Corporations Amendment (Strengthening Protections for Employee Entitlements) Act 2019 (44 of 2019)

Schedule 1   Amendments

Part 1   Employee entitlements

Corporations Act 2001

11   Section 596AC

Repeal the section, substitute:

596AC Relevant agreements or transactions that avoid employee entitlements - civil contraventions

Entering into relevant agreement or transaction

(1) A person contravenes this subsection if:

(a) the person enters into a relevant agreement or a transaction (within the meaning of subsection 596AB(3)); and

(b) the person knows, or a reasonable person in the position of the person would know, that the relevant agreement or the transaction is likely to:

(i) avoid or prevent the recovery of the entitlements of employees of a company; or

(ii) significantly reduce the amount of the entitlements of employees of a company that can be recovered.

Note: This subsection is a civil penalty provision (see section 1317E).

(2) A person who is involved in a contravention of subsection (1) contravenes this subsection.

Note 1: Section 79 defines involved .

Note 2: This subsection is a civil penalty provision (see section 1317E).

Causing company to enter into relevant agreement or transaction

(3) A person contravenes this subsection if:

(a) the person is an officer of a company; and

(b) the person causes the company to enter into a relevant agreement or a transaction (within the meaning of subsection 596AB(3)); and

(c) the person knows, or a reasonable person in the position of the person would know, that the relevant agreement or the transaction is likely to:

(i) avoid or prevent the recovery of the entitlements of employees of the company; or

(ii) significantly reduce the amount of the entitlements of employees of the company that can be recovered.

Note: This subsection is a civil penalty provision (see section 1317E).

(4) A person who is involved in a contravention of subsection (3) contravenes this subsection.

Note 1: Section 79 defines involved .

Note 2: This subsection is a civil penalty provision (see section 1317E).

Application of contravention provisions

(5) Subsections (1) and (2) apply even if the company is not a party to the relevant agreement or the transaction.

(6) Subsections (1), (2), (3) and (4) apply even if:

(a) the relevant agreement or the transaction is approved by a court; or

(b) the relevant agreement or the transaction has not had the effect or effects mentioned in paragraph (1)(b) or (3)(c), as the case may be; or

(c) despite the relevant agreement or the transaction, the entitlements of the employees of the company are recovered.

(7) However, subsections (1), (2), (3) and (4) do not apply if:

(a) the relevant agreement or the transaction is, or is entered into under:

(i) a compromise or arrangement between the company and its creditors or a class of its creditors, or its members or a class of its members, that is approved by a Court under section 411; or

(ii) a deed of company arrangement executed by the company; or

(b) a liquidator or provisional liquidator of the company causes the relevant agreement or the transaction to be entered into in the course of winding up the company.

(8) A person who wishes to rely on subsection (7) in a proceeding for, or relating to, a contravention of subsection (1), (2), (3) or (4) bears an evidential burden in relation to that matter.

Proceedings may be begun only after liquidator appointed

(9) Proceedings under section 1317E for a declaration of a contravention of this section may only be begun after a liquidator has been appointed to the company.

Linked debts

(10) If a person contravenes this section by incurring a debt (within the meaning of section 588G), the incurring of the debt and the contravention are linked for the purposes of this Act.

Definitions

(11) In this section:

evidential burden , in relation to a matter, means the burden of adducing or pointing to evidence that suggests a reasonable possibility that the matter exists or does not exist.

596ACA Person who contravenes section 596AC liable to compensate for loss

(1) A person is liable to pay compensation under subsection (3) or (4) if:

(a) the person has contravened subsection 596AC(1), (2), (3) or (4) in relation to the entitlements of employees of a company; and

(b) employees of the company have suffered loss or damage because of the relevant agreement or the transaction referred to in subsection 596AC(1) or (3), or because of action taken to give effect to the relevant agreement or the transaction; and

(c) a liquidator has been appointed to the company.

(2) The person may be liable whether or not:

(a) a Court has made a declaration of contravention or a pecuniary penalty order under Part 9.4B that applies to the person in relation to the contravention; or

(b) the person has been convicted of an offence based on section 596AB in relation to the matters giving rise to the contravention; or

(c) the company has been wound up.

(3) The company's liquidator may recover from the person, as a debt due to the company, an amount equal to the loss or damage referred to in paragraph (1)(b).

(4) An employee who suffers loss or damage referred to in paragraph (1)(b) may, as provided in section 596AF (but not otherwise), recover from the person, as a debt due to the employee, an amount equal to the loss or damage.

(5) An amount recovered under subsection (4) is to be taken into account in working out the amount (if any) for which the employee may prove in the liquidation of the company.

(6) Proceedings under this section may only be begun within 6 years after the company begins to be wound up.