Is Your Employer Going Under? What Happens to Your Pay and Redundancy

More often than most people realise. Around 1,100 Australian companies enter external administration or have a controller appointed every month, according to ASIC's insolvency statistics. That figure has climbed sharply since the pandemic, though it has eased slightly over the past year.

We track the trend — plus our composite Employer Distress Index — on the business insolvency insights page. If your employer is showing warning signs, you are far from alone, and there are protections in place.

Common red flags include late or partial pay, super that stops arriving in your fund, suppliers refusing to deliver, sudden restructures or asset sales, and directors becoming hard to reach. Unpaid superannuation is a particularly important signal — under payday super rules, contributions are due within days of each pay run, so a gap shows up quickly.

If you spot these signs, act early: keep copies of your payslips, employment contract and any records of hours worked. These documents make it far easier to claim what you're owed if the business does fail.

If your employer becomes insolvent and can't pay, the government's Fair Entitlements Guarantee (FEG) can cover unpaid wages (up to 13 weeks), annual leave, long service leave, pay in lieu of notice (up to 5 weeks), and redundancy pay (up to 4 weeks per year of service). There were around 4,076 FEG claims in the latest quarter — a figure that has risen year-on-year.

FEG doesn't cover unpaid superannuation (that's pursued separately by the ATO), and there are caps on the weekly wage rate used to calculate payments. But for most workers, it's the difference between losing everything and recovering the bulk of what they're owed.

When an external administrator is appointed, they'll write to employees with instructions for lodging a claim. You generally claim through FEG online once the company is in liquidation. Work out what you should receive first: use our redundancy pay calculator to estimate your redundancy entitlement, and think carefully before signing anything with our should I accept redundancy? tool.

Every situation is different, and insolvency law is complex. Our AI advisor — grounded in the same insolvency and entitlements data — can talk you through your specific circumstances in plain English.