What happens to my pay if my employer goes bankrupt in Australia? — full 2026 guide

When an Australian employer becomes insolvent (formal liquidation or bankruptcy), the Commonwealth steps in. The Fair Entitlements Guarantee (FEG), established under the Fair Entitlements Guarantee Act 2012, pays affected employees up to:

• 13 weeks of unpaid wages
• unused annual leave in full — FEG does not cap the number of weeks
• unused long service leave in full — again, no week cap
• 5 weeks of payment in lieu of notice
• redundancy pay, capped at 4 weeks for each full year worked (the NES scale, which tops out at 16 weeks, sets what you are actually owed)

All capped at a weekly rate of A$3,032 for 1 July 2026 to 30 June 2027 (indexed annually). Above-cap shortfalls become unsecured creditor claims with the liquidator. FEG does not cover unpaid superannuation guarantee — that is claimed through the ATO.

FEG applies when:

• Your employer is in formal liquidation (liquidator appointed by court or creditors)
• Your employer is in bankruptcy (trustee in bankruptcy appointed)
• You were an Australian-based employee (not contractor)
• The insolvency event happened within the last 12 months

FEG does NOT apply when:

• Your employer is in voluntary administration (DOCA stage) — wait for the outcome
• Your employer is still trading (use FWO or small claims instead)
• You were a contractor (no employer-employee relationship)
• Your employer is overseas-based with no Australian incorporation

Major FEG-triggering insolvencies in 2024-25-26:

• Porter Davis Homes — March 2023 collapse, 1,700+ employees + thousands of contractors. FEG payouts still being processed in 2026.
• Bonza Airlines — April 2024 liquidation, ~330 cabin and ground staff. FEG payouts processed late 2024-2025.
• Star Entertainment (various) — 2024-25 restructures and asset sales. Casino-floor + hospitality casuals.
• Godfrey's, Booktopia, various retail chains — 2024-25, hundreds of retail workers.
• Construction sector collapses — ongoing throughout 2024-26 (Probuild, Beth Air, multiple residential builders following Porter Davis pattern).

The FEG scheme processed approximately A$280-320M in claim payouts in FY24-25 (final figures pending Annual Report).

1. Wait for formal liquidation or bankruptcy. An external administrator must be appointed for FEG to apply.
2. Visit dewr.gov.au/fair-entitlements-guarantee and lodge through FEG Online Services. You have 12 months from your job ending or the insolvency event to lodge.
3. Provide supporting documentation: employment contract, last 3 payslips, calculation of unpaid entitlements, proof of identity, liquidator/trustee contact details.
4. Wait around 14 weeks on average for FEG assessment and payment. Payment goes direct to your nominated bank account.
5. If your gross weekly pay was above the FEG cap (A$3,032/wk), lodge the shortfall as an unsecured creditor claim with the liquidator. Realistic recovery is typically 0-10c in the dollar.

FEG does NOT cover unpaid superannuation. If your employer hasn't paid your super (common in pre-insolvency periods), recover it separately:

1. Submit an Unpaid Super Enquiry to the ATO via the ATO Business Portal or by phone (13 10 20).
2. The ATO pursues the liquidator for the unpaid Superannuation Guarantee Charge.
3. Where the SG is unrecoverable from the employer (typical in liquidation), the ATO pays it directly to your super fund from the ATO trust account.
4. Process takes 6-18 months, longer than FEG. Persistence pays off.

Tax treatment of FEG payments: wages component is assessable income for tax. Redundancy component receives concessional tax treatment (tax-free portion of approximately $13,598 + $6,801 per year of service for 2026-27, indexed annually).

Centrelink while waiting: if you're out of work and waiting for FEG (around 14 weeks on average), you may be eligible for JobSeeker. Centrelink may recover some payments from your FEG payout, but you'll usually still come out ahead.

Free legal help: JobWatch (Victoria), Working Women's Centres (each state), Redfern Legal Centre (NSW) and similar community legal centres offer free advice on employer-insolvency entitlements.

Run your specific situation through the FEG Claim Calculator for an estimated payout total. For complex matters (large amounts, contested entitlements, partial-year service), consult a free legal aid service or specialist insolvency-law firm.