Up to $3.2bn lost to 'phoenixing' by firms
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CANBERRA, July 4 AAP
July 04 2012, 10:51AM
Up to $3.19 billion has been lost as a result of companies trying to avoid paying debts and taxes by going into liquidation, new figures show.
A report by the Fair Work Ombudsman, released on Wednesday, estimates the annual cost of so-called phoenixing to be between $191 million and $655 million for employees in the form of unpaid wages and other entitlements.
It estimates another $992 million to $1.93 billion is lost by businesses, while the government loses around $610 million in revenue every year.
All up, phoenixing has cost the economy between $1.78 billion and $3.19 billion.
The report says consideration should be given to amending the Fair Work Act to address the problem.
The changes should include a provision to prohibit an employer entering into a transaction with the intention of preventing its staff from recovering their entitlements, the report said.
Fair Work Ombudsman Nicholas Wilson said his agency had identified an increasing number of companies engaging in phoenixing to avoid paying staff entitlements and court issued penalties.
