Business groups and insolvency firms warn companies will fail without enough money to cover staff payouts
Most employees' redundancy payments are capped at 12 weeks but those on union-negotiated deals and individual contracts can build payouts faster and to much higher levels that can be worth hundreds of thousands of dollars.
"The collapse of even one large business with generous redundancy entitlements could lead to a cost of hundreds of millions to the budget." "Once current insolvency relief ends, many corporates will have nothing left, which will place unhealthy strain on the government," Mr Ayres said."What will be interesting for some ... is that when they go to right-size their business, they may actually not be able to afford the redundancies because of a lack of cashflow."
In many cases, he said it would be financially pointless to sue the company meaning the "risk of employees losing entitlements is very high". "If companies are unable to keep trading without assistance from the government, it is likely that they will not have sufficient funds to meet employee entitlements on termination."While extending insolvency rules helped keep some businesses afloat during the crisis, Equifax head of product and rating services Brad Walters said it was a "double-edged sword" that also put others at risk.
Mr Porter said the government had been focused on keeping businesses open and, for those that have to shut, staying connected with workers through JobKeeper.
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