This week, 188-year-old Australian retailer David Jones announced it will close 19 of its 38 stores after Christmas, after going into voluntary administration. The receivers are yet to say how many of its 6,000 employees will lose their jobs.
Authors
- Jacqueline Meredith
Lecturer in Law, Swinburne University of Technology
- Julia Tomassetti
Lecturer, School of Business, Law and Entrepreneurship, Swinburne University of Technology
That news came a day after Qantas announced 850 jobs will be outsourced to India, as part of a longer-term shift to using more artificial intelligence.
In recent weeks, National Australia Bank said it will cut up to 2,500 jobs , or about 6% of its workers, with some to go before Christmas. Then high-profile Australian design company Canva announced 1,270 jobs , or 22% of its staff, will either have to change roles, be relocated, or lose their jobs.
Those are just the companies big enough to make headlines. Unemployment is now at a five-year high of 4.7% .
If you work for a small business or a big company like David Jones, your rights to redundancy payouts can vary. Here’s a brief guide to three scenarios in which you might lose your job – and where to get more help.
Basic entitlements when you lose your job due to redundancy
Let’s start with basic entitlements if your employer is still operating, but has decided to make job cuts. This is a business decision to get rid of the role you’re in, rather than anything you’ve done.
Under the National Employment Standards , eligible employees are entitled to redundancy pay when employment ends due to redundancy. Redundancy pay is calculated by the length of the employee’s continuous service .
Some employees aren’t entitled to redundancy pay under the national system. Casual employees, those with less than 12 months of continuous service, and employees of small businesses with fewer than 15 employees are among those who are excluded.
Employers must also pay out any outstanding employee entitlements, including annual leave and long service leave.
If you’re covered by an award or enterprise agreement, your redundancy entitlements may differ to what’s in the National Employment Standards, so check what those say too.
What if my employer is in voluntary administration?
If the company keeps trading while in voluntary administration or receivership, as David Jones is, employees who keep working should continue to be paid.
However, any previously owed entitlements, such as wages, leave, and super, may not be paid during this period of being in voluntary administration or receivership. How and when outstanding entitlements are paid depends on the assets available.
Following a creditors’ meeting, one option is for the company to enter into ” a deed of company arrangement “. This is a binding arrangement between the company and its creditors outlining how the company’s debts will be dealt with.
Employees are generally prioritised over other unsecured creditors. Where the usual priority rules apply, employee entitlements are paid in this order:
- outstanding wages and superannuation
- outstanding leave entitlements (including annual leave and long service leave)
- redundancy pay.
Employee priority applies only to the funds available after administration expenses have been paid. These expenses include employee pay earned for work performed during the administration.
What if my employer has gone bust?
The rate of business ” insolvency ” – when a business goes bust because it can’t pay its debts on time – has been much higher since the pandemic.
If your employer goes into liquidation – meaning it needs to shut down – the company’s assets will be distributed to creditors.
The same order of payment outlined above generally applies in liquidation too. This increases the likelihood of employees recovering their entitlements.
But the reality is liquidation often provides a low return for employees. So how can you recover unpaid entitlements in these circumstances?
The national safety net for workers
Eligible employees can generally recover most of their unpaid entitlements by lodging a claim through the national safety net scheme, the Fair Entitlements Guarantee . That needs to be done within 12 months of employment ending or the employer entering liquidation, whichever is later.
This scheme provides financial assistance for:
- unpaid wages (up to 13 weeks, subject to a weekly cap)
- unpaid annual and long service leave
- payment in lieu of notice (up to five weeks)
- redundancy pay (up to four weeks per year of service).
If you are an employee of a company in voluntary administration, you’re not usually eligible for Fair Entitlements Guarantee assistance, unless the company subsequently goes into liquidation.
But there have been exceptions. In 2024, when Mosaic Brands collapsed , several retailers including Millers, Rivers and Katies closed. The federal government fast-tracked access to allow eligible employees to claim unpaid entitlements without waiting for the company to enter liquidation.
Payday super protects against bigger losses
That Fair Entitlements Guarantee scheme does not cover unpaid superannuation.
This highlights the importance of new “payday super” laws , which started on July 1 this year. Under the new rules, employers must pay superannuation contributions at the same time as employees’ wages, rather than just quarterly.
This reduces the risk of employees being owed significant amounts of unpaid superannuation before a business enters administration or liquidation.
Where to get more help
If your employer is in administration, liquidation, or receivership, you can contact the administrator, liquidator, or receiver to ask about unpaid entitlements. The Fair Work Ombudsman can also provide advice and assistance.
If you suspect misconduct connected with the insolvency, you can report it to the Australian Securities and Investments Commission (ASIC) .
For unpaid superannuation, employees can contact the Australian Taxation Office . (However, there has been criticism of how slow the super recovery process can be.)
If an employer closes its business and its directors abandon it without formally entering liquidation, you may have more difficulty recovering unpaid entitlements. In these circumstances, ASIC may be able to assist.
Employees experiencing financial hardship due to unpaid entitlements can access free financial counselling through the National Debt Helpline .
