TL;DR: Employee entitlements — wages, superannuation, and leave — are 100% protected during Small Business Restructuring and cannot be reduced through an SBR plan. You continue normal payroll throughout. ASIC data shows 93% of companies that complete SBR keep trading, preserving jobs. Staff don’t need to be informed unless you choose to tell them.
If you’re considering Small Business Restructuring, you’re probably worried about your employees. Will they lose their jobs? What happens to their entitlements? Do they need to know?
Here’s the complete picture of how SBR affects your staff.
SBR’s Key Principle: Employee Entitlements Are Fully Protected
The most important thing to understand is this: employee entitlements cannot be reduced through an SBR plan.
This means:
- Outstanding wages must be paid in full
- Unpaid superannuation must be paid in full
- Leave entitlements are fully protected
- Redundancy entitlements (if applicable) are protected
Employees are not creditors who take a “cents in the dollar” outcome. Their entitlements are quarantined from the restructuring process.
What Happens to Employee Debts During SBR?
If your company owes employees money (unpaid wages, outstanding super, accrued leave), here’s what happens:
Option 1: Pay Before the Plan
You can pay outstanding employee entitlements before the restructuring plan is finalised. This clears the debt and means employees aren’t affected by the process at all.
Option 2: Include in the Plan at 100%
If you can’t pay immediately, employee debts can be included in the restructuring plan — but they must be paid at 100 cents in the dollar, not reduced like other creditor debts.
Option 3: Priority Payment
Employee entitlements receive priority in any distribution. They’re paid before other unsecured creditors.
The bottom line: your employees will receive what they’re owed, in full.
Do I Need to Tell My Employees About SBR?
There’s no legal requirement to inform employees about SBR unless it directly affects them. In practice:
If You Have Outstanding Entitlements
If you owe employees wages, super, or leave, they may become aware through the process (as employee creditors, they’d be notified of the plan).
If Everything Is Current
If all employee entitlements are up to date, your staff don’t need to know about the SBR process unless you choose to tell them.
Practical Considerations
- Small teams often know something is happening
- Key staff may need to know to assist with the process
- Some business owners prefer transparency
It’s your decision. There’s no one right answer.
Can I Keep Paying Wages Normally During Small Business Restructuring?
Yes. Absolutely yes.
Ongoing wages for work performed after the restructuring appointment are a normal business expense. You should:
- Continue your normal payroll
- Pay employees on their usual pay day
- Process PAYG withholding as normal
- Pay superannuation on time
The restructuring process doesn’t interrupt your payroll. In fact, maintaining normal operations (including paying staff) is essential to demonstrating your business is viable.
Superannuation Obligations During SBR
Superannuation is a critical area during SBR. Here’s what you need to know:
Outstanding Super (Pre-Appointment)
If you have unpaid superannuation from before the restructuring appointment, this debt must be paid in full. It cannot be reduced through the plan.
Outstanding super may also have triggered Director Penalty Notices — another reason to address it.
Ongoing Super (Post-Appointment)
Continue paying superannuation guarantee contributions on time during restructuring. Falling behind on new super obligations while in SBR would be problematic.
Superannuation Guarantee Charge
If super is overdue, it becomes a Superannuation Guarantee Charge (SGC), which includes penalties and interest. This full amount (not just the original contribution) must be paid.
Hiring and Terminating Employees During SBR
Hiring
Yes, you can hire new employees during SBR. If your business needs staff to operate and remain viable, hiring is appropriate.
Terminations
You can also terminate employees if genuinely required — but be careful:
- Don’t use SBR as an excuse for unfair dismissal
- Follow normal termination procedures
- Pay all entitlements on termination
- Consider redundancy obligations
Terminations purely to reduce costs for the restructuring plan could backfire if they make the business less viable.
How to Answer Employee Questions About SBR
If employees become aware of the SBR and ask questions, here are some key messages:
“Is the business closing?”
No. SBR is specifically designed to keep the business running. 93% of businesses that complete SBR continue trading.
”Will I lose my job?”
SBR itself doesn’t require job cuts. The business continues operating, and your role continues as normal.
”Will I get paid?”
Yes. Ongoing wages continue as normal. Any outstanding entitlements must be paid in full — they’re protected under SBR.
”Is my super safe?”
Yes. Superannuation entitlements cannot be reduced through SBR. They must be paid in full.
”What happens next?”
The business is restructuring its debts to become more sustainable. Day-to-day operations continue as normal.
SBR Employee Entitlements Checklist
Before and during SBR, ensure:
- All current wages are paid on time
- PAYG withholding is lodged and remitted
- Superannuation is current (or plan to catch up)
- Annual leave balances are accurately recorded
- Long service leave provisions are calculated
- Any outstanding entitlements are identified
Your restructuring practitioner will need this information to develop the plan.
SBR Employee Fears vs Reality
| What employees might fear | What actually happens |
|---|---|
| Mass layoffs | Business continues, jobs preserved |
| Unpaid wages | All wages paid in full |
| Lost super | Super entitlements fully protected |
| Business closure | 93% of SBR businesses keep trading |
| Chaos and uncertainty | Structured, orderly process |
A Note on Trust
Your employees have trusted you with their livelihoods. SBR is designed to honour that trust by:
- Keeping the business alive
- Protecting their entitlements
- Maintaining their employment
- Creating a sustainable future
The fact that you’re considering SBR — a process to save the business rather than close it — shows commitment to your team.
Fair Work Act Obligations During SBR
SBR doesn’t change your obligations under the Fair Work Act. You must still:
- Pay at least minimum wage and entitlements
- Follow modern award requirements
- Provide required conditions and leave
- Not discriminate or unfairly dismiss
The restructuring process relates to company debts to external creditors, not to your employment law obligations.
Summary
- Employee entitlements are 100% protected in SBR
- You can continue normal payroll throughout
- Staff don’t need to be informed unless you choose to
- Jobs are preserved — the business keeps trading
- Outstanding wages and super must be paid in full
Your employees can continue doing their jobs while you focus on restructuring the business’s debts. That’s the whole point of SBR — to save viable businesses and the jobs they support.
Related Articles
Can I Keep Running My Business During SBR?
Can you keep running your business during SBR? Yes — directors retain full control. Unlike voluntary administration, you manage operations while the plan is developed over 20 business days.
SBR GuideHow Much Does SBR Cost? A Complete Breakdown
How much does SBR cost? ASIC data shows median practitioner fee of $16,137 plus $6,739 plan fee. Total SBR cost is $15K-$30K — far less than voluntary administration at $50K+.
SBR GuideSBR Explained: The Government Process That Could Save Your Business
What is Small Business Restructuring (SBR)? A government-backed process letting eligible Pty Ltd companies reduce debt by 60-80% while directors stay in control. 87% plan approval rate.
Could SBR Help Your Business?
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