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2014-09-10

FEG2

Government moves to reduce redundancy entitlements

The Abbott Government has introduced a Bill in the House of Representatives to cap redundancy payments under the Fair Entitlements Guarantee scheme at a maximum of 16 weeks, describing the current benefits for employees of insolvent companies as "overly generous" and as creating a "moral hazard".

The Fair Entitlements Guarantee scheme provides protections for employees of companies which go broke and don’t pay their workers what they’re owed in leave, redundancy payments or other entitlements

The original scheme was introduced by the Howard Government in 2001 with an eight week cap on redundancy payments, which it increased to 16 weeks in 2006.

The Rudd Government removed the cap at the start of 2011, guaranteeing redundancy benefits of up to four weeks' per year of service. But the Abbott government says that is "very generous by community standards" and out of step with the National Employment Standards (NES). The NES entitlement provides a maximum 16 weeks payout.

The government says it is not its job to “prop up” businesses that fail to meet their responsibilities. Perhaps not, but propping up businesses and ensuring workers receive their actual entitlements are two different things.

A government that paid more than lip service to supporting “honest workers”, as the Abbott government says it does, would ensure they are paid what they are owed.

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