It is difficult to see why the Federal Government has been so tardy and weak over changing the corporations law to ensure that employees’ rights to holiday pay, long-service pay and other entitlements take precedent over all other debts in a company winding up.
At present employees have to form a queue with other debtors when a company goes broke. It means that secured creditors – those with mortgages over property or floating charges over all company assets – will take before employees for all but their immediate pay cheque.
The situation is unjust. Companies cannot operate without employees. The employees have earned the entitlement, often long ago. It is unfair that large financial institutions can come in after employees have earned the entitlements and get security for their credit. Those institutions are in a position to ask a company about employee entitlements before they give credit.
The Commonwealth, states and territories have joined in a co-operated scheme on corporations law. No single state or territory can act on its own. It now requires quick action to prevent the sort of injustice seen when the Oakdale mine closed last week leaving hundreds of miners owed thousands of dollars.
A scheme is needed to prevent money being siphoned off to related corporations or individuals. A new order of creditors should be put in place to ensure employees take precedent over other creditors (who are often in a better position than employees). Employers should be required to put sufficient funds to meet redundancy and long-service payments into a trust fund.
There is no excuse for inaction. Indeed, the Federal Government’s inaction is very foolish. It leaves it open to a charge that it does not care about employees’ rights, no matter what the justice of the situation, that it will prefer financial institutions and the corporate sector no matter what