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Director liability good for members
Super fund members will be the ultimate beneficiaries of Federal Budget changes making company directors personally liable for unpaid employee superannuation payments, according to Holding Redlich Lawyers.
The changes, aimed at clamping down on phoenix company schemes, could still end up taking a blanket approach and hence affecting directors not personally involved in wrongdoing, although in most cases directors should be aware when their company is struggling and super payments are not going through, said Holding Redlich partner Jenny Willcocks.
In this case it will have a significant impact on directors’ risk of personal liability, she said.
The end result will be a positive from an employee or trustee perspective if it makes directors more aware and more focused on their responsibilities concerning employee super, she said.
The fact that there is discussion out there sends a positive message that the government is taking the situation seriously from a deterrent point of view, meaning those tempted to use such schemes may think twice if they are more personally liable and there is greater capacity to go after the directors personally, she said.
What the situation really highlights is a need for an overhaul in the system of superannuation payments from employers to funds, with the lead time currently far too long and creating the potential for such dishonest conduct, Willcocks said.
If super payments had to be paid in the same way as wages, that would close the loophole allowing phoenix schemes to take place and would also benefit members, who are currently missing out on having their own money invested while it sits in an employer’s account, she said.
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