What to do if your employer goes broke or doesn't pay

Before you write a letter, send an email or fill in a form, establish whether your employer still legally exists and whether anyone has been appointed over it. Two free searches settle it. The Australian Business Register's ABN Lookup shows the business's ABN status, and the Fair Work Ombudsman says explicitly that it can only help when that status is listed as active or in administration. ASIC's published notices search shows whether an external administrator, receiver or liquidator has been appointed — you search by business name or Australian Company Number and the appointment notice names the practitioner.

If your employer was a sole trader or partnership rather than a company, the equivalent search is the Bankruptcy Register maintained by the Australian Financial Security Authority. The Department of Employment and Workplace Relations points claimants at both registers — ASIC's insolvency notices for companies, AFSA's bankruptcy notices for individuals — as the way to confirm an insolvency event has actually happened before lodging a Fair Entitlements Guarantee claim.

The distinction that matters is not "in trouble" versus "gone". It is which formal process, if any, is running. Voluntary administration, a deed of company arrangement, receivership, liquidation, personal bankruptcy and plain abandonment look similar from the outside and give completely different answers about who will pay you.

ASIC's guidance for employees is precise on this. Appointing a voluntary administrator does not automatically end your employment, and entitlements that arose before the administration are not usually paid during it. Appointing a receiver does not automatically terminate employment either, and the receiver's main duty is to the secured creditor who appointed them — ASIC notes the receiver has no obligation to report to unsecured creditors, including employees, about the receivership. Liquidation is different again: in most cases, it terminates employment.

The Fair Entitlements Guarantee follows that same map. ASIC states that an employee of a company in receivership is not eligible for the scheme until and unless the company enters liquidation, and that employees cannot access it during voluntary administration or under a deed of company arrangement — eligibility only begins if the company subsequently goes into liquidation. If your employer is in administration, the honest answer is that you are waiting to find out which door opens.

Then there is the case with no process at all. The Fair Work Ombudsman calls it an abandoned business: the employer closes and walks away without going into liquidation or bankruptcy. There is no practitioner to lodge a claim with, and because there has been no insolvency event, the Fair Entitlements Guarantee is unavailable. That has its own remedy, covered below.

A solvent employer that has not paid you owes a debt, and the way you recover a debt is by proving the amount and making it clear you will pursue it. The Fair Work Ombudsman's guidance on preparing a small claim is effectively a checklist for that file, and it is worth assembling even if you never go near a court, because the same material persuades an employer, a regulator and a registrar.

Gather your start and end dates, the dates and times you worked, a description of your role and duties, the award or enterprise agreement that covers you, what you were paid and what you say you are owed. On the evidence side: your contract or written offer, rosters, timesheets, hours you recorded in a diary or an app, payslips, and any text messages, emails or letters between you and the employer. Employers must keep pay records, but the Ombudsman is realistic that yours may be the better set.

Then calculate the amount. Each entitlement has to be worked out separately — base rate, penalty rates, allowances, leave — and the Ombudsman notes that a court wants to see both what is owed for each entitlement and how you arrived at the figure. Its free Pay and Conditions Tool and leave calculator will do most of the arithmetic if you know your award and classification.

Now put it in writing. The Ombudsman recommends a formal letter that sets out what the dispute is about, what entitlements are owed, and notice that a small claim will be made if it is not resolved by a set date. Give a real date, not "as soon as possible". Keep a copy of what you sent and any reply. Send it even if you have already left the job — the Ombudsman specifically says that a written approach can still be worth making after employment has ended.

One detail decides more cases than it should: the name. The Ombudsman warns that an application must list the legal name of the employer, not the business trading name, and that pay slips, payment summaries or an employment contract are where to confirm it. A café trading as one name may be a proprietary limited company with an entirely different one, and a claim aimed at the wrong entity goes nowhere.

There is also a quick check worth doing first. The Fair Work Ombudsman holds money recovered from employers on behalf of workers it could not locate, and publishes a search taking your family name and the employer's name or ABN. The ATO points employees at that database directly. It takes two minutes and occasionally ends the whole exercise.

The Fair Work Ombudsman is free, national and can be reached on 13 13 94. It publishes a specific list of what it will help with: underpayments and non-payment of wages and entitlements, pay rates including penalty rates, notice of termination, redundancy entitlements and final pay, leave entitlements, hours of work and breaks, minimum conditions under the Fair Work Act, awards and enterprise agreements, sexual harassment, and breaches of the National Employment Standards.

It also publishes what it will not touch, and the list is longer than most people expect: tax and superannuation, bullying, work health and safety, unfair dismissal claims, issuing employment separation certificates, workers compensation, providing legal advice, and — importantly for anyone chasing an old debt — issues that happened more than six years ago. Sending the Ombudsman a super complaint or an unfair dismissal complaint simply loses you time.

