Direct Request (CEACR) - adopted 2003, published 92nd ILC session (2004)

Protection of Workers' Claims (Employer's Insolvency) Convention, 1992 (No. 173) - Australia (Ratification: 1994)

The Committee notes the information supplied by the Government in its report, in particular the adoption of the Corporations Act, 2001, and wishes to draw attention to the following points.

Article 3, paragraph 2 of the Convention. The Committee notes with interest the setting up of two administrative arrangements, or safety net schemes, i.e. the Employee Entitlements Support Scheme (EESS) to apply to claims lodged in respect of terminations of employment due to insolvency from 1 January 2000 up to 11 September 2001, and the General Employee Entitlements and Redundancy Scheme (GEERS) which covers employees whose employment was terminated due to their employer’s insolvency occurring on or after 12 September 2001. Both schemes apply in principle to all employees but exclude shareholding directors, relatives of shareholding directors, workers other than employees (e.g. contractors), employees whose employment was terminated other than as a result of the insolvency, and claims lodged more than 12 months after the termination of employment. Under the operational arrangements of the EESS, protected entitlements include up to four weeks’ unpaid wages, four weeks’ annual leave, four weeks’ redundancy pay, five weeks’ pay in lieu of notice and 12 weeks’ long service leave. In contrast, under the GEERS, there is no maximum limit as regards the period in relation to which wage claims have accrued with the exception of redundancy entitlements which are limited to eight weeks. With respect to monetary limitations, there is a A$20,000 cap on the amount an eligible employee may receive under the EESS, whereas the GEERS sets an income cap currently fixed at A$81,500 but indexed annually, it being understood that employees with higher earnings may receive payments as if they earned a rate equivalent to the scheme’s income cap. The Committee also notes with interest the establishment of a third ad hoc scheme, i.e. the Special Employee Entitlements Scheme for Ansett group employees (SEESA) which was set up following the insolvency of Ansett Airlines and a number of its subsidiaries and which is financed through a passenger ticket levy collected on all flights that originate in Australia. In light of the above developments, the Committee recalls that the Government may wish to consider extending its acceptance to Part III of the Convention dealing with wage guarantee institutions. It therefore requests the Government to inform the International Labour Office in its future reports of any initiative to this end.

Article 4, paragraph 2. The Committee notes the Government’s statement regarding the scope of application of the Corporations Act, 2001, and the Bankruptcy Act 1966 to public employees to the effect that, while these Acts have no application to employees directly working for a government statutory body, bodies that are incorporated under Corporations Act, 2001, in which an Australian Government is a shareholder are generally directly subject to the usual laws of insolvency in the Corporations Act, 2001, including the provisions protecting entitlements of employees.

Article 7, paragraph 1. The Committee notes the Government’s indication that the maximum amount in a bankrupt estate to be distributed to an employee in payment of wages under section 109(1)(e) of the Bankruptcy Act, 1966 is currently set at A$3,300 and that this amount is adjusted as necessary to maintain its value. Bearing in mind, however, the significantly higher monetary and income cap introduced by the EESS and the GEERS respectively, the Committee is bound to renew its request for additional information as to whether the abovementioned maximum amount represents a socially acceptable level within the meaning of this Article of the Convention and also having regard to the variables enumerated in paragraph 4 of the Protection of Workers’ Claims (Employer’s Insolvency) Recommendation, 1992 (No. 180).

Part IV of the report form. The Committee notes that as at December 2001, an estimated 6.1 million employees in the private sector were covered by the measures giving effect to the Convention. The Committee would be grateful to the Government for continuing to provide general information on the practical application of the Convention, especially with regard to the operation of the safety net schemes, including available statistics on the number of applications received, claims settled and debts successfully recovered from insolvent employers.