What happens if my employer goes out of business while still owing me superannuation?

Superannuation (super) is a compulsory savings scheme through which a portion of your income is set aside for the years following your retirement. Super is calculated as a percentage of your base salary.

If you’re an Australian worker, your employer is required to make superannuation contributions on your behalf to a super fund of your choosing. These contributions are known as the super guarantee (SG).

In the event that your employer collapses, a trustee, administrator or liquidator will be appointed to manage the company. That trustee/administrator/liquidator will be required to pay your superannuation out of company funds.

If the company doesn’t have enough funds, in some cases company directors may be required to fulfil superannuation obligations. If the directors cannot pay, the Australian Securities & Investment Commission (ASIC) might take legal action on your behalf.

However, ASIC may decline to take legal action or might be unsuccessful.

This means there could be some circumstances in which you don’t receive outstanding super that you’re owed.

If you suspect your employer is in financial difficulty, you should raise your concerns with them as soon as possible. If this action fails to produce results, you can:

• seek professional legal advice
• lodge a complaint with the ATO regarding unpaid superannuation
• contact your local union representative if applicable
• lodge a complaint with ASIC

What can I claim if my employer becomes insolvent?

A business is insolvent if it cannot pay its debts. An insolvent business may go into liquidation, or the owner may declare bankruptcy. If this happens, your employer may not have the money to pay your wages and entitlements.

If eligible, you can make a claim via the Fair Entitlements Guarantee (FEG) scheme for payment of some or all of what you’re owed including:

• unpaid wages (up to 13 weeks) capped at the FEG maximum weekly wage
• unpaid annual leave and long service leave
• payment in lieu of notice (up to 5 weeks)
• redundancy pay (up to 4 weeks per full year of service).

The FEG scheme does not cover:

• unpaid employer superannuation contributions
• reimbursement payments
• bonus or commission payments

What other options are available to reclaim unpaid super?

Contact ASIC if your employer is not in liquidation

The Australian Securities & Investments Commission (ASIC) may be able to assist employees owed entitlements by companies that have been abandoned by their directors, but are not yet in liquidation.

You’ll need to lodge a request with ASIC to wind up the company. This document also contains some helpful information pertaining to the information you’ll need to provide and factors ASIC considers when deciding whether to exercise this power.

You will be asked to provide ASIC with supporting information to assist with their assessment, including:

• confirmation that you are an Australian citizen or permanent resident, or a citizen of New Zealand
• your employment agreement/contract
• documents which may show your employee entitlements (e.g. payslips, group certificate and bank statements)
• an estimate of the number of people employed by the company
• why you believe that the company has been abandoned

You should consider encouraging your colleagues and other employees to lodge similar requests with ASIC because abandoned companies will generally not be wound up if the total amount of outstanding employee entitlements is less than $15,000.

Contact ATO to chase unpaid super

You can use the Australian Taxation Office’s (ATO) online tool to inform the government that your employer hasn't met their super obligations. Be prepared to provide all relevant information.

The ATO can only investigate an enquiry about unpaid super for a period after an employer’s due date for lodgment. This means that if your enquiry includes any period within the current quarter, unpaid super for that period cannot be investigated.

You'll need to enter relevant information regarding your unpaid super enquiry, including:

• your personal details - including tax file number (TFN)
• the period of your enquiry
• your employer's details - including Australian business number (ABN)

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