair Entitlement Guarantee Scheme (FEGS) replaced GEERS and the cap was removed.  The proposed amendment would restore the old GEERS cap and bring FEGS into alignment with the National Employment Standards, which caps redundancy payments to employees at 4 weeks’ redundancy pay for each year of employment, capped at a maximum of 16 weeks.

For more information please contact Simon Gallant.