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Where a company is in liquidation, it will be liable for the superannuation guarantee charge (‘SGC’) in relation to payments made to its former employees under the Fair Entitlements Guarantee Act 2012 (FEG Act).

The FEG Act provides for financial assistance (referred to as an ‘advance’) to former employees, where the end of their employment is linked to the insolvency or bankruptcy of their employer. An advance is paid in respect of certain unpaid employee entitlements where there are insufficient funds or assets available to the employer to pay those entitlements.

An advance that is paid to a former employee of a company that is in liquidation is ‘salary and wages’ within the ordinary meaning of those terms, because the advance is paid as consideration for the services rendered by the former employee to the company, prior to the company entering into liquidation.

The superannuation guarantee charge is payable by the employer. This does not change under the liquidation process, whether it is paid on behalf of the employer by either the liquidator or a third party.

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