What happens if my employer avoids employing me to not give me certain entitlements?

In Plain English

If an employer deliberately avoids hiring you or enters into agreements to prevent you from getting your employee entitlements, they could be committing an offence. The Corporations Act 2001 makes it illegal for companies or their officers to enter into agreements or transactions with the intention of preventing employees from receiving their rightful entitlements or significantly reducing the amount they can recover.

Detailed Explanation

The Corporations Act 2001 addresses situations where employers attempt to avoid their obligations to employees. Specifically, section 596AB outlines offences related to relevant agreements or transactions that avoid employee entitlements.

  • Offences:
    • A person contravenes subsection 596AB(1) if they enter into a relevant agreement or transaction with the intention of avoiding or preventing the recovery of employee entitlements, or significantly reducing the amount of recoverable entitlements.
    • A person contravenes subsection 596AB(1A) if they enter into a relevant agreement or transaction and are reckless as to whether the agreement will avoid or prevent the recovery of employee entitlements, or significantly reduce the amount of recoverable entitlements.
    • An officer of a company contravenes subsections 596AB(1B) and (1C) if they cause the company to enter into a relevant agreement or transaction with the intention or recklessness of achieving the same outcomes.
  • Employee Entitlements:
    • These entitlements include superannuation benefits, injury compensation, amounts due under an industrial instrument for leave of absence, and retrenchment payments (as per Chunk 618 of the Corporations Act 2001).
  • Application:
    • These provisions apply even if the company is not a party to the agreement or transaction (subsection 596AB(2)).
    • They also apply even if the agreement or transaction is approved by a court, has not yet had the intended effect, or if the entitlements are eventually recovered (subsection 596AB(2A)).
  • Exceptions:
    • The provisions do not apply if the agreement or transaction is part of a formal compromise or arrangement approved by a court under section 411, a deed of company arrangement, or a restructuring plan (subsection 596AB(2B)).
    • Subsections 596AB(1A) and (1C) do not apply if a liquidator or provisional liquidator causes the agreement or transaction to be entered into during the winding up of the company (subsection 596AB(2C)).

Additionally, section 596AC of the Corporations Act 2001 outlines civil contraventions related to avoiding employee entitlements. A person contravenes subsection 596AC(1) if they enter into a relevant agreement or transaction and know, or a reasonable person would know, that the agreement is likely to avoid or prevent the recovery of employee entitlements or significantly reduce the amount that can be recovered. A person involved in such a contravention also contravenes subsection 596AC(2).