How are a director’s outstanding employee entitlements dealt with in a Liquidation?

An Insolvency Practitioner’s response to this question is guided by the definition of “Excluded Employee” within Section 556 of the Corporations Act 2001.

What is an Excluded Employee?

An individual is an Excluded Employee in the event they are or were:

• An employee of the Company who has been a director of the company (incl. de facto and shadow directors) within twelve (12) months of the Liquidation; or
• An employee of the Company who is a spouse of the director (and importantly the director was also an employee of the Company); or
• An employee of the Company who is a relative (defined to refer to a parent, brother/sister, child) of the director (and importantly the director was also an employee of the Company).

Can the Excluded Employee’s unpaid employee entitlements be claimed in the liquidation?

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