Some of you may recall GEERS, which stands for General Employee Entitlements and Redundancy Scheme, which was reluctantly introduced by the Howard government. The background to this scheme was the collapse of National Textiles – in the dying days of Australia’s protected TCF industry- the chairman of which was Stan Howard, the Prime Minister’s brother.
As the company had become insolvent and there were insufficient funds to pay out the entitlements of the workers, the government stepped in to provide a very limited form of guarantee of workers entitlements, including some wages, unused leave and redundancy pay, capped at 16 weeks.
This was always the sort of scheme with great appeal for Labor – get the taxpayer to pick up the tab for workers’ entitlements (think, indirectly, SPC, auto industry, Qantas). But GEERs was always too low-rent for Labor and the unions – think big, think uncapped.
The policy developement occurred in two phases: the first was to plump up GEERS and then to introduce a new scheme called FEG. The incentive of FEG is for unions to approach failing companies and negotiate excessive redundancy pay (104 weeks, say), in the knowledge that the taxpayer will effectively be paying the bill.
This scheme is causing considerable consternation in the automotive component industries, where many of the firms are facing a bleak future. Of course, the irony is that these sorts of provisions make it almost impossible for the firms to downsize and adjust because the cost of making some workers redundant is prohibitive.
And the fiscal liability is large and rising. Just another mess for the Coalition to fix up.
See the details below:
GEERS (Part 2)
From 1 January 2011, assistance for unpaid redundancy entitlements will be extended under the General Employee Entitlements and Redundancy Scheme (GEERS).
GEERS is a basic payment scheme established to assist employees who have lost their employment due to the liquidation or bankruptcy of their employer and who are owed certain employee entitlements.
If a liquidation or bankruptcy occurs on or after 1 January 2011, eligible claimants will now be able to access GEERS assistance for redundancy entitlements, as specified in their industrial instrument, up to a maximum of four weeks for each year of continuous service. Prior to this change, redundancy pay was capped at 16 weeks under GEERS.
In addition to redundancy pay, eligible claimants may be able to access GEERS assistance for up to three months unpaid wages for the period prior to the appointment of the insolvency practitioner, annual leave, long service leave and up to five weeks payment in lieu of notice.
GEERS assistance is calculated in accordance with an employee’s entitlements under legislation, an award, a statutory agreement or a written contract of employment. For example, all employees will not necessarily receive redundancy pay of 4 weeks per year of service - the assistance an employee receives will be based on the redundancy entitlement provided for in their legal instrument.
The changes have been made through amendment of the GEERS Operational Arrangements, prior to the Government’s introduction of the Fair Entitlements Guarantee.
Fair Entitlements Guarantee (looks pretty like GEERS part 2, need to check differences)
The Fair Entitlements Guarantee is a government scheme helping employees who lose their job and have outstanding entitlements because their employer goes into liquidation or is bankrupt. This scheme is run by the Department of Education, Employment and Workplace Relations.
Eligible employees may be able to get assistance through the Fair Entitlements Guarantee for:
- up to 13 weeks unpaid wages
- unpaid annual leave
- unpaid long service leave
- up to 5 weeks unpaid payment in lieu of notice
- up to 4 weeks unpaid redundancy entitlement per year.