Explanatory Memorandum
(Circulated by the authority of the Parliamentary Secretary to the Treasurer, the Hon David Bradbury MP)Chapter 3 - Miscellaneous Amendments
Context of amendments
3.1 The Australian Government introduced the Paid Parental Leave scheme in 2010. The Department of Families, Housing, Community Services and Indigenous Affairs (FAHCSIA) administers the Government's scheme.
3.2 Paid parental leave payments can either be paid to eligible employees through their employer, making them a paid parental leave employer, or FAHCSIA through the Family Assistance Office. Where a company enters into external administration, it is no longer appropriate for the paid parental leave payments to be made by the paid parental leave employer.
3.3 FAHCSIA will generally be notified of a liquidator's appointment to a company as they will be a creditor. However, FAHCSIA may not be a creditor when, for example, an employee has been paid all funds provided by FAHCSIA owing to them by their employer at the time insolvency occurs. The amendment will provide that FAHCSIA be notified of an insolvency practitioner's appointment, even when they are not a creditor.
3.4 The new law allows FAHCSIA to determine whether to continue paying paid parental leave payments to the company or to make the paid parental leave payments directly to the employee.
Summary of new law
3.5 The new law imposes an obligation on receivers, administrators and liquidators to advise the Secretary of FAHCSIA where a company to which they are appointed is a paid parental leave employer.
3.6 The Bill also empowers the Court to validate any action of a reinstated company that took place from when the company was deregistered, until it was reinstated by ASIC. The Court currently has an equivalent ability to validate any action where the reinstatement of the company has been ordered by the Court.
Comparison of key features of new law and current law
| New law | Current law |
|---|---|
| A liquidator, receiver or administrator must advise the Secretary of FAHCSIA that they have been appointed to a body corporate that is a paid parental leave employer.
The Court can validate actions taken in respect of a company from it's deregistration to its reinstatement if either ASIC or the Court reinstates the registration of the company. |
There is no obligation on a liquidator, receiver or administrator to advise FAHCSIA that they have been appointed to a body corporate that is a paid parental leave employer.
The Court can only validate anything done by a company from it's deregistration to its reinstatement if the Court reinstates the registration of the company. |
Detailed explanation of new law
3.7 The new law introduces the phrase 'paid parental leave employer' into the Corporations Act. The term is defined in section 9 of the Corporations Act by reference to the new section 600AA of the Corporations Act introduced by Schedule 1, item 28 of the Bill. [Schedule 1, item 27, section 9]
3.8 The new law establishes a statutory duty on receivers, administrators and liquidators to notify the Secretary of FAHCSIA upon their appointment to a company that is a paid parental leave employer. A company will be considered a paid parental leave employer where the company is obliged to make a payment under section 72 of the Paid Parental Leave Act 2010 . [Schedule 1, item 28, section 600AA]
3.9 While FAHCSIA will generally be notified of a liquidator's appointment as a result of their rights as a creditor of the company, FAHCSIA may not always be owed funds by a paid parental leave employer. For example, when an employee has been paid all funds provided by FAHCSIA owing to them by their employer at the time the insolvency occurs. The Bill ensures that FAHCSIA will be made aware that a paid parental leave employer is under external administration, regardless of whether FAHCSIA is owed debts by the employer.
3.10 The Bill amends the Corporations Act to provide the Court with the power to make directions and otherwise validate actions taken during a period of deregistration of a company that has had its registration reinstated by ASIC. Currently, the Court is only empowered to make directions and validate anything done in respect of a company during a period of deregistration where the company has been reinstated by the Court. [Schedule 1, item 29, subsection 601AH(3)]