Industry funds urge SG inclusion in last resort scheme

Major industry funds representative group, Super Members Council (SMC) is arguing for an extension of the Fair Entitlements Guarantee (FEG) scheme to ensure employees of insolvent businesses are compensated for unpaid superannuation guarantee (SG) contributions.

The FEG is a safety net scheme of last resort which allows employees to claim their unpaid wages for up to 13 weeks, unpaid annual leave and long service leave, payment of lieu of notice up to five weeks and redundancy pay for up to four weeks.

The scheme does not currently cover unpaid superannuation but is in the process of being “recalibrated to recalibrated to also actively pursue unpaid superannuation guarantee charge (SGC) amounts owed by employers who have entered liquidation or bankruptcy where certain criteria are met (including where a FEG advance had been made to former employees)”.

Consultation around the “recalibration” is being run by the Department of Employment and Workplace Relations (DEWR) and the SMC has used a submission that it is vital that SGC amounts are added to the priority regime for the payment of debts.

“While unpaid superannuation is one element of the SGC, it also captures amounts for nominal interest that workers would have earned if their super had been paid to their accounts, and an administrative penalty to deter employers for non-compliance,” it said.

“While not all unpaid super is due to corporate insolvency, we know that unpaid super affects around 2.8 million employees each year, costing the impacted workers an average of $1,800 in 2021-22.

“Adding the superannuation guarantee charge at section 596AA of the Corporations Act 2001 will improve workers’ balances and help to deter those pernicious actors who aim to avoid paying what they owe. It will also strengthen the integrity of the FEG Recovery Program and reinforce employers’ super obligations,” the SMC said.

“In addition, we recommend that the FEG advance scheme itself be extended to include super amounts owing to workers to ensure that they receive their entitlements sooner and are paid regardless of the Recovery Program achieving a successful outcome.”