The Minister for Financial Services & Regulation, Joe Hockey, today said the Government will act to protect employee entitlements after recent high-profile company failures.
"We will move quickly to amend the Corporations Law in the next session of Parliament so that Australian workers are better protected in the event that a company goes bust," the Minister said in Sydney today.
The Minister said that two measures were today endorsed by the Ministerial Council for Corporations.
The measures are:
- To introduce a new offence to stop directors from entering into arrangements or transactions that avoided payment of employee entitlements.
- To strengthen the existing prohibitions against insolvent trading so that directors would be breaking the law if they gave a financial benefit to a related party including an associated company - which lead to the company's insolvency.
The Minister said further consideration would be given to the option of enabling the court, in certain circumstances, to make a company within a group pay outstanding employee entitlements of another company in that same group.
"This represents a major step towards protecting worker entitlements without hampering a business's day-to-day operations.
"The measures provide a strong incentive on directors to do the right thing without impacting on genuine entrepreneurial activity."