Fair Entitlements Guarantee (FEG): Safety Net for Unpaid Entitlements on Insolvency

What FEG covers

The Fair Entitlements Guarantee (FEG) is a safety net of last resort under the Fair Entitlements Guarantee Act 2012 (Cth), administered by the Department of Employment and Workplace Relations (DEWR). It provides financial assistance to employees who have not received all of their entitlements when their employer becomes insolvent.

FEG covers several types of unpaid entitlements. This includes up to 13 weeks of unpaid wages, capped at the FEG maximum weekly wage (AUD 2,793 per week for events between 1 July 2024 and 30 June 2025). It also covers up to 5 weeks of unpaid annual leave and the equivalent annual leave loading, and NES redundancy pay: section 119 scale.

Furthermore, FEG covers all unpaid long service leave accrued under federal, state or territory law (with no statutory cap), up to 5 weeks of unpaid payment in lieu of notice, and up to 4 weeks of unpaid redundancy pay per year of service.

What FEG does NOT cover

The Fair Entitlements Guarantee (FEG) has specific limitations on what it will cover. Unpaid superannuation guarantee contributions are not covered by FEG; these claims are pursued separately through the Australian Taxation Office. Similarly, FEG does not provide assistance to employees of employers who are solvent, even if there are unpaid amounts owing. National Employment Standards: 11 entitlements deep dive

FEG is only available to employees. Consequently, independent contractors are not eligible for FEG assistance. Furthermore, certain individuals are excluded from FEG coverage, including directors of the insolvent company and people closely connected to the directors.

Finally, it’s important to note that claims for entitlements that accrued more than 12 months before the employer’s insolvency event may be reduced or refused. National Employment Standards: 11 entitlements deep dive

Eligibility and claiming

Eligibility for the Fair Entitlements Guarantee (FEG) is determined by several factors. To be eligible, a claimant must be an Australian citizen, a permanent resident, or hold a visa with permission to work and reside in Australia. Working Holiday Maker tax and super (417/462) visas are included in this category, provided the holder meets the requirements for working and residing in Australia. Furthermore, employment must have ended within six months before the date the insolvency practitioner was appointed.

The FEG applies to insolvency events occurring on or after 5 December 2012. Events prior to this date were covered under the previous GEERS scheme. An effective claim must be lodged within 12 months of the insolvency event, which is the date of liquidation or bankruptcy.

Claims are submitted electronically via FEG Online Services, accessible through the DEWR website. This online portal is the sole method for lodging claims.

Recovery and subrogation

Once the Department of Employment and Workplace Relations (DEWR) pays an employee’s unpaid entitlement under the Fair Entitlements Guarantee (FEG), it gains the right to recover those funds. This subrogation places DEWR in the employee's position as a priority creditor in the insolvency proceedings.

The Commonwealth, acting through DEWR, actively pursues recovery of these amounts from the insolvent estate. This recovery is prioritised under section 556 of the Corporations Act 2001. The FEG Recovery Programme investigates and seeks recovery from related entities, directors, and pre-insolvency advisors where misconduct is suspected. Paid family and domestic violence leave: 10 days entitlement may also be included in these claims.

Section 596AB of the Corporations Act 2001 prohibits actions intended to avoid employee entitlements. DEWR typically pays approved claims within 16 weeks of receiving the required information from the insolvency practitioner.