Its main service for individuals is Dispute Assistance, a no-cost service open to both employers and employees, and the Ombudsman says most people who ask for help resolve their dispute through it. Beyond that it monitors compliance, investigates alleged breaches of the Fair Work Act, awards and agreements, and takes enforcement action where its Compliance and Enforcement Policy supports it. In some cases it says it may help you lodge a small claims application.

Understand what it is not. The Ombudsman states plainly that it is independent and impartial, which means it does not represent you or advocate on your behalf. It decides what action to take, if any, guided by the issues raised and its own regulatory priorities. A referral to the Ombudsman is not the same as having a lawyer, and a decision not to investigate is not a finding that you were paid correctly.

There is an anonymous reporting channel if you are still employed and worried about consequences. You give information about the business and are not contacted afterwards. It is the right tool for systemic underpayment across a workforce and the wrong tool if you want your own money back.

Once liquidation or bankruptcy begins, this route closes. The Ombudsman's own page on bankruptcy and liquidation says it cannot help employees get unpaid entitlements once a business is in bankruptcy or liquidation, and refers them to the Fair Entitlements Guarantee instead. It can still provide advice and support to employees with unpaid entitlements while a business is in voluntary administration, which is a narrow but real distinction.

Australia has a deliberately low-friction way for employees to sue for unpaid entitlements, and it is under-used. The small claims process lets you bring the action yourself, usually with the employee as applicant and the employer as respondent. The Fair Work Ombudsman describes it as faster, cheaper and more informal than ordinary proceedings: hearings are usually before a registrar or another court representative rather than a judge, and matters are usually resolved in a single hearing.

The threshold figure is A$100,000. Claims about underpayments up to that amount can go through the small claims process, and the dispute has to relate to entitlements covered by the Fair Work Act — National Employment Standards entitlements, terms of an award or enterprise agreement, safety net contractual entitlements, a workplace determination, a national minimum wage order or an equal remuneration order. Claims can cover base rates, penalty rates, allowances, leave, unlawful deductions and unpaid superannuation, and interest may be claimable in some circumstances.

The deadline is six years from the date the entitlement should have been paid. The Ombudsman's advice is to move well inside it, because as time passes it becomes harder to contact the employer and gather evidence. In practice, a six-year-old claim against a company that has changed hands twice is a very different proposition from a six-month-old one.

You choose where to file. The Federal Circuit and Family Court of Australia hears fair work small claims Australia-wide, and each state and territory has its own court or tribunal that does the same job. The Ombudsman is explicit that it cannot tell you which to choose and recommends independent legal advice on the point. Forms and procedure differ between them, so check the rules of the one you pick and ask its registry for the correct forms.

Both parties usually represent themselves, and a party that wants a lawyer to appear needs the court's permission — a rule that meaningfully levels the field between an individual and a company with an HR department. If you file in person or by post rather than online you will generally need at least three copies of the application and supporting documents, and the application then has to be served on the employer.

Cost is the other reason this route is worth considering. There is a filing fee, but the Ombudsman notes that a successful applicant may be allowed to claim it back. Combine that with self-representation and a single hearing, and the economics of a A$4,000 underpayment claim look nothing like ordinary litigation.

Super is the entitlement people most often lose, because it is the one nobody owns on their behalf. The Fair Work Ombudsman lists superannuation as outside its jurisdiction. The Fair Entitlements Guarantee does not cover it — the Department of Employment and Workplace Relations states that flatly and refers claimants to the ATO. If you do nothing else after reading this page, open a separate line of enquiry with the Australian Taxation Office about your super.

The rules changed materially on 1 July 2026. Under the payday super regime, an employer's super obligation is assessed against each payday rather than each quarter: the ATO calculates a super guarantee charge where the required contribution is not received by the employee's fund within seven business days after the employee is paid. The charge is made up of the unpaid super, notional earnings on it, an administrative uplift reflecting the cost of enforcement, and a choice loading where the employer ignored the choice-of-fund rules. Employers no longer lodge a super guarantee statement — the ATO assesses and issues a notice.

The ATO sets out a four-step process before you report. Confirm you are entitled to super under your work arrangements; estimate what you should have received; check what actually reached your fund by looking at member statements, phoning the fund or using ATO online services; and only then use the online tool to report unpaid super contributions from your employer. Doing the checks first matters, because contributions genuinely paid to the wrong fund are a different problem from contributions never paid at all.

What the ATO can do is real. It uses Single Touch Payroll data, super fund reporting and employee referrals to find non-compliance, and where an employer will not pay it can issue director penalty notices making a director personally liable, issue garnishee notices to banks and trade debtors, apply credits or refunds against the debt, disclose the business tax debt to a credit reporting bureau, or take legal action. It is candid that recovery is not always possible and may take time.

