Bargaining for Security: Lessons for Employees from the World of Corporate Finance

The plight of employees who lose accrued entitlements when their corporate employers collapse is a matter of continuing political and industrial interest. After the National Textiles collapse in January 2000, the Howard government introduced the Employee Entitlements Support Scheme to provide a taxpayer-funded, minimum safety net to cushion employees from the worst effects of employer insolvency. Just prior to the 2001 federal election, a more generous General Employee Entitlement Redundancy Scheme was introduced. These are administrative solutions, susceptible to the fickle winds of political expediency. There have been many calls for longer term legislative solutions—through industry-wide or national insurance or guarantee-fund schemes. This article explores a further alternative: using existing long-standing commercial law principles and practices to bargain for security. If employee representatives were to examine the principles of corporate law, and adopt the practices of corporate financiers, they might bargain more effectively for better protection than may be offered long term by a welfare-based safety net.