Having just returned from a contract job in New Zealand I came across
the following letter from Tony Robinson MP amongst my mail. It seems
that Tony is still fighting for justice for retrenched employees. If
anyone is interested in talking to Tony please let me know.



Richard Watson



________________________________________________________________________
_____________________________

9 June 2005



Dear Richard



GEERS



I enclose for your information a copy of a letter I have received from
the Federal Minister for Industrial Relations in response to my earlier
query about certain aspects of the General Employee Entitlements and
Redundancy Scheme.



The Minister makes a number of points, perhaps the most significant of
which is the relatively few number of cases in which Deeds of Company
Arrangements (DoCA) have disturbed the order of priority specified in
the Corporations Act.



I’d be more than happy to discuss this with you further – it may be that
given the relatively few cases in which DoCAs interfere with
distributions, a new procedure should apply to facilitate the provision
of entitlements.



Yours sincerely



Tony Robinson MP

Member for Mitcham

Enc.



Mr Tony Robinson MP

Member for Mitcham

9 Blackburn Road

Blackburn Vic 3130



1 Jun 2005



Dear Mr Robinson



I refer to your letter of 23 February 2005 concerning the legislation of
the General Employee Entitlements and Redundancy Scheme (GEERS).



The Australian Government is the first government to seriously address
the issue of employee entitlements lost as a result of an employer’s
insolvency. GEERS was established by this Government against a
background of inaction by the Federal and State Labor parties, including
a failure by State Labor Governments to contribute to employee
entitlements support schemes.



This Government appreciates that many employees experience significant
hardship as a result of their employer becoming insolvent. Since the
introduction of the first federal employee entitlements scheme in
January 2000, over 50 000 Australian workers have received in excess of
$615 million in assistance for their entitlements lost due to the
insolvency of their employer.



To further protect the entitlements of employees of insolvent companies
the Federal Government introduced changes into the Corporations Act 2001
which strengthened legal obligations on company directors to protect
employee entitlements and extended the prohibition on insolvent trading
to cover uncommercial transactions other than debts. Anyone who
deliberately avoids payment of employee entitlements can now be ordered
to pay a penalty and/or compensation to employees.



GEERS does not negate the responsibility of all employers to pay their
employees’ full entitlements. Employers are, and must remain,
responsible for the provision of entitlements to their employees,
especially to the extent that any assets are available.



You have specifically asked why GEERS is governed by Operational
Arrangements rather than legislation and/or regulations. The practices
of directors and related parties in respect of a company’s insolvency
are constantly changing. By remaining an administratively based scheme,
GEERS is better able to address emerging inappropriate practices which
seek to either exploit employees or derive an unwarranted benefit from
taxpayer funds used to provide GEERS assistance.



I don’t agree with your claim that the Government, through my
Department, may be able to “pick and choose those circumstances in which
the scheme will apply.” GEERS is administered in strict accordance with
its Operational Arrangements. My Department clearly explains the basis
for its decisions in writing on each occasion directing claimants to the
relevant clause(s) of the Operational Arrangements. Claimants who
believe their case has not been administered in accordance with the
Operational Arrangements may appeal the departrment’s decision or apply
to the Commonwealth Ombudsman for review.



I note you ask how many cases have involved Deeds of Company Arrangement
(DoCA) that have disturbed the order of priority specified in the
Corporations Act 2001. Where a DoCA is found to alter the priority
specified in subsection 556(1) in the Corporations Act 2001, Insolvency
Practitioners are advised that this is inappropriate and initially given
the opportunity to amend the DoCA so that the priorities and protections
they contain for employees are restored, and the terms of the GEERS
Operational Arrangements are met allowing employees’ claims to be
processed.



Out of over 4000 cases processed by my Department since the introduction
of the employee entitlements safety net schemes, there have been 19
cases with DoCAs that have disturbed the order of priority specified in
the Corporations Act 2001.



I note that you have also asked for the number of times people have been
prosecuted for deliberate avoidance of liability for employee
entitlements as provided for in the Corporations Act 2001.
Unfortunately, this issue does not fall within my responsibility, I have
therefore referred this aspect of your query to the Treasurer for direct
response.



I trust this information is of assistance.



Yours sincerely



Kevin Andrews

Minister for Employment and Workplace Relations

Minister Assisting the Prime Minister for the Public Service


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