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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:

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

When a business is in voluntary administration the Fair Work Ombudsman can provide advice and investigate entitlements.

What is the role of a voluntary administrator?

To look into the company’s affairs and reports 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. They become a creditor if the company owes them money, they need to speak to the administrator about outstanding entitlements.

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.

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