Among the trivial and predictable election coverage provided by the nation's media over the weekend, a real news story almost slipped under the radar.
While most journalists were obsessed with the worm and yet more reheated policies on immigration and population, on Sunday the Government announced a policy that would make a huge difference to the income security of all Australian workers. Not that you’d have read much about it.
The Government’s Protecting Workers’ Entitlements package will go a long way to guaranteeing 100% of employee entitlements when company’s collapse.
It has long been one of the great injustices that when companies collapse not only do workers lose their jobs, but in some cases because of unscrupulous behaviour by the company directors, they also end up out of pocket because no provision has been made for their entitlements to redundancy pay, superannuation, and various forms of leave.
This is money that employers have agreed to set aside, and that the workers have earned over years of service to an employer.
For an employer not to have met that obligation equates to theft.
This has been a problem that has been around for decades, but has come into sharp focus over the past 10 years following a string of high-profile company collapses such as Ansett, One.Tel, Nylex and others.
In 2001, the Howard Government introduced the General Employee Entitlements and Redundancy Scheme (GEERS) safety net, but this was always a stop-gap and followed an acute political embarrassment for then-PM John Howard.
In 2000, John Howard had been forced to bail out workers at his brother Stan’s company, National Textiles, when that company collapsed leaving employee entitlements unfunded.
GEERS is a basic payment scheme that covers capped unpaid wages, annual and long service leave, capped payment in lieu of notice and redundancy pay capped at 16 weeks. But often that falls far short of 100% coverage of entitlements.
In short, it leaves the taxpayer to pick up the tab where company directors have failed to do the right thing. This year, $178.4 million has been allocated to GEERS.
Notwithstanding the Government’s stimulus program which softened the landing, the economic downturn last year resulted in a spike in company collapses, again leaving workers out in the cold.
Often, companies fail for genuine reasons. But there are also many cases where company collapses can be sheeted home to poor business practices by their directors.
Whatever the reason, a failure to make provision for entitlements is a sign of immoral behaviour by corporate Australia. If there weren't irresponsible employers we wouldn't need GEERS.
The Protecting Workers’ Entitlements package announced on Sunday is a vast improvement on GEERS.
It will mean almost al workers will receive redundancy payments in full when their employer goes out of business, and dodgy company directors will be less able to rip off their workforce.
There will also be strengthened compliance measures to ensure employees receive their superannuation entitlements, and the corporate watchdog, ASIC, will be given increased powers and strengthened penalties to take action against companies that do the wrong thing, including shameful ‘phoenix’ company arrangements.
ACTU President Ged Kearney says the package has widened the gap between the two major parties on who is best able to secure jobs and incomes for working Australians.
Kearney says Opposition Leader Tony Abbott’s record in the former Howard Government reveals a callous disregard for the plight of workers who through no fault of their own are left out of their pocket because of unethical behaviour by their employer.
Kearney says the proposed new Fair Entitlements Guarantee would mean that 97% of workers would receive their redundancy entitlements in full in cases where their employer went out of business without having made provisions for entitlements. It will provide workers entitlements including redundancy pay up to a maximum of four weeks for each year of service, all annual leave, all long service leave and up to three months of unpaid wages. It will be enshrined in legislation.
“There is nothing worse than for a worker to first lose their job, and then discover that their employer has not made provision for their entitlements to redundancy, superannuation, and leave,” says the ACTU’s Ged Kearney.
“This is effectively theft from the pockets of workers, and unions have been leading campaigners for a better deal for workers. This type of unethical corporate behaviour was again on display during the economic downturn, and it must stop.
“The changes to information about and enforcement of superannuation payments along with new powers for ASIC will act as a kind of early warning system which should allow authorities to step in to prevent directors from stealing worker entitlements before it’s too late.
“Importantly, the Government intends to crack down on the dubious practice of phoenix companies, where directors shift assets to a new company to avoid their obligations.
“This must be backed by strong and harsh penalties for company directors who engage in such practices.”
One of the industries that has been worst hit by company collapses followed by unpaid entitlements has been manufacturing.
Australian Manufacturing Workers’ Union National Secretary Dave Oliver says the GEERS scheme has left many long-serving employees many thousands of dollars short of what they were owed, at the same time as they faced unemployment.
But he says the new guarantee would mean that workers were no longer left to bear the cost of companies who failed to set aside entitlements.
“We have seen thousands of workers loyally serve their employers only to be told that the company has gone out of business and there is no money left,” Oliver says.
“The outcome for workers has been the double-whammy effect of unemployment after many years with an employer and no money to sustain them while they look for new work.
“The new ‘Fair Entitlements Guarantee’ will provide security to thousands of families around Australia.”
Kearney says Tony Abbott and the Coalition had forfeited any credibility on job and income security with their opposition to the economic stimulus package that saved more than 200,000 jobs during the GFC.
“If the Coalition had its way, thousands of Australian companies would have collapsed and unemployment would have gone through the roof,” she says.
But the ACTU President also hastens to add that taxpayer support for workers’ entitlements should not be seen as a get-out-of- jail-free card for employers.
"Employers need to do everything they can to prevent laying staff off and they need to meet their legal obligations to their staff and set aside enough to cover workers' entitlements.
“Employers that set up sham arrangements or shift assets to shelf companies and fail to meet their financial obligations to their staff by engaging in immoral corporate behaviour should face the full force of the law.”
Mark Phillips is the ACTU’s media co-ordinator.
R@W News is a forum for news, analysis and commentary about rights at work and related issues. The opinions presented in R@W News are those of the author, and do not necessarily represent policies or views of the ACTU.