New product protects employee entitlements
George Hodgson
Former employees of Investment Data Technologies (IDT) are yet to receive their entitlements despite the financial planning software provider entering voluntary administration a year ago.
While their situation is not uncommon, a new insurance product, believed to be an Australian-first, could mean fewer people will find themselves facing the same dilemma in the future.
The product, Employee Entitlements Plus (EE Plus), guarantees entitlements are paid within 30 days of retrenchment due to company insolvency.
An administrator was appointed to IDT early last year after the technology provider experienced cash flow difficulties following the loss of one of its major clients, National Australia Bank.
In a letter sent to creditors dated January 5, 2007, the administrator said it was now considering taking the necessary steps to move IDT into liquidation.
Only when liquidation is confirmed will employees be eligible to make a claim for their unpaid employee entitlements (excluding superannuation contributions) under the Federal Government’s General Employee Entitlements and Redundancy Scheme (GEERS).
However, it is worth noting GEERS is discretionary and unlegislated, meaning there is no guarantee of payment.
Masterminds behind EE Plus, International Underwriting Services (IUS) and Assetinsure, claimed that prior to the launch of their new insurance product, GEERS was the only option available to people awaiting entitlements.
“Depending on the complexity of the formal administration, we know this creates delays of anything from three to 12 months before workers receive their entitlements,” IUS group managing director George Hodgson said.
“This is a very long time for the average worker and will almost certainly cause real hardship for their families.
“In contrast, EE Plus ensures entitlements are paid in full within 30 days of retrenchment by the insolvency practitioner.”
Such entitlements include unpaid wages, accrued annual leave and long service leave, payment in lieu of notice, redundancy pay and superannuation guarantee contributions.
“The bottom line is that over the past 10 years or so, literally thousands of Australian companies, including many with household names, have become insolvent, costing employees millions of dollars in lost entitlements,” Hodgson said.
“If any of these companies had been covered by EE Plus, the personal, political and social fallout from their closures would have been avoided.”
Recommended for you
Net cash flow on AMP’s platforms saw a substantial jump in the last quarter to $740 million, while its new digital advice offering boosted flows to superannuation and investment.
Insignia Financial has provided an update on the status of its private equity bidders as an initial six-week due diligence period comes to an end.
A judge has detailed how individuals lent as much as $1.1 million each to former financial adviser Anthony Del Vecchio, only learning when they contacted his employer that nothing had ever been invested.
Having rejected the possibility of an IPO, Mason Stevens’ CEO details why the wealth platform went down the PE route and how it intends to accelerate its growth ambitions in financial advice.
