Labor will crack down on dodgy directors and phoenixing

Today Federal Labor announced that a Shorten Labor Government will act to protect thousands of Central Victorian employees and small businesses from dodgy phoenix activity.

"Far too often I have met with local workers who have lost wages, entitlements and superannuation when their company goes into ‘administration’.

"These dodgy companies tend to engage in ‘phoenix activity’, where company directors deliberately burn companies in an attempt to avoid their obligations to employees, government and honest businesses.

"The anger and frustration these workers have is understandable.

"Currently it is easier to become a company director than open a bank account, yet the Government has barely raised a peep about phoenix activity,” said Ms Chesters.

Labor's package will see employees and business owners benefit from new enforcement tools for the Australian Securities and Investments Commission, tightened laws protecting employee entitlements and harsher penalties to deter and punish insidious phoenix activity.

Labor’s new plan will:

·         Require all company directors to obtain a unique Director Identification Number with a 100-point identification check.
·         Increase penalties associated with phoenix activity
·         Introduce an objective test for transactions depriving employees of their entitlements
·         Clarify the availability of compensation orders against accessories
·         Consult on targeted integrity measures based on the recommendations of the Melbourne Law School / Monash Business School Phoenix Research Team recommendations.

"Locally, I have met with small businesses and workers from cleaning, transport and construction industries who believe that they are victims of Phoenix activities.

"Phoenix activity occurs when the directors of a struggling business transfer its assets to a new company (generally owned by the same people) then actively ensure the struggling business fails. 

"This process allows them to avoid paying the money owed to the failed company’s creditors, which are often the company’s employees, other small businesses and the Australian Tax Office.:

"It's just dodgy and the Liberal National Government should follow Labor's lead and clean this mess up.
 
"It’s time the Liberal National Government focused on protecting workers and the vast majority of scrupulous businesses from the harm caused by the crooked few.”