There is a jurisdictional edge worth knowing. The ATO can only investigate shortfalls in contributions required under the super guarantee rate; any entitlement above that rate — for example, a higher contribution promised by an award — is a Fair Work matter. So a claim can genuinely split, with the guaranteed component going to the ATO and the award top-up going to the Ombudsman or a small claims court, which can hear unpaid superannuation claims.

If the employer becomes insolvent, super does not disappear from the picture. The ATO says the insolvency practitioner must report unpaid super by lodging a super guarantee charge statement, and that in insolvency and bankruptcy the charge ranks ahead of ordinary unsecured creditors and equally with employees' claims for wages and super contributions. Since 1 July 2024, a practitioner may also apply for funding through the FEG Recovery Program to pursue unpaid charge amounts, and anything recovered is paid to the ATO and then into employees' accounts.

If a liquidator has been appointed, they become the person you deal with. Their role, as ASIC describes it, is to protect, collect and sell the company's assets, investigate the company's affairs, report possible offences to ASIC, and then distribute what is left — after the costs of the liquidation, including their own fees, and subject to any secured creditor's rights — first to priority creditors, including employees, and then to unsecured creditors.

Employees are priority creditors, but the priority is structured. ASIC sets out the order: outstanding wages and superannuation first, then outstanding leave of absence such as annual leave and long service leave, then retrenchment pay. Each class must be paid in full before the next class receives anything, and if there is not enough to pay a class in full the available funds are distributed pro rata within it — which means the next class or classes get nothing at all.

Two categories of employee are cut back. Directors and their spouses or relatives are excluded employees: for the period they held that relationship, their priority claims are capped at A$2,000 for outstanding wages and superannuation and A$1,500 for outstanding leave, with no priority at all for retrenchment pay. Anything above those caps falls back into the ordinary unsecured pool alongside trade creditors. Contractors, ASIC notes, may be classified as unsecured creditors rather than employees altogether.

To be paid anything you must prove the debt. The liquidator provides a proof of debt form, and will notify you and call for proofs when funds might be available. They may be able to tell you what you are owed from the company's records — but ASIC warns those records may not be well maintained and that a claim can be rejected where the records are inadequate and you cannot substantiate it yourself. This is precisely why the evidence file matters.

If your claim is rejected, read the notice of rejection carefully. ASIC says you have a limited time after receiving it to appeal the liquidator's decision, and that if you do not appeal within that time the decision on your claim is final. You also have a standing right as a creditor to ask the liquidator for information, a report or a document relevant to the liquidation, and the liquidator must comply where the request is reasonable.

Two administrative items are easy to forget and expensive to lose. A liquidator who pays you entitlements must give you a PAYG payment summary for those payments, but is not obliged to prepare one covering the period before their appointment — ask, and if you cannot get one, contact the ATO. Similarly, ask whether they will prepare an employment separation certificate; Centrelink usually wants one before paying income support, and the Fair Work Ombudsman confirms that issuing separation certificates is not something it does.

There is also a collective option. A committee of inspection may be formed to advise the liquidator, monitor their conduct and approve certain steps, and ASIC says all creditors, including a representative of the company's employees, are entitled to stand for membership. Where a large workforce is owed money, having an employee on the committee is the cheapest form of oversight available.

The Fair Entitlements Guarantee is the safety net when the money is not there. It is administered by the Department of Employment and Workplace Relations, and the department is clear that every decision about eligibility is made under the Fair Entitlements Guarantee Act 2012 rather than as a matter of discretion or hardship. That is why the rules below read like a checklist: a departmental officer is applying a statutory test, and sympathy for your situation is not one of its limbs.

The department's eligibility test has five limbs, and you need all of them. Your employment has ended and your employer is now in liquidation or bankrupt. The end of your employment was due to that insolvency, or happened less than six months before an insolvency practitioner was appointed, or happened on or after the appointment. You are owed employment entitlements and have taken reasonable steps to be paid them. At the time your employment ended you were an Australian citizen or the holder of a permanent visa or special category visa. And you lodge an effective claim within 12 months of whichever is later — the date your employment ended, or the day your employer went into liquidation or bankruptcy.

What it pays is capped in five ways. Wages up to 13 weeks. Annual leave. Long service leave. Payment in lieu of notice, to a maximum of five weeks. Redundancy pay, up to four weeks per full year of service. Every advance is then subject to the maximum weekly wage, which the department publishes as A$3,032 for 1 July 2026 to 30 June 2027 — if you earned more, your entitlements are calculated as though you earned the cap. Your payment can also be reduced by money you owe your former employer, and the scheme may not apply at all if the insolvency practitioner expects to pay your entitlements in full within 112 days.

What it refuses is just as important. The Fair Work Ombudsman lists the exclusions: superannuation, reimbursement payments, one-off or irregular payments, bonus payments, and non-ongoing or irregular commissions. Contractors are not eligible, apart from certain textile, clothing and footwear outworkers, and neither are excluded employees under the Corporations Act, or anyone who converted from contractor to employee within six months of their employment ending or the practitioner being appointed.

