ASIC has extended existing relief granted to operators and promoters of employee redundancy funds from the AFS licensing and managed investment provisions of the Corporations Act for a transitional period of 18 months.
The decision facilitates further consultation by ASIC on the framework for the regulation of these funds.
On 30 July 2024, we publicly consulted on our proposal to remake the relief under ASIC Corporations (Employee redundancy funds relief) Instrument 2015/1150 for a period of five years, given it was due to expire on 1 October 2024.
We received four submissions from funds and one submission from an employer association. The funds generally supported the extension of the relief, while the employer association submission did not support extending the relief. Copies of the non-confidential submissions are linked below.
In light of the submissions we received and the growth in both the scale and scope of these funds’ activities since relief was initially provided, we consider it appropriate to consult further on the appropriateness and form of any future relief for these funds.
We have extended the relief for an interim period to allow for our further consultation. Our transitional relief is provided under ASIC Corporations (Amendment) Instrument 2024/618. The relief will expire on 1 April 2026.
Under the transitional relief, entities relying on the relief will now be required to notify ASIC. Existing entities relying on the relief will need to notify ASIC by 31 October 2024. This will assist to ensure all fund operators can be contacted in connection with the upcoming consultation. Entities can notify us of their reliance on the relief by emailing us at: rri.consultation@asic.gov.au.
We intend to consult in early 2025 and welcome submissions in response.
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Submissions to CS 9 Proposed extension of employee redundancy funds relief
Background
Employee redundancy funds are arrangements established to accept contributions from employers in construction and allied industries on behalf of their employees. The contributions represent redundancy benefits, which will be payable to the employee upon termination or cessation of employment, generally for any reason other than misconduct.
ASIC considers that employee redundancy funds are likely to meet the definition of a managed investment scheme and a financial product, and that the operator of an employee redundancy fund would likely be subject to the requirements to hold an AFS licence, register the employee redundancy fund as a managed investment scheme, and comply with the managed investment provisions of the Corporations Act.
ASIC is Australia’s corporate, markets and financial services regulator.