Bankruptcy & liquidation
Sometimes businesses shut down because they aren't profitable or run out of money. This can mean that employees lose their jobs, and in some cases, the employer may not able to pay them the wages and entitlements they are owed.
When a business is bankrupt, also known as going into liquidation or insolvency, employees can get help through the Fair Entitlements Guarantee (FEG).
The FEG, previously known as the General Employee Entitlements and Redundancy Scheme or GEERS, is available to eligible employees to help them get their unpaid entitlements. This can include:
- wages – up to 13 weeks of unpaid wages (capped at the FEG maximum weekly wage)
- annual leave
- long service leave
- payment in lieu of notice of termination – maximum of 5 weeks
- redundancy pay – up to 4 weeks per full year of service.
It doesn’t include:
- reimbursement payments
- one-off or irregular payments
- bonus payments
- non-ongoing or irregular commissions.
Find out who is an eligible employee and how to make a claim on the Department of Jobs and Small Business's Fair Entitlements Guarantee (FEG) page
Illegal phoenix activity
Illegal phoenix activity is when an employer deliberately liquidates their company and starts a new one to keep doing the same business or work. They do this to avoid the old company’s responsibilities, such as taxes and employee entitlements.
Illegal phoenix activity negatively impacts on employees, contractors and the wider community because it can mean that:
- employees aren’t paid their wages, superannuation and accrued employee entitlements
‘phoenix businesses’ get an unfair competitive advantage over other businesses
- suppliers don’t get paid
- government revenue is lost, and there are increased monitoring and enforcement costs
- regulatory obligations are avoided.
Illegal phoenix activity can significantly impact on getting unpaid employee entitlements back to employees.
A government-wide Phoenix Taskforce works together to combat illegal phoenix activity. You can find more information about the Taskforce on the Australian Taxation Office Phoenix Taskforce page
The Australian Tax Office (ATO) has a dedicated Phoenix Hotline, where employees, creditors, competing businesses and the general public can confidentially provide information or report their concerns about possible Illegal phoenix activity. For information about warning signs, where to go for help, and advice about how to contact the Hotline by phone, email or online, go to the ATO's illegal phoenix activity page
Before a business goes bankrupt
Before a business goes bankrupt it might go into voluntary administration. Voluntary administration happens when a business can't pay its debts. An administrator is appointed to work out if the business can keep operating or should go into liquidation.
When a business is in voluntary administration (before it goes into bankruptcy or liquidation) we can provide advice and help employees seek unpaid entitlements.
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