Who should be the super police? Detection and recovery of unremitted superannuation

Helen Lesley Anderson, Tess Hardy

Research output: Contribution to journalArticleResearchpeer-review

Abstract

An employee s immediate concern if their employer becomes insolvent is usually whether they have been fully paid their wages, annual leave, payment in lieu of notice and redundancy entitlements. Protection of these entitlements is critical, so that employees who have lost their jobs do not suffer additional financial stress. However, of equal significance is an employees superannuation entitlements, which may not have been remitted to the employee s nominated fund by the employer for months, years or ever. Corporate insolvency exacerbates the recovery of unpaid employment entitlements, including any unremitted superannuation contributions, because the main target of enforcement action - the company - is likely to have insufficient assets to meet the claim. This article describes the range of issues surrounding unremitted superannuation contributions in insolvency and also more generally. We argue that more should be done to improve the detection and recovery of non-payments because of the importance of superannuation to both employees and the government. We contend that any model of enforcement that shifts the policing of unpaid superannuation to employees is flawed. This is true whether their employer is insolvent or not. Unfortunately, it seems to be the model that the government is increasingly embracing. As an alternative, we argue for more sophisticated detection methods, increased focus on recovery efforts and greater coordination between key agencies. Part II provides the necessary background to the discussion, including a brief review of key regulatory models. Part III looks at the particular problem of unpaid superannuation in corporate insolvency - circumstances which highlight the central challenges facing enforcement agencies in this area. Part IV examines the former government s Protecting Workers Entitlements Package , which was released in 2010 and was designed to improve the recovery of employment entitlements, including superannuation. Part V identifies current detection and enforcement problems for the Australian Taxation Office ( ATO ) and the Fair Work Ombudsman ( FWO ) in relation to unremitted superannuation. Part VI makes recommendations to improve the functioning of the ATO and FWO as super police , and in particular advocates for an approach which is more proactive and collaborative. Part VII concludes.
Original languageEnglish
Pages (from-to)162 - 194
Number of pages33
JournalUniversity of New South Wales Law Journal
Volume37
Issue number1
Publication statusPublished - 2014

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