Apply through FEG Online Services, which lets you lodge, upload documents, track progress and update your details. You will need a smart device with an authentication app, your bank account details in your own name, and proof of citizenship or residency in an uploadable format. The department is specific that a driver's licence is not acceptable evidence — an Australian passport issued before your employment ended, a full birth certificate, a citizenship certificate, a registration by descent, or a visa grant notice will be. If you cannot apply online, there is a paper claim form lodged by email or post to the FEG Branch in Canberra.

Your claim is generally calculated using information verified by the insolvency practitioner, because they hold the employer's records. If you have evidence you do not believe the practitioner has, provide it with your claim. The department checks first that the claim is effective — lodged within 12 months, complete, from an eligible person, about covered entitlements — then gathers information, then assesses. It aims to process claims within an average of 14 weeks of receiving an effective claim, slower where records are poor or arrangements are complex, and pays an approved advance into your nominated account within two business days of calculating it.

Tax applies. The department must withhold PAYG under the Taxation Administration Act 1953, and warns that if you do not provide a tax file number or claim an exemption, your payment may be taxed at the top marginal rate. You can complete an electronic TFN declaration through FEG Online Services; on a paper claim you have to obtain a separate declaration from the ATO. The written decision you receive sets out the outcome, the reasons and your review rights.

Some non-payment is not an accident. If you were told to get an ABN and invoice for work that in substance looked like employment, you may have been in a sham contracting arrangement. The Fair Work Ombudsman describes it as a business representing to a worker that they are an independent contractor when they are in fact an employee, and says it is illegal to make that representation where the business does not reasonably believe it. It is also unlawful to knowingly say something false to convince an employee to become a contractor doing the same work, or to dismiss or threaten to dismiss an employee in order to re-engage them as a contractor.

The consequence for you is not merely a label. A worker misclassified as a contractor loses award rates, penalty rates, allowances, paid leave and, in an insolvency, priority creditor status — ASIC notes that a contractor may be classified as an ordinary unsecured creditor rather than an employee. Courts can impose penalties for sham contracting. The Ombudsman is careful to say it cannot tell you whether you are a contractor or an employee and recommends legal advice on that question, but it will help if you think you are in a sham arrangement.

Illegal phoenix activity is the other deliberate pattern. It occurs, on ASIC's description, when a company's business is continued by a new entity for little or no value after the old one has been liquidated or abandoned, to avoid outstanding debts including employee entitlements and taxes. The warning signs are recognisable: a new company with a similar name registered shortly after the old one fails, assets transferred below market value, the same operations running from the same premises, shared bank accounts, websites or contact details, and the same people in control.

Report it. The ATO runs a tip-off hotline on 1800 060 062 that takes confidential information from employees, creditors and the public about suspected illegal phoenix activity, and there is a tip-off form and a phoenix referrals email address. A government-wide Phoenix Taskforce coordinates the response, and penalties for those involved — directors, advisers and liquidators — can extend to large fines and imprisonment. Separately, ASIC notes it is an offence to enter into an agreement or transaction intended to avoid employee entitlements, and that where employees suffer loss as a result the person responsible can be liable to compensate them, with employees having priority to any compensation the liquidator recovers.

If the company was simply abandoned, there is a specific fix. The Fair Work Ombudsman says that to access the Fair Entitlements Guarantee, employees may need to ask ASIC to wind up the abandoned company, and points to ASIC's regulatory guide for how to make that request, what ASIC will consider, and what information employees should provide. ASIC can only do this where the business is a company registered under the Corporations Act — usually a name ending in Pty Ltd or Ltd. Winding the company up creates the liquidation the scheme requires, which is why the department tells claimants that where directors appear to have abandoned a company, ASIC may be able to place it into liquidation on request.

Free help exists and you should use it. Legal aid organisations and community legal centres provide limited free advice, generally prioritising people experiencing disadvantage, and the Fair Work Ombudsman points to the Community Legal Centres Australia directory to find one. The Fair Work Commission runs a Workplace Advice Service connecting eligible people with free legal help for dismissal, general protections, bullying and sexual harassment matters. Unions can advise and represent members, and the ACTU maintains a national union directory on (03) 9664 7333. State and territory law societies run referral services for employment specialists.

Finally, deal with the income gap. If your job has ended you may be able to claim JobSeeker Payment from Services Australia if you are between 22 and Age Pension age and meet the income, assets and residence rules. Centrelink usually wants an employment separation certificate, which neither the Fair Work Ombudsman nor a liquidator is obliged to produce — ask the liquidator, and if you cannot get one, tell Centrelink and ask what to do instead. A FEG advance can take months; income support should not wait for it.