Federal Entitlements Guarantee (FEGS)
Employee-owned cooperative directors don’t get the Federal Entitlements Guarantee (FEGS) if their cooperative goes into liquidation. Even if they have been elected as a Director for a few months, they miss out on their LSL, holiday pays and redundancy entitlements etc.
However, under the 556 Corporations Act, directors can receive their entitlements owing them before they were elected as Directors of their workers’ coop.
This is based on the definitions of Priority and Non-Priority Days, where payments can be apportioned on a pro-rata basis.
Priority Days: This is the number of days as a director of the workers’ cooperative
Non-Priority Days: Is the employment days before being elected as a Director of the workers cooperative
The NSW Court of Appeal has ruled:
Section 556(1C) requires identification of the amount of payment that can be attributed to non-priority days. It assumes by use of the words “must not include an amount attributable to non-priority days” … Read more