Reforming the Fair Entitlements Guarantee (FEG) Scheme

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This Financial Policy Brief was submitted to Treasury and the Department of Employment’s consultation on Reforms to address corporate misuse of the FEG scheme.

The deficiencies of the Fair Entitlements Guarantee (FEG) Scheme and its predecessors have been apparent ever since the first predecessor scheme (General Employment Entitlements and Redundancy Scheme- GEERS) was introduced in 2001 following a number of large high profile insolvencies (including Ansett). Legal changes proposed to improve the operation of the scheme, as proposed by the current consultation, are warranted. But by focusing only on employee entitlements they miss a bigger, more general, problem (of which non-payment of employee entitlements is a subset), and alternative solutions.

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This FPB was prepared by Professor Kevin Davis, Research Director at the Australian Centre for Financial Studies.

The ACFS Financial Policy Brief series provides independent analysis and commentary on current issues in financial regulation, with the objective of promoting constructive dialogue among academics, industry practitioners, policymakers and regulators and contributing to excellence in Australian financial system regulation.

To read more papers in the FPB series, click here.