If the Federal Government’s industrial relations laws are passed, workers’ entitlements will be jeopardised when companies collapse, according to Sydney-based insurer Assetinsure.

CEO Peter Wedgwood says this issue remains “surprisingly absent” from the current debate on how to achieve best outcomes for employees and employers.

“Yet each year over 6000 Australian companies become insolvent and around 4000 of these end up in the hands of liquidators or receivers,” he said. “Companies in Australia are not obliged to make provision in their accounts for redundancy payments, as long as they are a going concern.”

Mr Wedgwood says the Federal Government’s General Employee Entitlements and Redundancy Scheme (GEERS) is limited in its scope with capped payouts.

“Experience of recent collapses shows the loyal and long-term workforce, together with better paid white-collar workers, are at most risk when there are no assets left to fund employee entitlements,” he said.

He says the changes under GEERS will actually make it significantly more difficult for redundant workers to access their entitlements because it mandates that a company has to go into liquidation, rather than receivership or administration, before it becomes eligible.

“GEERS is a discretionary and unlegislated scheme,” he said. “There is no guarantee of payment; therefore it is inherently unreliable. Payment calculations are based on a maximum annual wage of $90,400 a year and GEERS pays only eight weeks retrenchment, when many awards stipulate 16 weeks or more.”

Mr Wedgwood says Assetinsure has introduced an insurance bond that covers the full entitlements detailed in employment contracts.