The collapse of Queensland Nickel and voluntary administration of Dick Smith brought the plight of employees whose employers go insolvent into the public spotlight. This article outlines some of the ways in which employees can recover unpaid entitlements from their employers in the event that they go insolvent.
Employees who work during a voluntary administration
The contracts of workers who are employed by companies that go into voluntary administration will not automatically be terminated. If employer continues to trade during the administration period, the employees will be paid their ongoing entitlements
An administrator is not likely to pay any outstanding entitlements owed to employees. These must be paid by the directors if the company is returned to their control at the end of the administration, or may be dealt with under a Deed of Company Arrangement. If the company is subject to a Deed of Company Arrangement, employees have certain voting rights.
Employees who lose their job as a result of administration, liquidation or bankruptcy
Most employees who lose their job as a result of their employer going into liquidation or administration or being declared bankrupt in the previous twelve months can make a claim under the Fair Entitlements Guarantee Act 2012 (Cth).
Employees cannot make such a claim if:
- They were a director of the employer during the period twelve months before the relevant winding up or for any time during the winding up; or
- They commenced their employment with the employer in the six months immediately prior to the date of the liquidation having previously worked for the employer as an independent contractor, in circumstances in which it was reasonable to expect at the start of employment that the employer would not be able to meet its obligations under the relevant employment contract.
Before they make a claim, employees must take reasonable steps to prove any debts that their employer may owe to them in the winding up or bankruptcy of the employer. The Australian Securities and Investments Commission has an Information Sheet that assists employees to submit such proofs of debt.
An employee who makes a claim may be able to claim the following payments:
- Accrued annual leave payments;
- Accrued long service leave entitlements.;
- Up to thirteen week’s unpaid wages;
- Up to five weeks’ pay in lieu of notice; and
- Up to four weeks’ redundancy pay for each year of service.
However, these entitlements are subject to a maximum weekly wage cap.
Employees are also not entitled to claim any outstanding superannuation contributions, discretionary bonus payments, one-off commissions, reimbursements, or relocation or travel allowances.
How can JFM Law Help?
If you are employed by a company that is in administration or liquidation, or by a person who has been declared bankrupt, contact JFM Law on (02) 9199 8597 for a no obligation chat. If you would rather get in contact through email, send your question through or by email at wehelp@jfmlaw.com.au. We will provide you with a free initial phone consultation that will help you to map out any options that you may have for obtaining unpaid entitlements.
The information contained in this post is current at the date of editing – 3 September 2025.
