There is an increasing amount of employees, especially those closing in on retirement, looking to salary sacrifice part of their wages to superannuation. Usually this is done to not only increase their retirement funds, but to also take advantage of taxation concessions.
Have you ever wondered, what happens when an employer fails to remit the salary sacrificed component of an employee’s wages to the superannuation fund and then becomes insolvent? Generally, in the event a company becomes insolvent, the debt will be treated as follows:
– The employee could make a claim against the government’s Fair Entitlement Guarantee scheme for the amounts that have not been remitted by the employer.
– The employee could claim as a priority creditor for outstanding wages against the company.
Recently, a company director found himself facing criminal prosecution for failing to remit the salary sacrificed component of an employee’s wages. The director decided to plead guilty and paid the employee the outstanding amount personally. This is yet another example of how the corporate veil can be pierced and a director be held personally liable for the outstanding amount.
If your need any further information in regards to director’s liability, contact our team of lawyers at The Quinn Group on (02) 9223 9166 or submit an online enquiry form today.