You work hard, you do the right thing, and you expect to get paid for it. But what happens if your employer suddenly closes the doors? Will you ever see your last payslip, your holiday pay, or the super you’ve been counting on?
It’s a question no one wants to face, but many Australians do every year when businesses collapse. The good news is you’re not left without protection. Let’s break it down so you know exactly where you stand.
Do Employees Come First When a Business Shuts Down?
Yes, and that’s an important point. Under Australian law, employees are prioritised over many other creditors when a company goes into liquidation. In simple terms, you’re usually paid ahead of suppliers and others who are owed money.
The order of priority typically looks like this:
- Wages and superannuation
- Leave entitlements such as annual leave, long service leave, and, in some cases, personal leave
- Redundancy payments
But if there aren’t enough assets in the company, you might not receive everything you’re owed directly from them. That’s where government support steps in.
How the Fair Entitlements Guarantee (FEG) Helps
The Federal Government runs a scheme called the Fair Entitlements Guarantee (FEG). It exists to help employees who lose their jobs because their employer goes into liquidation or bankruptcy.
Through FEG, you may be able to recover:
- Unpaid wages (up to 13 weeks)
- Annual leave and long service leave
- Payment in lieu of notice (up to 5 weeks)
- Redundancy pay (up to 4 weeks for every full year of service)
One thing FEG doesn’t cover is superannuation. But don’t ignore it, you can still lodge a claim with the ATO to chase unpaid super from your employer.
What Should You Do If It Happens to You?
Finding out your employer has gone under can be a shock. But taking the right steps quickly can make all the difference. Here’s where to start:
- Confirm the situation – Is the company in liquidation or voluntary administration?
- Gather your records – Keep payslips, contracts, and super statements handy. They’re your proof of what’s owed.
- Lodge a FEG claim – You need to do this within 12 months of your termination date.
- Check your super – Contact your fund to confirm whether contributions have been paid.
- Ask for help – If you’re unsure, get advice early. Waiting too long can cost you your entitlements.
Think of it this way: the sooner you act, the better chance you have of recovering what you’re owed.
What If the Business Is Sold Instead of Closed?
Not all struggling businesses disappear. Sometimes they’re sold or restructured.
- If the business is sold, employees might move across to the new owner under similar terms and conditions. Some or all of your accrued entitlements can transfer with you.
- If the business is liquidated, the doors shut for good, employees are terminated, and entitlements are sorted under the Corporations Act.
One outcome gives you a shot at keeping your job, the other ends the employment relationship completely.
A Message for Business Owners
If you’re running a business, it’s worth knowing that employee entitlements sit high on the list during insolvency. Unpaid super or underpayments can even create personal liability for directors.
That means acting early, whether that’s restructuring, selling, or seeking advice, can protect your employees and reduce your own risks.
Final Thoughts
Losing a job is hard enough. Not knowing if you’ll ever see your unpaid wages or leave entitlements makes it worse. The important thing to remember is that in Australia, employees have strong protections.
Schemes like FEG are there to help you recover what you’re owed. But time matters. Waiting quietly in the hope things will sort themselves out could leave you worse off. If your employer collapses, act fast, get your paperwork together, and make sure you claim what’s rightfully yours.
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