Employee entitlements (including wages, superannuation, leave, and termination amounts, etc.) are treated as a priority dividend—as a priority creditor in all insolvency appointments
Outside of the priority dividends outlined under the Corporations Act 2001 and Bankruptcy Act 1966 ahead of other types of creditor claims, the government provides financial assistance to cover certain unpaid employment entitlements to eligible employees who lose their job due to the liquidation or bankruptcy of their employer. This scheme is known as the Fair Entitlements Guarantee scheme (FEG). This scheme’s funding assists to satisfy and pay outstanding wages, leave entitlements, and termination amounts (subject to some limits) that employees are owed when the business cannot afford to pay these debts. Call us to find out more.