Financial protection for employees of bankrupt companies has been increased to the dismay of business groups.
Under new laws coming in from January 1, workers will be paid up to four weeks for every year of service by the General Employee Entitlements and Redundancy Scheme (GEERS) if a company fails.
The current payout is capped at 16 weeks.
Australian Industry Group CEO Heather Ridout said the changes are unfair and risky, and would create major moral hazards.
“Ai Group is very concerned that the collapse of even one large company could lead to a major funding shortfall and could lead to union calls for the publicly funded scheme to be replaced with a scheme funded by an employer levy.
“An employer funded scheme would operate as a tax on employment and would lead to the 99.99% of employers who do not become insolvent and fail to pay employee entitlements, funding the obligations of failed companies,” she said.
However, ACTU president Ged Kearney welcomed the changes, claiming they would be a vast improvement on the GEERS scheme established by the Howard Government.“The Global Financial Crisis highlighted shortcomings of GEERS, which was nothing more than a stop-gap scheme with major flaws.“Thousands of Australian workers lost their job during the GFC and were left high and dry without their full entitlements,” he said.