Q. Impact of phoenix activity on employ superannuation?
Employees experience a range of impacts other than lost wages, entitlements and superannuation from phoenix activity. First, if employees are not rehired by the new company, they will often experience periods of unemployment. These periods of unemployment can have significant impacts such as a disintegration of skills. Even if an employee is re-hired by the phoenixed company, they will often have a period of weeks or months where they are unemployed. Union stakeholders have indicated that during this period, the phoenix operator will often reassure the employee that they will be able to start work very soon. Therefore, employees will not claim unemployment and often experience financial distress before they are re-hired by the phoenixed company.
The impact of phoenix activity on employees' superannuation was included as a sensitivity test as the GEERS data does not include superannuation. However, it is important to note that the impact of phoenix activity on superannuation can have significant ramifications. In the paper Combating the Phoenix Phenomenon: An Analysis of International Approach, the extent of the impact is described:
"it is possible for an employee to work in the same factory, with the same machinery, for the same management, in ostensibly the same business, over the course of the employee's working life, with no immediate realisation that the business has been perpetually phoenixed... Essentially the employee appears to be in continuous employment. However the employee's superannuation benefits will be significantly reduced as a result."
Many employees of phoenix companies would not have worked for the company long enough to have accrued long services leave (as often the company will not have been operating for that long). However, when the business is liquidated and if the employee is re-hired by the new company, the new entity will not recognise this long service leave.