What is voluntary administration?

An insolvency procedure where an external administrator is appointed because the company is in financial trouble.

The ‘voluntary administrator’ is appointed by either:

• the directors after they have decided the company is or is likely to become insolvent
• a secured creditor who has a charge over most of the company’s assets
• a liquidator, or
• a provisional liquidator.

The Fair Work Ombudsman can continue to provide advice and investigate entitlements when a business is in voluntary administration. 

What is the role of a voluntary administrator?

To look into the company’s affairs and report to the creditors. They recommend whether the company should:

• enter into a deed of company arrangement
• go into liquidation, or
• be returned to the directors.

What happens to entitlements accumulated before an administrator is appointed?

The voluntary administrator doesn’t have to pay employee entitlements accumulated before the appointment date.

If an employee resigns during the administration period, they may not get their accumulated leave entitlements paid during that period.

For more information, see the section on ASIC's website titled 'Employee entitlements' in Voluntary Administration: A guide for employees. 

Employees may need to consider seeking independent advice about available options. 

If the business is bankrupt or in liquidation

FWO doesn’t have jurisdiction to investigate or recover entitlements in this situation. Employees should contact the Fair Entitlements Guarantee scheme on 1300 135 040. See Bankruptcy and liquidation for more information.